Tuesday, October 15, 2013

The government follies continue. How can anyone expect any kind of grand bargain when Congress cannot even agree on a very temporary extension of the debt ceiling and fully reopen the government? This could conceivably go on until the next presidential election and the Fed will add another few trillion to the balance sheet. The “buy-the-rumor, sell-the-news” case has gained some momentum among the market-watchers and that is still the base case. 

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S&P 500 (SPX) SHORT TERM OUTLOOK: NEUTRAL

The TD Buy Setup on the SPX 4 hour chart is nearing completion. A high print that meets or exceeds SPX 1711.57 will ‘perfect’ the setup and that will meet the minimum level for price exhaustion. For practical purposes, the outlook is neutral but a close today below SPX 1703.08 is the official level for a neutral outlook. ImageImage

The 2 hour SPX chart has already reached a 9 count TD Buy Setup and the 4 hour SPX chart is almost at completion. These confluences are enough reasons to refrain from being long at this point. 

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S&P 500 (SPX) SHORT/INTERMEDIATE TERM OUTLOOK: NEUTRAL

A close below SPX 1692.56 today will indicate the the bears are starting to reassert themselves again. Image

While technically the TD Buy Setup on the SPX daily is still active above 1692.56, it is more practical to push ahead one day to account for a potential selloff. If there is still fuel for the SPX to power higher, it should receive support from the SPX 4 hour chart by closing above 1703.08 today. A close above 1703.08 keeps the bull case alive up to a completion of either the 9 count TD Sell Setup or the 13 count TD Sell Countdown on the daily chart. 

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S&P 500 (SPX) INTERMEDIATE/LONG TERM OUTLOOK: NEUTRAL

Same as last week. Switch to bearish if SPX closes below 1687. Also will have to come to terms of another bullish initiation if the weekly SPX closes above 1711. (updated on October 11th)

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S&P 500 (SPX) LONG TERM OUTLOOK: NEUTRAL

Market is extended and within’ the risk level parameters of the 9 and 13 TD Sequential clusters in April and May. (last updated September 30th)

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STOCK SETUP: BENEFIT FOCUS (BNFT)Image

Benefit Focus is a recent cloud computing IPO with speculative potential. The business model is similar to Salesforce.com (CRM) except BNFT deals with employee benefit solutions in the cloud whereas CRM deals with business relationship solutions in the cloud. 

From a technical perspective, there is very little data points to draw from but it does comply technically. From the opening first day pop, BNFT retraced to the 100% Fibonacci projection in a typical Elliott A-B-C zig zag right at $37.50 and bounced in a meaningful way. Yesterday’s pop was good enough to produce a TD Bullish Price Flip and it is currently trading above the trending 8 day exponential moving average. If BNFT holds the 8 day EMA and the TD Buy Setup remains active on a closing basis, those two factors will indicate the trend is intact. If it loses either of the two factors, BNFT may not be ready for prime time just yet and patience should be allowed to wait for a better setup. Note that BNFT’s liquidity is thin so wide-outsized swings are normal.  

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