OEX Trading Resources
... Free Stock Market Updates & Technical Analysis - Swing & Trend Following Trading
08/27
The OEX has made a retreat in recent weeks, the 5 & 20 EMA chart (scroll down) shows a bearish crossover on 08/12. According to momentum indicators, the market has reached a short term oversold condition. Despite Friday's reversal and convincing up close, it has yet to make a clear breakout from the short term bearish channel, formed in the August trading month.
So it would take one more positive daily close to signal further price strength, with the 38.2% Fib. level (487 area) as a minimum upside target. A more typical target would be the key 61.8% Fib. retracement level (497). Until a clear breakout occurs, the short term bearish trend is still considered intact.
However, a breakout is not ruled out, as the RSI 25 and Cycle10 is now pushing higher from oversold readings. In addition, the Neural Net System (OEX Weekly) issued a new Long signal after this trading week, as the below chart shows. The Neural Net has been Long on GLD (Gold ETF Weekly) since the end of July and still is.
As for an Elliott Wave update, any move going beyond the early August wave 2 high (512.79) would force a revision of the wave count.
Scroll down for updated Volatility (VIX) chart. The VIX should reach trendline support in a day or two. If it fails to hold, it would be positive for the stock market for a few more days, until the next support zone is reached (the old broken channel line).
 Feel free to share or Twitter this web page link
or its content with your trading friends, as long as
it remains intact (active links included) and it's not
used for SPAM purposes.
08/13
This week the OEX broke out sharply from the Rising Wedge pattern seen on the daily chart, after strong impact from both daily and weekly Gann Angle cycle convergences. The market has now nearly reached the 50% retracement level of the advance from the June low, with Volatility (VIX) at the same time found up against trendline resistance. Any daily close above it would open up for even more fear among investors and more pressure on the stock market as a result.
A slightly revised wave count suggest an a-b-c wave 2 Flat pattern from the May low has ended. So chances are a wave three of three impulse structure could force the market lower in the coming weeks and months. The mental stop out level for the current short term wave count would be the wave c high. Wave 3's and C's are the strongest waves in the Elliott Wave Principle theory.
So given the Primary degree possibility from the Spring high, (see weekly chart) the March 2009 low could in fact be in danger sooner or later, in case this wave count turns out to be correct. Only time can tell for sure.
This week's weakness also resulted in a bearish weekly Cycle10 reversal, well into its sell territory. So given the early stages of a downside cycle pressure phase, the mid term outlook seems bearish to me.
Even the Neural Net output gave a new bearish signal after this trading week, as shown by the OEX weekly chart below.
08/06
A look at a monthly chart shows that the market found support and reversed at the first (38.2%) Fib. support, after the July trading month, with MACD bouncing off its MA as a result, keeping the long term bullish mode from July 2009 still intact.
With this in mind, it would take a move beyond the March high to prove that the wave 2 from the 2009 low is still in force. So this is viewed as a temporary market breather, before the wave 3 impulse structure to the downside may resume, until this high is broken.
Mid term, weekly prices pushed through the earlier mentioned trendline resistance area. The OEX and other markets could be near its next peak, most likely reaching its key Fib. level next week, calculated from the April - June decline. At the same time, Cycle10 should reach levels where it normally would make a bearish reversal. See weekly chart.
To come up with likely time points for this top scenario, the OEX is now within the time window of the weekly 07/30 Gann Angle cycle convergence. With positive weekly prices going into it, next week could in fact mark the top. I state next week because there is also an upcoming daily GA due 08/11, +/- 1 day. So the market may hold up or continue its overall positive advance into that point in time. The key Fib. level is found 8 OEX points higher.
This short & mid term bearish stance is supported by the bearish divergence observed in momentum, i.e. on the Murrey Math chart, where new highs in prices are not backed up by new highs in momentum. Also, in this MM theory, when prices are not able to break through the weak 1/8th MML (yellow), sharp reversals are often the outcome. A recent example is the June peak up against the same MML.
Another technical point supporting lower prices in the coming week(s), is Volatility (VIX) readings soon reaching strong support from the old broken channel, which is going to be tested from above. Odds are good for increased fear from that support area, also taking the soon oversold RSI 25 into account. The proof is in the chart, when RSI 25 has dipped below 40 in the past, increased volatility (lower stock market) tend to be the outcome thereafter.
From the Elliott Wave Principle point of view, it could be an a-b-c wave 2 Flat pattern forming from the June wave 1 low, with the c part now near its termination point, if not already so. Anyway, any breakdown (daily closing basis) of the wedge looking pattern, would signal market weakness ahead.
As for an update on the weekly trend chart, it currently shows mixed readings. But from a 13 - 34 EMA angle, the trend is now considered Bearish until the 34 EMA is crossed again.
Personally, the purpose of the trend chart is to look for trading opportunities in the direction of what the trend chart suggest, to line up with the current dominant force, which in turn could lead to better trade results over time.
The GLD Etf. (Gold) weekly Neural Net output turned Long again at the end of July.
07/09
The OEX upside reversal came more or less within the +/- 1 day time window of the 07/07 Gann Angle taking several days of consolidation into account. A pullback in the market is likely next week, ideally after a test of trendline resistance first, (494.5 area) so another day or two with advancing prices is not ruled out.
The Neural Net system turned bearish on GLD (Gold ETF) this week, after a positive period from early this year.
06/11
The price development from the May low is currently best interpreted as a Flat a-b-c structure underway. More evidence of this will show up with any daily close above trendline resistance and the 50% retracement area.
If the near term advance continues into the upcoming 06/15 Gann Angle cycle convergence, a pullback starting around that day is not out of the question. The VIX (chart below) break of trendline support could turn out to be positive for the near term bulls, if the market is able to push prices through the OEX daily trendline on a closing basis.
Positive for the Bulls could also be the bottoming weekly Cycle10 and the still intact weekly trendline and first Fib. support. But it would take one more weekly up close to open up for even higher prices thereafter. So until this occurs, the market is currently in a vulnerable position, to instead fall back for support again. Especially since the OEX is just a few points from reaching it's daily 20 EMA, where the market tend to make near term reversals. The 5 - 20 EMA has been in bearish mode since early May (chart below).
05/21
Wave iv of (1) completed up against a resistance line drawn through the April lows. On the weekly chart, it peaked up against the earlier broken trendline. This is a valid wave count as it didn't overlap the wave i low, although wave four patterns tend to be more complex in nature, than this simple a-b-c zig-zag from the May low. The last wave v forced prices back for a test of the wave iii low, as expected from a wave five, excluding the more rare truncated wave five scenario.
Odds are good Friday marked a near term low in this market, as RSI 25 once again dipped below the 40 level this week, as it did with the wave iii low earlier in May. Prices also reached the key L3 DGL support area, before reversing intra-day Friday.
In addition to most likely being the last wave v of this impulse structure from the April high, another technical point supporting a reversal, is that prices have entered the 05/24, +/- 1 day time window of the next Gann Angle cycle convergence now due. Because the trend was bearish into this GA, a reversal in the opposite direction is looked for. Minimum upside target is first Fib. resistance around 510.
A look at some weekly charts, shows that i.e. Cycle10 is now well into it's buy zone (bellow 40) and S&P 500 weekly trend mode is still Bullish, as the 13 -34 EMA has yet to make a crossover and the 64 EMA still holds as support.
Scroll down for updated daily 5-20 EMA and VIX (Volatility) charts. The higher high in the VIX but lower peak in RSI 25 (divergence) gives support to the near term bottom scenario.
05/07
A sharp correction in OEX prices brought the market below weekly trendline support. This broken trendline should now act as resistance instead, which comes in at around 535 next week. The 5-20 EMA and the Volatility (VIX) charts below are updated. The 5 - 20 EMA entered bearish mode a few days before the price collapse. Volatility (fear) readings exploded this week but has now reached an "overbought" state, as indicated by RSI 25. In addition, the Neural Net system turned Long after this trading week.
From the Elliott Wave Principle point of view, Intermediate degree wave 1 of the earlier discussed Primary degree wave 3 impulse scenario, pushed prices sharply lower. A re-test of the recent low is not ruled out in the last wave v to the downside, which has yet to begin.
04/30
With the April trading month now ended, a look at the OEX Monthly chart, shows a bearish reversal candlestick (Hammer) formed near key Fib. resistance.
And this week's break of the mid April weekly low, also increased the odds of a mid term top in place. More evidence of this will show up if the 04/27 pivot low fails to hold this coming week. Because of the current look of the pattern developing from the April high, there is a chance of a complex wave four pattern underway. If this turns out to be the case, this would mean the wave Z is still active and one more push higher could be the outcome, in the last wave five, likely testing the April high. But if the 04/27 pivot low and channel support gives in to the bearish forces right away next week, it would probably exclude this scenario from the list of likely events.
It would only take one more lower close in OEX daily prices to see a clear 5 - 20 EMA crossover to the downside (chart below). This is one possible way to go, in an attempt to ride upcoming bearish moves to the downside, in case the Great Bear Market from 2000 has resumed, now possibly in the early stages of a wave 3 of C impulse to the downside. Much stronger evidence of a resumed bear market would show up with the next bearish crossover on the weekly 13 - 34 EMA trend chart, which is still in bullish mode.
Any break of the April high (low risk stop out level) would prove me wrong though and could delay a top even further, excluding a wave 5 Double Top scenario, with a potential brief break of the April high, before heading lower in wave 3.
As for an update on the VIX (Volatility) chart, increased fear among investors this week, brought the VIX near channel resistance (scroll down for updated chart). Any clear break of this resistance, would open up for even more volatility and put more pressure on the stock market, short & mid term.
04/16
 Here is also a few other technical reasons why the markets could soon roll over, with weekly trendline support as a minimum downside target. In general, weekly RSI 25 readings above 60 often alerts of market tops soon to be formed. In fact, this week a S&P 500 reversal type of candlestick formed up against the key Fib. resistance area, on heavy volume. This, in addition to it's down close for the week, reflect distribution and institutional selling going on. The first down close in 7 weeks also resulted in a Cycle10 reversal, which has been in a positive cycle pressure phase since mid February, apparently catching a large chunk of the price trend from the Feb. low. So any break of the week low at 1186.77 (OEX 542.52) would further increase the odds of a top in place.  Growing fear among traders and investors is also observed, as the daily VIX (Volatility) chart shows a breakout from a near term falling trend. A test of the upper channel line is not ruled out in the coming days. As for an update on the Elliott Wave Principle count, despite further delay caused by the break of the January high, (stop out level) the overall advance from the March 2009 low is (although extended) still viewed as a Primary degree wave 2 scenario finally coming to an end, if not already so, as the 62% is a typical retracement for wave 2's in general. This wave count remains firmly intact until the Oct. 2007 high is taken out. Any clear break of OEX weekly trendline support would most likely confirm a top of minimum mid term degree in place at that point. If it holds, more price oscillations to the upside within these two converging trendlines could be the outcome but possibly not taking out the current high. In the OEX, these two trendlines will meet in mid July, so a breakout ought to occur before that point in time. The lower degree waves from the March 2009 low traces out a likely w-x-y-x-z looking pattern but who knows for sure... it could also be a large a-b-c pattern developing. In the bigger picture it's not that critical to be 100% correct about the lower degree waves, as long as we know the market still trades below the Oct. 2007 peak and if larger trendline support fails to hold at some point, the valid wave 3 impulse scenario to the downside simply can't be ignored. Below is also a re-trained Nerual Net and updated weekly OEX signal chart, which turned bearish after the close for the week. The previous Long signal was generated in mid February. The Neural Networks used is from the Sidekick Edition of the Stock Assault 2.0 software. 04/09 Daily prices have oscillated higher within a bullish channel looking pattern, with RSI 25 reaching an overbought extreme. Any downside breakout from this channel, would increase the odds of a short term top in place.
From a Murrey Math point of view, Friday's trading session closed up against the (green) 3/8th MML (Murrey Math Line). In this theory the 3/8th - 5/8th range is viewed as difficult to enter and can lead to reversals as a result. Weekly OEX prices reached trendline resistance this week, with weekly Cycle10 at the same time reaching levels where it has made many bearish reversals in the past. This upside cycle pressure phase has catched a large chunk of the overall price trend on the Long side, after this indicator reversed at oversold levels in mid February.
03/19
The wave 2 scenario from the Feb. low is now excluded from the list of valid counts, as the OEX climbed above the Jan. high this week. So the larger degree wave 2 from the March 2009 low apparently had unfinished business to the upside. This wave 2 possibility can't be ignored until the Oct. 2007 high is broken.
Short term, prices pulled back from the key L3 DGL at the end of week, which also resulted in a RSI 25 reversal, in it's overbought territory, alerting of a possible short term top forming. However, after an ended pullback, a retest of Friday's high first, is not ruled out before this market could be heading lower.
03/12
In the S&P 500, the wave 2 scenario is now excluded from the list of valid wave counts, as it broke through the Jan. high this week. This is not yet the case in the OEX, so i'll still label it as a wave 2 until/if the Jan. high is also broken in this market, joining the leading S&P 500. I'll come up with a revision of the OEX wave count at that point.
Using traditional technical analysis, i don't rule out a Double Top pattern in the OEX or at least a pullback towards trendline support or the 20 EMA, from the Jan high. But it has to overcome the now reached trendline resistance first, discussed in the previous update. If it's not able to break through, it could form a near term top at current levels. The next trading session should give more clues.
The OEX has also reached the key L3 DGL (Dynamic Gann Level) area, with RSI 25 at the same time entering it's overbought zone.
03/05
The OEX pushed prices through the key Fib. resistance (512) area this week, reducing the odds of the wave 2 scenario from the Feb. low, although it's still a valid count as long as the Jan. high at 530.74 remains intact. A wave 2 can't retrace more than 100% of wave 1, to stay valid.
Let's see if the OEX finds resistance early next week, (524 -525 area) using a slightly adjusted daily trendline drawn through important closing lows in the past, instead of using only the lows. If overcome, this market is likely going for a test of the Jan. high, possibly forming a Double Top pattern. Any move beyond the Jan. high though, could lead to a further dealy for the larger top scenario, into Spring.
Using a weekly closing prices chart, the OEX closed up against a trendline coming in from the Summer 2008. Weekly Cycle10 is in the early stages of an upside cycle pressure phase.
02/05 The lower channel line on the daily chart above is adjusted to go through the lows instead of the closing lows, as the reaction up early in the week, apparently met resistance from this trendline, which resulted in a sell-off for the rest of the week. It ended right below the 200 EMA before a recovery move brought the OEX above it again, so this long term EMA is still intact on a daily closing basis.
Friday's bullish reversal candlestick (closing near it's high) showed that buyers came to the market at the end of the week, which could lead to a near term reversal next week, signaled by a break of this candlestick's high (492.07). Friday's trading session closed at the earlier broken minor trendline from January.
This near term bullish stance is taken at a time the weekly Cycle10 is bottoming out and a five wave structure (Wave 1) from the Jan. high also seems completed. So an a-b-c zig-zag rebound could start next week, which could take prices up for a test of the 20 or 50 EMA or even the channel line is not ruled out. A move below Friday's low, (481.80) would prove me wrong about this bullish view and could delay a near term bottom further.
The OEX weekly Neural Net Signal Output is still Long at the close for the week.
I'll be away on travel for the rest of February, so the next update will be in early March. 01/08, 2010
The OEX push to new highs in the first trading week of the new year, resulted in a Cycle10 whipsaw signal, as it had just started on a new downside pressure phase at the end of 2009. Prices followed minor trendline resistance higher throughout this week, resulting in a Cycle10 reading at levels where it normally would make a bearish reversal.
A bullish price channel from the Fall 2009 is established. As long as prices stays within this channel, the overall trend higher should be intact. Weekly key Fib. resistance is around 575, a likely target before the mid term trend could change.
Previous market commentaries: 2008 - 2009
|
Copyright 1997 and beyond... oextradingresources.com - All Rights Reserved