Charts & Commentary September

s&p 500 daily chart

09/30

Monthly Charts are updated, i.e. S&P 500 is consolidating up against trendline resistance, it closed at nearly the same level as in August. Volatility – VIX monthly closed at trendline support. 30y US T-Bond Yield is pushing higher. Gold still trades right below larger trendline resistance.

Light Crude closed up against trendline resistance. Real Estate fell below trendline support. The US Dollar is still stuck between trendline resistance and first Fib. support.

The Apple stock broke out from a Triangle pattern to the upside. Facebook is still trading within a long standing bullish channel from 2014. Amazon once again reached long standing trendline resistance.

Short term, as the S&P 500 hourly chart better shows, a series of  wave 1-2’s lower is the best interpretation at the moment. The many lower highs from the August peak have built up quite stiff resistance, so if the market turns out to be strong enough to overcome this area, this could mean it wants to go for a test of that peak. This strong trendline resistance is up around 2,175 for Monday’s trading session. Important support comes in at 2,151.

The market is getting closer to the Apex of two converging trendlines, so there is not much to comment about the current market situation, until a directional breakup or breakdown is seen, which will give a clue as to where the market is heading thereafter.

S&P 100 BPI (Bullish Percent Index) daily Sentiment chart.

The Neural Net System turned Long on the OEX weekly

Dow 30 | Dow Transport | OEX | Nasdaq | VIX daily | Monthly Charts
NYSE A/D line | Put/Call Ratio | McClellan 21 EMA | Carlucci (?)
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09/23

A few observations after this trading week:

The Neural Nets system is still Short on the S&P 100, despite the stock market advance this week.

The S&P 500 rebounded into the Triangle but with the upper line still holding, forming a third lower high from the August top, a pattern which can often lead to a sharp sell-off, in a potential wave 3 or c, now that a wave 2 or b possibly has reached it’s termination point, as better seen on this S&P 500 hourly chart.

The Dow daily triangle is still intact though, after a second test from below.  So we could see these markets going for a test of trendline support next week.

VIX daily once again reached strong support and reversed Friday. Any break of the 12.65 barrier next week, would clear the horizon and increase the odds of a stock market decline towards trendline support.

This view is supported by the still bearish NYSE Summation Weekly trend indicator, despite the stock market rebound this week.

 

09/16

As suspected it could, a sharp reaction up from the first Fib. support area, brought prices up for a test of the broken Triangle area, before once again heading lower.

As the S&P 500 hourly chart shows, the price action throughout this week is probably forming another Triangle pattern. This consolidation phase could go on until news connected with the Sept. 21 FOMC meeting comes out. So waiting for a directional breakout from this triangle for a signal of where the market is heading next.

OEX weekly momentum is still in bearish mode but seems to prepare for a reversal, at mildly oversold levels. Strong support is down at the 932 level.

S&P 100 BPI (Bullish Percent Index) daily Sentiment chart.

The Neural Net System is Short on the OEX weekly.

Dow 30 | Dow Transport | OEX | Nasdaq
NYSE A/D line | Put/Call Ratio | McClellan 21 EMA |Carlucci (?)
NYSE Summation Trend: Daily | Weekly | Sentiment
Free Elliott Wave Tutorial

09/09
The market finally came out of it’s sleepy state, after the ECB’s refusal to promise additional Bond purchases and a worried member of the FOMC (possible rate hike in Sept.?) spooked the market Friday. Volatility exploded to the upside and investors dumped Bond market positions ( TLT weekly chart ), pushing Yields higher.

So the S&P 500 had no choice and broke out sharply from the Triangle to the downside and on above average Volume, revealing institutional participation in this sell-off. The lower part of this triangle has now instead become a strong resistance area. So any reaction back towards it + ideally an overbought RSI-2 extreme, would be an excellent area for a low risk, high reward Short trade entry.

Because of this sharp sell-off, RSI-2 has reached an oversold extreme, so a price reaction up from the first Fib. support level is not ruled out, if the next daily candlestick is able to close above it. Any clear close below it, could mean the market is targeting either the 50% or the key 61.8% Fib. area, before reversing.

A zoomed in version of Friday’s price action can be seen on this hourly chart.

OEX weekly momentum has yet to reach an oversold condition. Strong support comes in at the 932 level, which most likely will be tested next week.

S&P 100 BPI (Bullish Percent Index) daily Sentiment chart.

09/02
Monthly charts are updated. S&P 500 monthly trendline resistance is still intact after the August trading month.

It tried to overcome it but sellers came in late in the month and pushed prices lower, resulting in a Shooting Star looking candlestick. This is a candlestick pattern which often marks market reversals, especially when found up against resistance.

In addition, BPI Sentiment ran into major resistance Friday. With overbought S&P 500 monthly momentum at the same time close to entering bearish mode and RSI-25 flashing a bearish divergence warning, the odds are increasing for the stock market pullback scenario this Fall. Even more when a Momentum bearish mode is seen, sooner or later.

The Real Estate market, using the Dow Jones REIT index as a proxy, pulled back in August, after an intra-month test of channel resistance. However, it closed for the month at the trendline coming in from 2007. More weakness towards channel support could be the outcome, if it fails to hold.

The Oil index shows a still intact bearish channel, after a test in the August trading month. This market has been moving sideways in the last 4 months. So any break below the June pivot low, would once again indicate trouble for this market. A positive breakout (closing basis) from this channel, on the other hand, would be bullish for Oil, long term. So waiting for a directional clue here.

Gold monthly closed down in August, after making a pullback from trendline resistance. This could be the end of wave a or even a full a-b-c corrective phase to the upside could be over. If a wave b is underway to the downside, a typical target would be the 50 – 61.8% Fib. retracement area, calculated from the wave a advance.

Junior Gold Miners ETF GDXJ weekly seems ready for another push higher, after it formed a bullish Pin bar this week, on heavy Volume (buyers coming to the market) and at trendline support. The August high should be the first significant resistance area, so it’s a possible target, mid term.

The Bond market, TLT monthly is deteriorating, after it reached major trendline resistance in July. At a minimum, it should go for a test of trendline support in the coming months, which would lead to higher interest rates.

A look at the 30y T-Bond Yield TYX monthly gives support to this view, with an oversold and ‘bullish divergent’ RSI-25 and also a bullish Falling Wedge formation.

A test of upper wedge resistance is a likely outcome, in the coming months. Any breakout from it would confirm a larger bottom in place and a further advance towards the trendline coming down from the 80’s is not ruled out. The August month was an ‘Inside Month’ trading within the range of the July trading month, reflecting indecision.

The US Dollar pulled back intra-month but managed to close higher. Still, the Buck is stuck between a falling trendline and strong Fib. & horizontal support. The directional breakout from this situation should give a clue where the USD is heading thereafter, long term.

Short term, the S&P 500 is stair stepping lower from the August high, making lower lows and lower highs. It’s also forming a Symmetrical Triangle pattern from the early August low, which gives a trading opportunity near term, by trading the directional breakout from it.

Any downside breakout would indicate weakness towards first Fib. support (2,117 area). An upside breakout could mean it wants to go for a test of the August high and even the trendline coming in from April, so that would mean all time high territory.

OEX Weekly Momentum is firmly in bearish mode and has not yet reached an oversold condition. Strong support is down around 932, which if reached is a probable rebound area.

 

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