Monday, February 29, 2016

Screen Shot 2016-02-27 at 9.12.44 PMThere are a few asset management firms calling emerging markets as the “trade of the decade” based on valuations. See Bloomberg article here: http://www.bloomberg.com/news/articles/2016-02-26/trade-of-decade  From a TD perspective, there may be some truth to that. From the monthly chart of the iShares Emerging Markets ETF (EEM), a qualified TD Buy Setup @9 will likely record this month. Combined with the true low of the active TD Buy Setup @9 is trading above the 19.86 TDST Support level, further losses appear to be contained.

Screen Shot 2016-02-27 at 9.39.59 PMOther support for the EEM may come from some upcoming price exhaustion points on the monthly Light Sweet Crude (/CL) oil chart. The current month already shows a ‘perfected’ bar 8 of the TD Buy Setup. Another lower close and lower low will for the month of March will set up a TD Buy Setup @9 and TD Combo Buy @13. This increases the chances that crude will begin the bottoming process this year. The best value looks to be between 20-30, and anything under 20 can be considered oversold.

Foe the S&P 500 (SPX), there is nothing groundbreaking on the calendar maybe except for the manufacturing PMI from China and Friday’s jobs report.


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

Neutral if four-hour SPX closes below 1933.47 mid-session or closes below 1951.62. 

Screen Shot 2016-02-27 at 8.55.36 AMUsing the 1934.47 TD Resistance level as a bull/bear polarity level, all bearish price flips below 1934.47 are bearish, and bullish price flips are neutral. Above 1934.47, all bearish price flips are neutral and bullish price flips are bullish. Note with this strategy, higher than normal turnover may be experienced.


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

Neutral if daily SPX closes below 1921.27.

Screen Shot 2016-02-27 at 9.18.45 AMThe goal here is to at least test the 2078.36 TDST Resistance level. The inability to do so will translate into an uncommitted market unless 1850.61 is breached.


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

Bearish if weekly SPX closes below 1850.61 on Friday, March 4, 2016.

Screen Shot 2016-02-28 at 8.12.47 PMThere is not enough there to say the worst is over through any type of capitulation. Therefore, the hold and wait stance remains.


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

Bearish if monthly SPX closes below 1850.61, the weekly TDST Support level on Monday, February 29, 2016. 


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6 Responses to Monday, February 29, 2016

  1. alby says:

    Finished Jason Perl’s book a few weeks ago and digging further into DeMark’s work.

    Really enjoy your postings and observations, has been very helpful to aid in the learning curve. Per some of your commentary in older posts I have implemented SequenceCounter into charts and it appears to be a good replication of TD Setup and TD Countdown.

    Did you code in the TD Combo and TDST Support/Resistance and countdown status as well? I’m trying to expand the TOS offerings to at least accommodate those extra strategies/parameters or is there a better way to get access to the stuff you discuss and point out so I’m on the same page?

    Thank you for sharing via your blog

    • Art says:

      Thanks! There is a lot to absorb in that book. Yes, all the Counts, TDST Support/Resistance, and more are coded into TOS. However, it is a visual mess with endless dashed lines . Therefore, what you see is the more reader friendly version that I manually input.

  2. alby says:

    Hello again. Nice call on EEM trade, I liked the way you broke it down and also took a more long dated approach using the TD Buy Setup on the monthly. It’s kicked off March in very nice fashion.

    Just so I understand the mechanics as decribed in Perl’s DeMark Indicators book:
    – the stop loss is the range of lowest low occuring in bar 8 which is $3.89
    – less that from the low of $27.61 gives a stop loss of $23.72
    – given the 02/29/16 close of $30.32 and assuming that was also entry gives ($30.32-$23.72)/$30.32= 0.2176 or 21.76% stop loss
    – you also point out the $19.86 TDST support as an additional way to define the risk and I understand the derivation of that number

    Obviously, taking any trade has inherent risk, this one appears to have 21% risk to the downside or is there another way to interpret this? Thanks

    • Art says:

      Yes, it’s all correct. You can take the book approach if you are working within the confines of the monthly chart. But the daily chart true high/low is .85. Personally I prefer using the absolute low, which is 27.61. A trade below makes it suspect, and for a close below 27.61, I just call it a day. It’s just my personal style.

  3. alby says:

    Thank you, Art. 8.9% risk is much more logical and speaks to the pattern being suspect as you point out. In flipping through charts in the past few days, it appears if the set-up fails, it fails. The subtleties of intersection and ‘Trading the 9s’ can also help to identify better entry points. In my experience in general, when a trade works, it generally doesn’t create a lot of stress and simply plays out (like the EEM trade). Appreciate your time

  4. Gary says:

    Art, would be interested in DeMark analysis of interest rates at your convenience.

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