Thursday, February 6, 2014

There has been plenty of “doom” talk out there and some of SPX numbers that are being thrown out are a bit dire. Yes, there are plenty of bearish settings that can draw the S&P 500 towards 1100, but the markets will get there in stages. While Tom DeMark’s 1929 analog is amusing and scary at the same time, there are two sides to the coin and so much can happen between SPX 1850 and 1100. 

Getting back to Tom DeMark’s step-by step “unravel”, yesterday closed with a down day, but the SPX opened up today, which halts his proposal of market beat down. But until every nuance is refuted, expect DeMark to stick with his 1929 analog. 

The TD Buy Setups on the Nikkei, FTSE, and DAX are doing what is promised by stabilizing. In fact, the European markets are rallying on the back of the ECB rate non-decision and could produce TD Price Flips soon. Another 9 count is surfacing on the iShares Emerging Markets EEM, which is covered more in depth below. For the US markets, tomorrow’s jobs report is setting up a binary event if the number is too hot, above or below consensus. A short term rally is just as plausible as continued weakness. If there is more selling, some S&P price projections will be drawn out on the daily charts.   



Switch to neutral if SPX closes above 1768. 

ImageImageYesterday’s close price-flipped the 4 hour SPX from a TD Sell Setup @5 to TD Buy Setup @1. This takes away the potential Friday morning drop and a subsequent closing recovery as suggested in the previous post. Now the SPX is binary and there are risks to the upside as much as the downside for today and Friday. The 2 hour chart confirms this as there is enough sideways action for the SPX to resume selling as much as the TD Sell Countdown @13 marking the low on February 3rd. 




Flip to neutral if daily SPX closes above 1768, the support/resistance polarity level (updated February 4th.)



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



Flip to neutral if SPX (monthly) closes below 1756.54 (updated February 3rd.)


ETF SETUP UPDATE: iShares Emerging Markets Index (EEM)

TD Buy Setup @9 for the weekly setting up a bounce and possible short/intermediate bottom.

ImageImageSince emerging markets are at the center of universe, an update from the January 24th post on EEM is appropriate, especially in light they will be recording a weekly TD Buy Setup @9 this Friday. The weekly chart follows TD Setups rather nicely and if EEM closes above 38.02 TDST Support, a clean Hanging Man candlestick pattern will form, and EEM should start showing signs of stability. Closing under the TDST Support level will bring some drama and in that case, the daily charts will be used to hone in for a potential tradable rally. EM outflows has been experiencing huge weekly and monthly outflows making this contrarian play more enticing.





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