Only three charts today as I’ve had a lot on this morning.
One reason I do my optic run views on my seven main US equity indices is because while SPX is often the technical leader, by which I mean not that it moves fastest, but that it is delivering the cleanest trendlines/patterns and fibonacci retracements, that is not always the case. That leader at the moment is the Dow Industrials, and my first two charts will illustrate why that is.
The rising wedge on SPX that I tweeted on Tuesday night hit the very well defined wedge resistance (tweeted at the high yesterday) and then broke down on the frankly very predictable not really news that QE3 had ended in October as planned, and the usual assurances that the Fed would be fighting hard to keep interest rates near zero until the stars fall from the sky. Now those of you who have been looking at my work closely for a while might have wondered why I was giving strong weight to a pattern on SPX that was mediocre due to the poorly defined support trendline, and the answer to that question is of course that ………. SPX 15min chart: (more…)
I was talking yesterday about the 1976 SPX target and the trendline resistance that may well be there. SPX is likely to gap up today and we will see whether that target is hit today and if so, whether the trendline holds. SPX daily chart:
I last wrote about the SPX:VIX ratio in my post of October 15th.
As shown on the 20-Year Daily ratio chart below, bulls have pushed the price back up to close out this week at major resistance around the 120.00 level. Failure to hold 120.00 could very well see price re-test the 60.00 level, or lower…watch for panic selling of equities should the 60.00 level be breached and held.
The REAL test for sustained market bullishness will be whether price can reclaim and hold the 150.00 level, which was a milestone level this ratio reached before succumbing to pressures of the 2007/08 financial crisis.
SPX broke above the daily middle band yesterday and tested the 100 DMA. More importantly though, the high yesterday was within a couple of points of testing the weekly middle band. Given that today is Friday that may well be formidable resistance today, and while I’d quite like to see a test of yesterday’s high today, I’m very doubtful about seeing a move significantly higher. This is closing resistance, so only the closing price today is important for that. We could see a move somewhat higher intraday. SPX weekly chart:
Way back on August 30, I did a post called Past Fear, Present Fear, which offered up an analog of the VIX (please read it if you don’t remember; it’s a pretty good post). I would daresay it was one of the best posts I did in 2014, and things certainly unfolded as I hoped they would (although today was no fun for me). I followed up on October 9th with my Moment of Truth post, which was just before the markets started really falling hard. Thus – so far, so good. (more…)
The following four 3-Year Daily charts show the relative strength/weakness of the SPX compared with the WORLD Index.
Chart #1 shows a fairly steady climb of the SPX during the past three years. Recent action in October has put in a lower low and broken the uptrend on this daily timeframe. Lower lows have also been made in all three indicators (RSI, MACD & Stochastics)…hinting of further weakness ahead.
Chart #2 shows a more difficult climb of the WORLD Index once it broke above major resistance in January of 2013. This market topped out in July of this year, lost all of its 2014 gains, along with much of its 2013 gains, and hasn’t yet recovered. (more…)
You’ll pardon me if I pin the Gold Medal for Technical Analysis on my bare chest for my VIX prediction. As I said virtually every single day on TastyTrade for weeks, and as I said here countless times as well, I intended to stay aggressively short until the VIX reached “between 22 and 23″. Well, it peaked at 22.46 today, and that’s when I got out of any big shorts and – gasp – actually bought a bunch of stocks. The graph is fantastically glorious in its clarity. Thank you; thank you; yes, it is a beautiful thing. (more…)