Monday, May 19, 2014

ImageThe above year-to-date daily Amazon (AMZN) chart is representative of many on-going number of Nasdaq stocks at daily selling exhaustion levels. Without any further selling catalyst, these stocks and the weekly Russell 2000 (RUT), currently on a “9” count of TD Buy Setup, could initiate some upside starting this week, ideally after a few days of selling. We’ll take it day-to-day as the most puzzling part is how the Nasdaq and the RUT will reconcile with the SPX, as it is already hit upside exhaustion levels. 


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

Back to neutral again if SPX cannot close below 1870.74.

ImageIf the SPX can manage a hard selloff, then Tuesday or Wednesday can mark a qualified TD Buy Setup. 


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

Switch to neutral if both the Nasdaq closes above 4057.12 and the RUT closes above 1103.93.

ImageThe volatility squeeze component of the daily TTM_Squeeze is showing red again as the Bollinger Bands has re-entered inside the Keltner channel on the SPX. Other indices showing potential volatility squeezes are the Dow and the Nasdaq. Coupled with the volatility squeeze on the weekly charts, whatever the next market bull or bear news catalyst, the impact can be large. 


S&P 500 (SPX) INTERMEDIATE/LONG TERM STATUS: NEUTRAL

Switch to bearish if weekly SPX closes below 1863.40 on May 23rd.

ImageImageImageImageRECENT: Both TD Sell Countdown and TD Combo Sell recorded “13’s” on the same weekly bar, ending May 2nd, indicating a solid warning signal of price exhaustion for the SPX.

CURRENT: The response to the recent “13’s” has been a pair of indecision doji candlestick patterns. 

PROGNOSTICATION: The implications are challenging since on one side, the SPX and Dow have completed their exhaustion signals and waiting for a catalyst to take them lower. On the others side, many widely followed stocks in the Nasdaq index have hit daily “13’s” and have held up so far. Also the RUT will be trading on a “perfected” 9 count of TD Buy Setup. It seems unlikely the Dow and the SPX will trade lower, while the Nasdaq and the RUT come up with relief rallies. Therefore, additional choppiness may be in order. 


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

Flip to neutral if the SPX does not trade above 1897.28 during the month of May and closes below 1836.27 on May 30th, the 8 month MA. Alternatively, flip to neutral if SPX closes below 1782.59 on May 30th (updated May 5th).


 

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