Monday, May 13, 2024

Wednesday’s May 15th CPI release will be the primary catalyst for markets as the FOMC has placed a large weight on inflation’s direction. The daily S&P 500 (SPX) has an active TD Sell Setup @6. This places a 9 count right on the day of the CPI release.

There are subtleties surrounding the price action on that day, and not just simply fading the 9 count. The easiest trade is if the CPI comes in hot. With the SPX at price exhaustion levels, a selloff to eventually test the lows made last April is probable.

If the CPI comes in line to expectations, fading an initial pop would make sense. If the SPX closes below 5177.11, the TDST Support for the 30 and 60 minute timeframe, that would signal the market is ready for the next phase of the downturn. Hold 5177.11, new highs above 5264.85 are in sight.

If the CPI comes in much cooler than expected, then it gets trickier. New highs should be made and a continuation of TD Sell Setup running concurrently with TD Sell Countdown. But also watch for a minor consolidation just based on the SPX at price exhaustion levels before resuming the bullish trend. Though not the base case, be wary of an intraday reversal. 

Above is a great guide from JP Morgan to navigate expectations on the SPX’s reaction to the CPI release. ( Note the previous posted JP Morgan CPI chart was incorrect. Reposting the correct one – May 14, 2024)

Monday, April 22, 2024

A 5.5% plus drawdown for the S&P 500 (SPX), and there is alignment for at least a bounce direction higher. The TD Trend Factor at 4972.12 has been recorded. That takes care of the price objective, but the active DeMark counts are still ongoing with a TD Buy Setup @7. Since TD Buy Setup still needs to be ‘perfected’ by having either TD Buy Setup @8 or @9 recording a lower low in the TD Buy Setup indicator, be warned that the SPX can record another lower low during Monday or Tuesday’s session.  Looking at the convergence of short term timeframes and the daily SPX, the ideal time would be early Monday. 

Note an overnight low was made at 4926.37 as a result of the geopolitical skirmish in the Middle East. Consider 4926.37 as support. A close below 4926.37 would suggest the market would suffer another setback in the near future. If the bottom was made as of the close of Friday, the SPX needs to record a daily close above the 60 minute TDST Resistance level at 5041.97 or record a bullish price flip during the trading week without violating the current low at 4953.56. 

There is some extreme rotation going on with the financial sector rallying and the semiconductor sector breaking lower. If the stabilization scenario holds with the SPX maintaining the current low at 4953.56, it’s entirely possible for the Nasdaq (COMP) to lag the SPX by a day or two. This will place a possible Nasdaq low on Tuesday or Wednesday as both the Nasdaq and Semiconductor ETF (SMH) have active DeMark counts at TD Buy Setup @6. 

Monday, April 1, 2024

The market remains bullish and digging through individual stocks, there is continued momentum occurring in other sectors besides tech. While the new trading week is the sweet spot for a potential price exhaustion per longer term TD Sequential charts, the daily S&P 500 (SPX) has reset the DeMark counts which can carry the market to a 9 count on April 9th. The new risk parameters are set at the 60 minute TDST Support level at 5216.80. A bearish price flip on the daily SPX before recording a 9 count, and trading below 5216.80 will signal market is ready to cave. 

The weekly SPX is on an incredible run. The active counts are TD Sell Setup @9 +14,  and TD Sell Countdown @11. While the weekly can price flip bearish at any point, be cognizant that the weekly may dip, and be bought right back up to finish recording a TD Sell Countdown @13. It is common to see patterns where bearish patterns emerge, but the SPX goes on one more path to higher highs before a more substantial correction commences.

The monthly SPX is on a path to record a TD Sell Countdown @13 for the month of April. Unless the projected downturn doesn’t not price flip the current TD Sell Setup count, all time highs can be recorded during the November election month or December. 

The quarterly SPX is on track to record a TD Sell Setup @9 halfway in 2025. Even if the SPX trades sideways through the remainder of 2024, the DeMark counts would still be active. It would take a monumental shift to deep pessimism to change course from bullish to bearish. Note the unofficial TD Risk level at 5525.59. If the market continues to melt up and records two consecutive higher closes above 5525.59, more highs are likelier than not. 

Friday, March 22, 2024

The S&P 500 (SPX) has reached the 5244.63 TD Trend Factor. While this target price has been recorded, the time duration target has not. The daily SPX has an active TD Buy Setup @3. Therefore, the TD Trend Factor is not aligned price exhaustion measures of an 8 or 9 count on the daily chart. The default is to follow time duration. This leads to a TD Sell Setup @9 on Monday, April 1st. This will align with the 2 day timeframe which can record a 9/13/9 on April 2nd. The 3 day SPX can record a TD Sell Setup @9 + 9 on April 2nd. The 4 day TD Sell Setup 9 on April 3rd. If the 5244.63 TD Trend Factor does have significance, look for a price flip on the daily sooner than later, and manifest into the later timeframes. Confirmation that this extraordinary rally has terminated will see the SPX close below 5147.60. Warning if we close below 5174.67, the 30 minute TDST Support. Other than that bearish scenario, new data points will arise in the first week of April.

Monday, March 11, 2024

The market is still making higher highs, but laboring hard with two hard distribution days the past week. The DeMark TD Sell Setup count for the daily S&P 500 (SPX) has price flipped bearish with a TD Buy Setup @1. TD Sell Countdown recorded a 13 on March 1st and TD Combo Sell recorded a 13 on March 7th. The reactionary thought is the rally has ended. This can be confirmed with a daily close below the two hour TDST Support at 5061.89. The warning signal would be if the SPX closes below the 30/45 minute TDST Support at 5105.73. DeMark indicators aside, there are enough catalysts ahead that can chop the market around and maybe even propel the market high enough to challenge the TD Trend Factor at 5244.63. On the calendar, the potential catalysts are the CPI release on March 12th, Nvidia’s AI event on the March 18th, and the March 20th FOMC meeting. To see 5244.63 or at least the recent high at 5189.26, the mentioned TDST Support levels just needs to hold. While this whole top picking exercise is just splitting hairs, the longer term charts has queued up the sweet spot for price exhaustion. This has signaled the risk is to the downside. 

Monday, March 4, 2024

There is clear FOMO in pockets of the market. However other pockets are looking like they are playing catch up, which is providing continued elevation in stocks. Starting with the longer term time frames, the intermediate weekly S&P 500 (SPX) chart recorded a TD Sell Setup @9 + 9. The interpretation is the market will enter the price exhaustion phase. Since momentum is still strong, we’ll need to drill down to lower time frames to get a better look at timing.

Also, the driver of the rally has been semi stocks and the weekly Vaneck Semiconductor ETF (SMH) has an active TD Sell Setup @7. This is suggesting 1-3 weeks of more upside.

From the prospective of the daily SPX, it has closed the week by recording 13’s on both TD Sell Countdown and TD Sell Combo. With TD Sell Setup @2 and TD Trend Factor at 5244.63, a top on March 11th or 12th is scheduled. If that scenario should play out, look for signs that volatility is about to start. Another scenario would see the active TD Sell Setup price flip bearish before March 11th or 12th with the SPX closing below the close of the prior four bars. In this case, this just could be a mean reverting trade that likely sets up higher again. 

If a bearish price flip does occur on the daily SPX, it will likely occur during Jerome Powell’s March 6th House of Representatives testimony. The four hour SPX has active TD Sell Setup @5 and could record a 9 count on Tuesday. March 5th which sets up market vulnerability on March 6th. Again, it would likely be a mean reverting trade unless the SPX closes below the proposed TDST Support at 5061.11. Absent of that, observe signs of a toppy market that culminates to the middle of March.

Monday, February 12, 2024

The daily S&P 500 (SPX) has recycled higher after single day drop on January 31st. A similar situation is coming up where overbought conditions are absorbed just to resolve higher. The active counts are TD Sell Setup @7, TD Sell Countdown @6, and throwing in TD Combo Sell @9. The SPX is on course to record a TD Sell Setup @9 on Tuesday, February 13th. If recorded, any selloff below the (pending) 4 hour TDST Support at 4954.24 would signal the rally since early January is through. 

With the strength of the SPX, it now makes more sense the weekly TD Sell Setup should record a TD Sell Setup @9 + 9 count. This should mark a more meaningful selloff around the beginning of March. 

Monday, January 29, 2024

There are plenty of catalysts in place for the coming trading week, and the S&P 500 (SPX) should start experiencing a gut check. The daily SPX has an active TD Sell Setup @7 and on target to record a TD Sell Setup @9 on Tuesday, January 30th. This will complete a 9/13/9 TD count. Adjacent timeframes have either recorded price exhaustion or about to adding to more waning bullish pressure. There is a TD Trend Factor at 5016.46 that can be defined as the sole price target. 5016.46 is about 2.5% away from current levels which suggests a strong bullish run before faltering.

If the SPX should breach under the 4873.43 TDST Support level on the 30 minute timeframe without a higher high (4906.69), that’s the first indication not all is well. All the longer term charts are still in an uptrend. For confirmations, the SPX should not hold the 4818.62 level, which was the former all time high, and eventually a bearish price flip on the weekly chart.

A followup to Wayne Whaley’s Toy Story indicator. The November 19, 2023 – January 19, 2024 SPX gain was 7.2%. There has been 35 occurrences since 1950 when the gain has been 3% or more during the November 19 – January 19 period. Out of the 35 times, only two times (1987 and 2018) when the SPX failed to record a positive year. Another indication of a positive year ahead.

Monday, January 8, 2024

The 2024 consensus among asset managers is for another positive outcome, but with geopolitical caveats. When aggregating all the long term charts filtered with DeMark TD Sequential, it would generally agree with that consensus. The long term charts are ominous, but does allow for more upside to challenge 5k SPX. 2024 started negative, which takes away the January trifecta per the Stock Trader’s Almanac. The Wayne Wayley TOY barometer will determine the probability of another up year. To simplify the TOY barometer, if January 19 records a close above 4514.02, this gives the SPX a bullish edge for 2024.

The primary observation is if the S&P 500 (SPX) can obtain new all time highs before TD Sequential reaches price exhaustion levels.

The four hour short term  SPX has already recorded a TD Buy Setup @9 which sets up at least some stabilization around current levels. 

If the SPX does not stabilize enough and the daily SPX continues to track the TD Buy Setup currently on count 4, next Thursday or Friday should see a bottom by recording a TD Buy Setup @8 or @9. Note next Thursday is December CPI release. If the market proves itself weaker than expected, the 2 day TDST Support at 4549.34 is the must hold if the 2024 bullish narrative is going to hold. Also note the vicinity of the TOY barometer 4512.02 level as mentioned earlier. 

The weekly recorded a TD Sell Setup @9 to close 2023. This just simply supports the early January selling.

The monthly SPX price flipped bearish at the end of October 2023. Currently it is reasserting itself, but TD Sell Countdown has an active TD Sell Countdown @9. If TD Sell Countdown 13 count becomes imminent, and trading at a new all time highs, TD Sell Setup can be the more dominant count. The main determinant is if the SPX can obtain new highs in the near future.

The quarterly SPX recorded a 13 termination count for TD Sell Countdown at the close of 2023. While that suggests a reversal is pending, TD Sell Setup @3 is still active and awaiting a bearish price flip. If TD Sell Setup stays active, the quarterly can record a 9 count at the end of 2024.

The yearly SPX represents the secular look. The active count is TD Sell Setup @9 + 3 to end 2023. The 9 count recorded at the close of 2020 is still viable and indicating the market is at secular price exhaustion. The TD Risk level at 5328.54 is the point of interest. Close above it to end 2024, and TD Sell Countdown will be entrenched. Close below it, coupled with a bearish price flip, is a warning going forward.

Monday, December 18, 2023

Market thoughts through year end. The S&P 500 (SPX) has an active TD Sell Setup @6, TD Sell Countdown @8. It can record a TD Sell Setup @9 on Wednesday, December 20th and possibly in conjunction with the TD Trend Factor target at 4788.29. This will be the ideal point for a short/intermediate top. However, the recent TD Trend Factor at 4560.12 corrected through time and price was noisy. The next iteration can equally be noisy due to year end fund flow machinations. 

For the start of 2024, the weekly SPX has an active TD Sell Setup @7 and TD Sell Countdown @10. A higher high print next week will met the minimum objective for price exhaustion. Assumption is if the December 20th scenario plays out, the ideal narrative would see the SPX break through all time highs currently at 4818.62 in the early days of 2024. At that time, fresh projections can be made for a more significant top. 

For a similar comparison, the Nasdaq ETF, (QQQ), has an active TD Sell Setup @7. TD Sell Countdown has recorded a 13 last Thursday, December 14th. Unlike the SPX, a QQQ TD Sell Setup @9 would indicate a short/intermediate top on Tuesday, December 19th. If the Q’s can at least breach new all time highs at 408.71 before it reverses, that will make a strong case for further gains down the road. With that base case, the Q’s should see any price selloff contained within 3%. It’s all about early 2024 where markets are expected to experience a market selloff gut check. The first few days of January will give more clarity if the DeMark indicators will recycle their respective counts.