Wednesday, January 29, 2014

Continuing on yesterday’s post about Tom DeMark’s flight path for the S&P, both the futures and the cash market recorded up, green candles indicating some buying interest. The next step in the playbook is to key on his levels (1762.20 for the futures and 1767.99 for the cash SPX). This is the primary support area of concern. What is disturbing is how quickly risk aversion took hold after Turkey’s mind-blowing 425bps rate hike to 12%. Turkey took a page from Mario Draghi’s “whatever it takes” guide to central banks which failed to alleviate pressure on the emerging markets and this has to weigh on the minds on the FOMC for today’s release. More on the technicals below. 

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

Back to bearish if SPX trades under 1767.99

ImageThe SPX rally was just good enough to reverse the TD Buy Setup @7. The bounce may be short lived now that bulls may be recognizing they are no longer in control. Trading above the 15/30 minute TDST levels between 1804.50 – 1806.02 will give pause to the bear case.  

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

Breaking under SPX 1767.99 (Alternatively DeMark’s 1767.20 level) will allow the selling trend to continue.

ImageImageImageStaying with the thoughts of Tom DeMark, both the S&P Futures and and the S&P Cash have recorded an up candle. Selling below the 1762.20 level on the futures market and 1767.20 on the cash market will mark a clear path for the bears. In other words, breaking under those key levels will likely record a TD Buy Setup @9 and there is a decent chance TD Sell Countdown will follow. Note the Dow is very close in breaking its own TDST Support level at 15,808.92. 

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

Neutral if SPX weekly closes above 1842.27, most recent high close (updated January 27th.)

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

Switch to neutral with a January close below SPX 1681.55. After January, stop levels will be raised in accordance to price flip levels. (updated January 2nd)

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EQUITY SETUP UPDATE: IBM

Looking for a break under 172.73 to keep the long term sell intact.

ImageImageImageAn update on IBM as it continues to deteriorate fundamentally. There is a case of competing timeframes from the daily and the weekly. Referring to the daily chart, IBM rallied hard enough in late December to complete a TD Sell Setup @9 above the TDST Resistance level at 184.99. This gave some pause about how high IBM can rally but the recent earnings announcement changed all that and IBM is about to challenge the 172.73 TDST Support. Breaking this prior to recording a TD Buy Setup @9 will keep the long term sell intact. Glancing to the weekly chart, it has already broken the 179.32 TDST Support for the third time and expectations are high it will break the lows at 172.57, which incidentally, it’s almost identical to the daily TDST Support at 172.73.  

 

 

 

 

 

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