Monday, October 20, 2014

Screen Shot 2014-10-19 at 10.11.29 PMThe chart above is the monthly S&P 500 (SPX) and the TTM_Squeeze indicator, which represents momentum and the Keltner channel intertwined with the Bollinger Bands. In a normalized trending market, the Bollinger Band will always trade outside the Keltner Channel. This is represented on the TTM_Squeeze indicator as the horizontal green dots. However, what makes this indicator interesting are the red dots. That’s when the Bollinger Bands trade inside the Keltner channel. These occurrences are made possible by low volatility and trading ranges. When the Bollinger/Keltner component flashes a red dot, a potential volatility squeeze is in the works, which can trigger major bull and bear runs. The momentum component of TTM_Squeeze is represented by the vertical histogram. Similar to standard chart reading, momentum readings can come with divergencies. The current prognostication is the SPX is outlining a long term trading range based off the momentum component. It is currently at an extreme, but it has not yet shown any negative divergence. This supports the idea that the SPX will see new highs after it works off the overbought excess.


Switch back to bearish if SPX closes below 1861.96.

Screen Shot 2014-10-19 at 8.51.00 PMScreen Shot 2014-10-19 at 9.07.08 PMThe short term (and daily) SPX price flipped bullish and now it’s time to attempt to to see if this just a bullish reflex from oversold conditions or something more. If this market is still super bearish, it should not go beyond the 15 and 30 minute TDST Resistance confluence as shown by the 2 hour SPX chart. What is more probable is for the SPX to make an attempt to normalize by at least reaching the top of the down channel as shown on the 4 hour SPX. Observing the TD counts as the market unfolds will help determine market direction.


Change back to bearish if SPX closes below 1861.96, same as Short Term Outlook.

Screen Shot 2014-10-19 at 9.19.46 PMExpectations are not high for the SPX to re-start a significant rally, but it could be tradeable.


Neutral if SPX closes above 1982.25 on October 24, 2014. 

Screen Shot 2014-10-19 at 9.33.29 PM Screen Shot 2014-10-19 at 9.34.34 PM Screen Shot 2014-10-19 at 9.36.24 PM Screen Shot 2014-10-19 at 9.37.54 PMOn the weekly charts, expectations are high that TD Buy Setups will be fulfilled on the major indices. Note that all the indices tested their respective TDST Resistance levels and weekly closes below those levels will enhance the probability equities will continue to look for a bottom. Continue watching the Russell 2000 (RUT) as a leading barometer. A weekly bullish price flip above 1119.33 on the RUT can change the landscape from bearish to bullish.


Neutral if SPX closes below 1960.23 on October 31, 2014. 

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One Response to Monday, October 20, 2014

  1. tradetotravel says:

    Art, Great chart at the top of the TTM_Squeeze of the S&P. Tells me to stay bullish long-term – i.e. don’t buy black swan puts:)

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