Friday, February 7, 2014

ImageNon-farm payrolls printed a gain of 113,000 but there was 75,000 upward revision to the prior month. Whether the miss is weather related or the product of slow growth to come, the long term unemployment for persons out of work for 27 weeks or more, continues to drop by printing the second consecutive drop under 4 million. This is an important metric as the new Fed chair, Janet Yellen, is focused squarely on long term unemployment and as the line squiggles lower, her policy leadership becomes a bit easier to navigate.

It is clear the S&P 500 found an interim bottom, and rather than draw downside targets, a couple notable upside targets are notated on the daily charts in the Short/Immediate Outlook using DeMark’s TD Trend Factor and TD Propulsion. For a quick primer, TD Trend Factor and TD Propulsion are similar in that they were developed using Fibonacci ratios. When they are used is different as TD Trend Factor is utilized only when the market rises or falls by 5.556%. TD Propulsion requires a 23.6% retracement from the previous low to high or high to low. TD Propulsion is considered a “warm” target as it provides an initial stopping point before a reversal or resumption of a trend. TD Trend Factors are “hard targets” and sometimes possess uncanny predictability for reversals. Often Tom DeMark will publicly state a target right down to the hundredths decimal place. The source of the target is likely his TD Trend Factor. 

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

Bearish with a close below 1752.06 mid-day or 1751.79 end of day

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There is a bullish case and goes as such: If the 2 hour SPX chart records a TD Sell Setup @8 (the maximum count at the end of the day) above 1786.15, then there will consideration to go long next Monday on a brief retracement. Alternatively, if the SPX clears 1793.88 in the first half of the trading day, that will also signal long. 

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

Same as Short Term Outlook, flip to bearish with a close below 1751.79.

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On the SPX, TD Propulsion and TD Trend Factor have been notated. The TD Propulsion level at 1786.15 represents the stopping point where the bull/bear decision is made. If 1786.15 is taken out, the next target is TD Propulsion Exhaustion at 1834.38, the second phase of TD Propulsion. Take note that TD Trend Factor is almost directly aligned with TD Propulsion Exhaustion at 1834.55. As markets play out, these targets will be taken in consideration in relation to TD Sequential. 

The other major index charts are shown and the two standouts are the Dow and the Russell 2000 (RUT). While the SPX, QQQ, and the RUT share similar counts, the Dow seems to be the best barometer in terms of the bounce right at the TD Buy Setup @9. For the RUT, when it broke under the 1107.05 TDST level on TD Buy Setup @1, this provides indication of further losses. It is an anomaly if the RUT recovers above 1107.05 and does not break below it again. 

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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

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

 

 

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2 Responses to Friday, February 7, 2014

  1. Liam Hawksworth says:

    so, are these targets on a closing bases or intraday?

    • Art says:

      I use them on a closing basis unless stated otherwise. Intraday is challenging since it requires explaining all the nuances in real time (i.e., the status of short duration TD Sequential or cross market behaviour). Having saying all that, depending on your risk profile, you can use them as intraday targets as a method to add, cut back, or initiate positions.

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