Monday, April 7, 2014

Checking for the asian market response from the US non-farm payroll release last Friday, the Shanghai market was closed due to Tomb Sweeping Day. For those unfamiliar with this holiday, Tomb Sweeping Day is similar to All Saints’ Day or Mexico’s Day of the Dead, and it’s a national holiday. Every year, China’s government creates a labyrinth of holiday scheduling that requires workers to “make-up” their vacation day by working on a weekend. Not a popular scheme as one would expect. However, there is a voting process called “public consultations” as a method to change current programs. Believe it or not, the polls reported to be in favor of the current structure of “make-up” work. Opaque government reporting still reigns. 

ImageImageSince the iShares Emerging Market index (EEM) recorded a qualified TD Sell Setup last Friday, and a retracement is expected, the overall bullish determination is the depth of the retracement. Although the TDST level resides at 39.36, the 40.35 polarity level takes on more significance if the EEM can hold above it. Note the EEM and S&P 500 rolling 12 month comparison chart showing a positive gain for EEM as the percentage return gap closes, providing the notion of rotation in favor of the EEM. 



Bearish if SPX intraday trades below 1869.86. 

ImageImageThe neutral outlook is more of a formality, judging by the action of last Friday’s selloff. The next test will come around the SPX 1850 where the 2 hour and the 4 hour timeframes are situated. It would be natural to see a bounce there, but as long as TD Buy Setups reman active, there is no reason to change the bearish bias.  



Switch to bearish if SPX cannot close above Friday’s close at 1865.09.

ImageThe TTM_Squeeze indicator is technically back in neutral indicating the Bollinger bands are back inside the body of the Keltner bands. The daily SPX has not recorded a 9 count TD Buy Setup in two years. With the TTM_Squeeze momentum now turning back to the downside, a break under SPX 1840 may just be the impetus for a TD Buy Setup, rather than another recycle. 



Flip to neutral if SPX closes above 1841.13 at the close of April 11th.

ImageImageImageImageBoth TD Sell Countdown and TD Sell Combo are still one count short of a “13”, but the active TD Buy Setup takes precedence. “13’s” have already been recorded on the Nasdaq and the Russell 2000, but the Dow is still locked in trading range as stipulated by the TTM_Squeeze. This is backing up the rotational theme for equities.



Switch to neutral if all of the following occurs: SPX closes below 1848.36, Dow closes below 16457.66, Nasdaq closes 3771.48, and Russell 2000 closes below 1163.64 (updated April 2nd).




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