Wednesday, October 16, 2013

It’s good news that a debt default has been averted but it’s a lack of defeat than a victory. While a stopgap deal from the Senate is nearly complete, House Speaker Boehner may have committed Seppuku as it is better to be a traitor to the hardliners in his party than risk default. While the base case is for the market to break down when a debt ceiling deal is done, one technical criteria was for the SPX to stay bounded around the SPX 1710 area. If the market closes around the highs of the day, the proposed break down – small or large may be delayed until the TD Sequential on the daily chart is played out. 



There is room for more SPX gains as suggested by the 2 hour chart but will switch to bearish with a close below 1710.14ImageImage

It’s problematic to see the 4 hour TD Sequential chart operate in a void since the highs made back in September 19th. The situation now is the same. However, if there is breakdown between now and the close, that will be evidence the euphoria was short lived and will flip to bearish. 



A close above SPX 1710 area will keep the daily TD Sell Setup active and suggest an potential breakdown will not be immediate.   Image

The VIX collapsing almost 20% and the high beta indices like the Nasdaq and the Russell 2000 running to new highs are bullish signs. This kind of initiation would make more sense if it was off the heels of a 10% correction so there is suspicion the rally is in the mold of the blow off type rather a lasting one. If the market remains bullish, the first test to the bulls can come together as soon as Monday when TD Sell Setup or TD Sell Countdown come around to their respective price exhaustion markers. 



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)



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)



A pair of 13’s adding to resistance on the daily chart. 


It has been about two months since the last Apple update when TD Sell Countdown was initiated. The path was not smooth as there were a couple of reversal candlestick patterns. Nevertheless, Apple recovered without recording a 9 count TD Buy Setup which keeps the TD Sell Countdown active up through today. Today will record simultaneous 13’s which originated from separate TD Sell Setups. The pair of 13’s signals potential price exhaustion on the daily and from this vantage point, Apple is more likely to continue basing than break below old support at the 390 area. If there is still strength in Apple, a close above 507.74 after a 9 count completion of the currently active TD Sell Setup is a good clue of further gains.

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