Market Timing Charts for Week Ending Friday, Nov 23, 2012

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Timer Chart: SPX 200-Day MA (1383) was overcome this week and next target now becomes 1416 (+1 sigma) which should signify the move up is about to get traction -- then more importantly, the  50-bar MA at 1426 (and within +1 to +2 sigma) is the KEY TARGET.  

We like the color and slope of CIs here.  Worth noting is McClellan Oscillators are at +145 for NYSE and +98 for NASDAQ.  We have ways to go before these readings become overbought.

Last Friday's outside bar reversal in SPX was a very effective bullish signal. The day before, on Nov 15th, the McClellan Oscillator registered -272.  This is a typically fairly close to the "launch-pad" mode.  We had one last year the day before Thanksgiving (Nov 23rd) which followed by 750 pts move in DJIA in three trading days.

Wyckoff Chart:  DJ Utils price action is still alarming while DJ Trans is back up to its 50-day MA.  And RUT is about to close above its 200-day.  RISK is coming back in, albeit, very slowly.  Fiscal Cliff is the issue, ioho.

SP1_momo Chart: On Friday Close, our DAILY timing model went to a BUY.  We are now on BUY-BUY (WEEKLY & DAILY).   The reversal came at SPX -2 sigma on weekly chart.

Our momo Indicator closed at +6.90.  We will be watching for +10 line as a short-term overbought line-in-the-sand.

TRIN Chart:  NYSE's 5-day TRIN is fast approaching a SELL signal (short-term over-bought) while NASDAQ's is crossed that threshold.

VIX & VXN Chart: Volatility Indices have peaked.  Keep an eye on their CIs' slope and color.

WEEKLY Support, Pivot & Resistance (SPR) Levels:   As you see we are beginning a move up.  We will update this chart via @HunterKillerSub Monday within the first hour of RTH, so you will have the key SPR levels for next week.

Above are the WEEKLY SPR Levels for 30-year(T-Bonds Futures), TLT (30-yr ETF) and 10-year (T-Notes Futures) -- courtesy of our HFT Bonds Chart Streamer.  Again, we will update this chart on @HunterKillerSub within the first hour of RTH, so you will have the key SPR levels for next week.

And last, but not least, here are the key SPR Levels for major ETFs which will be update Monday within the first hour of RTH via @HunterKillerSub.

And for the MAC+ enthusiasts, here is our beloved MAC+ Indicator.  As you notice, this past week, MAC+ needed no JP5.  It led the ES pretty much every day by about 30-seconds and kept us out of trouble.  Friday's performance was outstanding as volume was thin and MAC+ unrelenting.

Long Live AWACS .........

This week, Percent Components of SPX above their respective 200-day MA, rushed back up over its 50-day MA.  20-day MA at 68% is the next target. We are in a congested area and this indicator is givig no clear signal, yet.  A move above 75% is worth watching.


Bottom Line:  This Thanksgiving and last, while similar in structure, they do not offer same price action.  The Fiscal Cliff has put a damper on stocks and made bonds rally.  While we believe the Fiscal Cliff will be avoided in its pure form, the immediate road ahead should be viewed with higher expectations of volatility, tax selling and news-driven chaotic trades.

Have a great weekend ..............

IB Levels for $SPY & $QQQ for Friday, Nov 23, 2012

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Today's Initial Balance levels for $SPY and $QQQ

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Today's Initial Balance levels for $SPY and $QQQ

Tweet Today's Initial Balance levels for $SPY and $QQQ

Today's Initial Balance levels for SPY and QQQ

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Stock Market Timing Charts

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Timer Chart: Down Volume to Up Volume Ratios are not at capitulation levels but CIs are flat. 1380 is 200-day MA and next key test for SPX.  NDX today broke 200-day with AAPL totally unloved.

Wyckoff Chart: As you all recall from our last market timing webinar, our main concern here has been the sell-off in DJ Utils in the last two weeks. And, today we saw DJIA, DJ Trans & RUT punch thru their respective 200-day MAs.

 

SP1_momo Chart: Our weekly and daily timing models for SPX are still BUY on WEEKLY and BUY on DAILY (as of yesterday close). If 200 bar MA is punched thru (1380), next target becomes 1343.  Keep in mind, these levels are adaptive.  

Vol of the Vols Chart: Very minor bump in vol indices.  Data still does not support any specific scenario yet.

No signal on TRIN Chart.

MAC+ Chart: Our MAC+ [synthetic] indicator was outstanding today. It was the main reason we were done trading for the day before 0900 CT.  Just look at the 5-min MAC+ (right hand side chart) avalanche staying within -1 to -2 sigma channels.  The 30-min MAC+ also went straight down (center chart).

As we pointed out on Saturday on @HunterKillerSub, next target is 55%.  Today we closed at almost 61%.

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Bottom line:  We should continue lower till Down Volume to Up Volume Ratios signal a capitulation.

Daily Market Commentary

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Market Timing Charts Update

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Fari Hamzei

We had a few emails asking us for a quick update on our Market Timing Charts given the price action we have experienced in the last couple of days. Here they are:

Worth noting:
A) McClellan Oscillators have entered a slight oversold condition (down to less than -100 readings in three trading days).
B) SPX failed to touch its 200-day Moving Average.
C) NDX closed below its 200-day Moving Average. We talked about this possibility in our last Saturday Webinar
D) Down to Up Volume Ratios in NYSE and NAZZ were 11 and 22 to 1, respectively.



Note: Huge drop in DJ Trans and Russell 2000 to -1 sigma level. Bad leading indicator for the economy (going forward) and risk-takers (weak hands in small caps got their head handed to them).




Note: VXO bounced off -2 sigma yesterday and jumped today. Never made it to -3 sigma (our target). May Options X is here in the earnest.

Outside Bar on SPX and Rapid Deceleration of NDX Momentum

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Fari Hamzei

These two observations, ahead of the much anticipated April Non-Farm-Payroll data to be released tomorrow at 0830 EDT, call for high level of vigilance and alertness. We discussed their ramifications in detail on the Twitter tonight.

Trade Well Tomorrow.

I think the worst is over

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Fari Hamzei

Last Wednesday thru Friday, NDX $wPut/Call Ratio hit 4.6, 5.9 & 40+ on huge $wVolume ($700M, $2.4B and $7.4B, respectively). That is a lot of put buying by the institutions (NDX options are NOT for mom & pop traders, even at normal vol levels (VXN stayed above 60 last week)). The last time we saw these $wPCR levels for NDX, it was during the 2001-2002 dotcom debacle.

For those of you who remember my calls on CNBC back then, the readings at these levels for NDX are very bullish 1 to 3 days forward. We should expect 100 pt move in NDX in 3 days (registered 41+ today) which means, most likely, the AAPL earnings report tomorrow after the close, will be viewed very favorably.

In addition, a major perma bear threw in the towel today, LIBOR had eased off overnight and US short-term interest rates went up. In the last hour, there was a lot of mutual fund buying today. This is all good for equities.

Bottom Line: The chance of revisiting the Oct lows is now highly diminished albeit not zero.

Market Timing

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Fari Hamzei

First chart is our Timer Chart for SP-500 Cash Index (SPX). Notice that McClellan Osc for NYSE closed today at-211 level. This is a short-term extremely oversold signal. Given that Nov Options X is next week and we often see a counter-trend move during options expiry, odds are that we should go up a bit here into next week, make a bunch of put options go worthless (the Options MMakers have to pay rent too come Dec 1st !!), and then cascade DOWN. What is very clear now (since my last post here on Friday October 19th) is that Cumulative ADVANCE/DECLINE Line (yellow line graph) peaked this year in early June and with next two all-time highs in SPX, the Cum AD Line has setup a Bearish Divergence. In addition, we closed below its 200-day Mov. Avg.(white line graph), for the first time since Sept 10th.

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Same analysis goes for the next chart: the NASDAQ-100 Cash Index (NDX) -- except that one has to be reminded that the CUM AD Line for NAZZ peaked in FEBRUARY of this year. This does not bode well for the LONGs' argument.

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Next Chart is our Wyckoff chart and what I want to bring to your attention is the fact that while DJIA & SPX each made a three-weeks lows yesterday (channel breakdown pattern), DJ Trans put in a multi-month low and closed near its 2007 Open. This is, again, an ominous sign for our equity markets as a whole as the rate of economic expansion slows down.

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Next chart shows Russell 2000 (RUT). Here we go again, another six weeks low (since August 16th when Uncle Ben sent some of our SPX trading brethrens into the next world prematurely in order to save Citigroup from imploding). Risk tolerance is now at a new premium not seen recently. Bids to the market should evaporate. Stay defensive.

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Volatility is increasing in both NYSE and NASDAQ markets but as next two Sigma Channels charts show you, they are NOT at exhustion levels YET.

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Most probably, this is where I think we will go to on this first leg down: 1422 on SPX. which corresponds to -2 sigma at this time. There is an outside chance, we may get down to -3 sigma (1383). Notice this is the Weekly Chart. So it will take time to get there. My guess is that this will be in the next 3 to 4 weeks or so. If 1383 does not hold,... well, we shall get to that on my next post.




Bottom Line: For Intermediate-Term Timing, STAY SHORT.

Market Timing

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Fari Hamzei

I wrote a piece for FOX biz channel around 830 am PDT this morning, about my reasons why DOW should close about -350 to -500 today. Robert Gray, formerly of Bloomberg TV, quoted us near the close.

As a service to our loyal readers, here are my bullet points (part of these points were posted in our SuperPlatinum Virtual Trading Room in real time). Tomorrow in our Saturday Class we will explore these crucial issues in more detail.

1) expiration week is a counter trend -- we have been climbing a wall of worry since Aug 16th -- SPX hit massive resistance at MR1 Level (Monthly Resistance Level One) five times between October 8th and 15th and failed. We've had divergences between SPX and NDX at new highs with their respective cum advance decline lines -- see our Timer chart below.
2) Crude Oil is at ~85 to 90 USD per barrel.
3) Benazir Bhutto returning to Pakistan -- I wrote about this in early Aug on our Blog -- they have 40 confirmed nukes -- AQ is HQ'd there.
4) comrade Paulson putting his foot in his mouth on SIVs.
5) dollar trashing by Uncle Ben via pre-mature easing.
6) DJ Trans telegraphing massive slow down of the US Economy. See our Wyckoff Chart below.
7) 20th anniversary of Black Monday falling on October Expiration Day.











Have a great weekend......

FOMC and The Morning After

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From our Virtual Trading Room Transcript
May 10, 2007
about 0549 PDT

Jason_Roney> With expiration next week, the monthly patterns suggest further upside by next friday's open. In fact the SP500 is just 1% from the March 2000 all time high close (1527 in the cash). Given the solid uptrend, there's reason to think we'll hit that level sometime next week. But in the short term, the next few days would seem to offer the bear's best chance for downside. As I'll note in the afternoon discussion, there is often a counter-trend move towards the end of the week prior to expiration week. As well, the market tends to struggle with any follow-through on the day after an FOMC meeting. But a look at the daily patterns suggest an even greater probability of short-term pause.

Jason_Roney> Here's some observations: (1) the SP Futures have 7 consecutive closes above the open price. there have been just 10 occurrences over the last 10 years (in 2007, April 23 and Feb 23 were next day - both closed down) and 7 of those closed below the open; (2) the NDX finished higher for the first 6 days of the calendar month. looking back to 1995, this happened just 3 times before and each time the index finished lower; and finally, (3) the Treasury Bond closed below the prior day's low while the SPX finished above the prior day's high. this happened at the March Meeting and resulted in a flat next day's trade with close below the open.

Jason_Roney> The bottom line is that Thursday's action has a higher probability of finishing below the day's open. The overall trend remains solidly higher into expiration but the next 1-2 days offer more downside than upside risk.


Click here to read the complete transcript of Jason's chat.

Click here to read the Trading the SP Gaps by Jason Roney.

Equity Index Update

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Brad Sullivan

The index markets held serve after an attempt to push the indices lower failed to pick up steam at short term support levels. A late morning, lunchtime push higher allowed the market to probe, but never get above the unchanged level in all but the NQ futures. Volume was moderate ahead of both the CSCO earnings report and today’s FOMC statement.

As for CSCO, the stock was not able to match “whisper” expectations in its report and during the subsequent conference call. The issue is called to open about -1.45 at 26.90. This has put moderate pressure on the futures with the NQ contract trading lower by -5.00 at 1900.50. The SPM is trading lower as well, at 1510, down -2.25 on the session.

While we may have some moderate trading around the CSCO news in the first 45 minutes today, the odds play seems to be one of hands-in-pocket until the 1:15cst FOMC release. Attempting to handicap this release is generally futile as one verb added or subtracted can mean a few billion in market cap changes hands in the SP over the ensuing minutes. In other words…keep it close to the vest post announcement. Expectation wise, the markets are continuing to expect similar wording from the FOMC as it has received in the recent past. A change in this wording will move the markets…but to what extent?
From a trading perspective, the question we have to ask ourselves is pretty simple…is it time to fade this move and put a counter trade to work? So far, only the DJIA (as I showed yesterday) is extended from its 200 day MA. All things being equal, this represents a good time to get flat (if long the DJIA) or look to premium sell/outright sell the index. HOWEVER, the warning trade in this environment is that we are at the cusp of a major mega-cap upside explosion. If this scenario occurs, the extension readings could move sharply, possibly towards the +15% zone. Accordingly, proper use of stops and such are needed when fading a beast.

The other night I pulled down a book from the coming of age master J.D. Salinger and turned to a page that had a Taoist tale. Without rehashing the whole section, I will include this portion which is the tale end of a conversation between a Duke and his horse breeder that is about to retire. The breeder has sent the Duke to another breeder…a few months later the new breeder sent the Duke a horse that was supposed to be a dun-colored mare, but, turned out to be a coal-black stallion. When given this news the old breeder was amazed at how advanced his friend had become in choosing horses.

“In making sure of the essential, he forgets the homely details; he looks at things he ought to look at, and neglects those that need not be looked at.”

A traders mantra if I have ever read one…accordingly I have enclosed 4 charts for viewing today. One is the NDX extension readings for the 200 and 20 day MA’s. So far, the readings are elevated but not overbought.

Also included is an analog chart showing the performance of the Euro/Yen and SPX over the past year. The linkage is simply amazing. The third chart is showing the cumulative SPX breadth for the top 100 issues only. This continues to show the mega-cap extension as the upside ride continues. Finally, the last chart shows the 2007 performance for both the NDX and SPX top 100 from the OPEN print, in terms of net breadth for that session. You will see that yesterday showed a divergence in the NDX/SPX performance…it can possibly be explained by buying into the CSCO number. However, that seems a bit simplistic and it could be that mega-tech will continue to move higher.

Nasdaq-100 Cash (NDX)

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Tim Ord

Today the Nasdaq 100 (NDX) rallied strongly into our targeted area near 1810 range. We have been targeted the 1810 for the last couple of weeks in that a significant high volume gap form their on 2/27. Most large high volume gaps are tested. High volume Gaps are also like magnets, drawing the market towards them. Once the market gets to the gap the gap turns into resistance. Today’s test is just a bit short getting into the gap level but tomorrow most likely the gap will be tested. If the gap at the 1810 range is tested on 10% or greater lighter volume, and then close below the gap level, a sell signal will be triggered. We have an intermediate term sell signal in force now and the gap test will be a shorter term sell signals.

On chart is of the Nasdaq 100 in the Ord-Volume format. The Ord-Volume format takes the average daily volume in each leg and display that result on the graph with a line chart. The average daily volume in a leg measures the energy that leg has. By comparing the up leg and down leg energy you can see which way the market is pushing. Referring to the Ord-Volume chart, a big expansion of energy came in on the February decline which increased 26% from the previous up leg and shows the trend has turned from up to down. The current rally leg has 21% less energy then the previous down leg and shows the down leg is still dominant and in force. The gap is being tested so far on 30% less volume and implies the gap will hold as resistance. If volume does not pick up to 318m shares tomorrow a sell signal will be triggered.


Today’s is Spring Equinox and can mark significant turns in the market. We are expecting the market to be down most of this year. We have an intermediate term downside target to the 1400 on the NDX which is a 22% decline from current levels.