SPX Update: Market Sleepwalking Until Jackson Hole?

The last couple days of price action have made my job relatively easy (for once); nothing's really changed.  A week ago, after the adjusted 1425-1430 target was reached and the market promptly turned, I wrote: 

I feel reasonably confident that an intermediate trend change is now underway. Obviously, trade back above the 1426 pivot high would suggest the alternate count is in play -- however, even if that were to be the case, at the bare minimum, I expect this high will hold for several sessions and lead to a decent correction.

 

Well, it's done that much.  Now it appears the market is in a holding pattern, waiting to see if Bernanke emerges from Jackson Hole and sees his shadow, in which case we get six more months of QE.  Or maybe that's the groundhog... I can never keep the two straight.

 

(If you're a new reader, the overall intermediate outlook is probably summed up best in this article.)

 

Anyway, there very little to add in terms of comments to the following charts.  The first is a long-term S&P 500 (SPX) chart.  SPX is trying to hang on to its recent breakout.

 

 

 

 

The next is a 30-minute SPX chart, and it outlines the key levels for the bulls or bears to claim in order for the market to begin making more headway.

 

 

 

 

Finally, the 5-minute chart suggests the market is undecided and has set itself up for either outcome.  There's one short-term bullish and one short-term bearish pattern evident on this chart, so the price action is more likely to run whichever way it breaks.

 

 

 

 

In conclusion, the key short-term levels which provide clues remain unchanged from Monday and are outlined above -- and there's been no material change in the intermediate outlook for quite some time.  I expected the last lunge higher and the subsequent turn; now I'm just waiting to see if the market is going to add confidence to the preferred count, or if the alternate count will play out instead... and at the moment, it appears the market is waiting too.  Trade safe.

 

 Reprinted by permission; copyright 2012 Minyanville Media, Inc.

No material change

Yesterday, SPX was about as exciting as reading a washing machine instruction manual.  No material change in the outlook.  Trade safe. 

SPX and AmEx: Key Levels to Watch

On Friday, QE3 hopes ran high and the market failed to reclaim any of the bears' key levels.  Until the noted levels are reclaimed, higher prices still remain possible.  The first key level for bears to reclaim is 1391, and the first key level for bulls is 1416.  S&P 500 (SPX) chart below:

The 5-minute SPX chart notes some near-term support and resistance, and the potential of a head and shoulders pattern.  The tail end of Friday's rally could be a small ending diagonal, with one final wave up to around 1414 still to come -- but as noted, sustained trade above 1416 would increase the bulls' prospects for a retest of the 1426 print high.

The decline is thus far ambiguous.

The final chart is American Express (AXP), which is a stock I just added to my watch list.  AmEx appears to be in the late stages of a triangle consolidation, and should offer prospects for a decent trade upon clean breakout or breakdown from the triangle.

In conclusion, there's been no material change in the intermediate outlook: barring QE3, it's expected that an intermediate top is complete or in process.  Over the near term, the key levels outlined should help provide hints to the market's next move.  Trade safe.

Reprinted by permission; copyright 2012 Minyanville Media, Inc.

SPX, Gold, NYA: A Brief Overview of the Long-Term Outlook

Well, so far, so good on my call for a top in the SPX 1425-1430 range, and I hope readers were able to take advantage of that.  The market has lost a clean 26 points since then, and it looks like there's more downside still to come.

I'm going to get right into the charts, since I had a server crash yesterday, along with a number of pressing personal issues, and simply don't have time for a verbose article.  The chart annotations contain most of the relevant info.

The first chart I'd like to share is my long-term interpretation of the NYSE composite (NYA).  NYA is an excellent representation of the total market, as opposed to the Dow Jones Industrial Average (INDU) or the S&P 500 (SPX), which contain only the "best of the best" stocks.  NYA is more like the average person's "balanced" portfolio.

This chart helps provide some perspective on my current view of the big picture.

Next is the 30-minute SPX.  My standing bearish 40 point sell trigger has finally become active.  Trade back above the black trigger line would suspend the target, but trade above 1426 is required to completely negate it.  The next short-term target is 1386-1390.

A quick look at the very short-term SPX:

The Dow Industrials (INDU):

Finally, a quick update on gold, which is well on its way to reaching the target for the trade trigger I published a couple months ago, and which became active in July.  I would suggest watching the high 1600's and the rising blue trendline (which is currently crossing about 10 points shy of the trigger target) as possible resistance.

In conclusion, I probably couldn't have caught the recent top much better than the 5 point range I provided on Tuesday -- so why should I have any caution at all?  Well, sometimes the patterns work perfectly over the short-term, then mutate into something unforeseen on the next larger timeframe. For this reason, I have given a brief overview of the long-term, but I'm holding off from getting too focused on longer-term targets until there's more confirmation in the charts.

Just to play devil's advocate, I'll lay out what I believe would be the best-case scenario for bulls: over the short-term, it appears we're only about one-third to half-way through the current decline.  Over the intermediate term: if bulls are somehow able to reverse the decline and muscle back over the 1426 print high, then the next upside target for a long-term top would only be the mid-1400's -- so, barring QE3, I see no reason to be long-term bullish here. 

That's best case for the bulls, and that potential currently appears to be the underdog.  The market so far seems to be on track with my prior, and more-bearish, intermediate projections -- and there is currently no reason for me to doubt those.   Trade safe.

Reprinted by permission; copyright 2012 Minyanville Media, Inc.

Forum Crash Earlier

The forums crashed earlier, due to the site exceeding the bandwidth available under my "unlimited bandwidth" web-host contract.  I know, it didn't make any sense to me either.

But this is the price of fame, and we've just become too popular to handle our own traffic.  :)

Anyway, if you got the "forbidden" message, it wasn't because you were banned (although, let's face it: you probably should be.  Troublemaker!), it was due to the server crash.

I had to have an IT guy fix it (everyone say "Thanks, Kyle!"), but it should be back up and running now.  I've been assured that it should work from now on.  At least until it doesn't.  But we think we fixed the problem, so if you were unable to access the forums earlier, you should be able to do so now.  :)

Playing catch-up (ketchup?) now on Friday's update...

No Material Change

I've been trying to stick to finding at least one random day each week where I take the night off -- and this week, that's tonight.  No material change in the outlook from yesterday.

Just so you have something to look at, below is a chart of one of my proprietary signal indicators, with the components removed (I can't give away everything for free!).  This series of indicators issued a confirmed sell signal yesterday.  I have highlighted the past instances where the signal triggered, so you can see how well it's performed over the years

The Fed minutes were released on Wednesday, and there was lots of buzz about QE3.  After reading through the minutes, it's pretty obvious why everyone was so excited.  Buried within the document, I found this very revealing series of "strong statements" from the Fed:

Given the apparent slowing in the economic data, The Fed stands ready and willing to be able to be willing to be at the ready; whichever is greater. The Fed has many tools at its disposal (though, to be honest, Ben is all thumbs!) and is of course able to use these tools to accomplish things such as being ready to be willing.

The Fed is not afraid of an ecomonic slowdown, and is fully able to take whatever action it feels is appropriate, assuming that Ben doesn't show up drunk to the next meeting (again). The Fed wants it noted that it is not currently willing to take inappropriate actions unless it is deemed appropriate to do so -- in which case the Fed stands at the ready.

Also, we're not certain if we mentioned this yet, but the Fed has a lot of tools, some of which are almost certainly appropriate -- though it should be noted that we'd need to examine these tools in more detail first (which we are willing to do) just to be sure the tools are ready, and that we are able to use said tools, Good Lord willing. So say we all!

Trade safe!

Is the Rally Over or Just Due for a Breather?

On Monday, I laid out the intermediate bear case and noted that the wave structure suggested there was likely to be one final wave up over the short-term.  Then, based on Monday's price movement, I adjusted the target for that final wave in the S&P 500 (SPX) to 1425-1430 (contingent on trade above 1419.59); and also published a target of 3100 for the Nasdaq Composite.

In Tuesday's session, the SPX hit 1426.68 and reversed; and the Nasdaq hit 3100.54 and reversed -- and in a market like this, that's not a bad day.

Now the question becomes if the entire intermediate rally is, in fact, complete.  I favor the view that it is, for a number of reasons, but in this article I'll discuss some of the pros and cons for that view.

A series of historical data points which suggest an intermediate turn is underway were laid out in Monday's article, and it's worth visiting if you missed it, since I won't rehash that data here.  These data points are definitely a "pro" to the overall bear case, but are not exact short-term timing measures.  As such, they tell us that a turn is very likely to be in play over the intermediate term, but they don't really help us figure out the short-term: i.e.- if that turn happened yesterday, or if it will happen a couple weeks from now.

The chart below is a point in favor of the intermediate turn having peaked.  The wave structure that shows in the Dow Jones Industrials (INDU) counts very well as a complete wave.

The Nasdaq Composite (COMPQ) is slightly more ambiguous, particularly on the daily level (not shown), and the daily chart of the Nasdaq 100 (NDX) in particular would probably be considered a "con" to the intermediate turn having already occurred (chart follows).

Below is the Nasdaq 100 (NDX) daily.  This chart looks like a con to the idea that the final top is in, though it's also possible that NDX will go on to make a new high, and indices such as INDU will not.

The SPX chart outlines both possibilities, and some key levels to watch.  The weakness of the alternate count's third wave has to be considered a "pro" to the idea that the top is in. 

Another "pro" not shown was discussed yesterday: the NYSE Composite (NYA) reaching, and so far failing to overcome, intermediate resistance.  On Tuesday, NYA was rejected directly at the intermediate trendline discussed yesterday.

In conclusion, the rally turned perfectly from within Tuesday's final adjusted target zone, and I feel reasonably confident that an intermediate trend change is now underway.  Obviously, trade back above the 1426 pivot high would suggest the alternate count is in play -- however, even if that were to be the case, at the bare minimum, I expect this high will hold for several sessions and lead to a decent correction.  As the assumed decline unfolds, I'll watch the structure and the key levels, and that will help me either add confidence to, or subtract confidence from, my view that Tuesday's swing high was all she wrote for this rally.  Trade safe.   

Reprinted by permission; copyright 2012 Minyanville Media, Inc.