US - Market Direction 41 (Mar 18 - Dec19)

Re: US - Market Direction 41 (Mar 18 - Dec19)

Postby winston » Mon Dec 24, 2018 10:43 am

CHARTS

There is not much to add to the discussion on them: all are breaking to lower lows for the selloff, the year.

Three weeks in a very sharp dive has VIX starting to generate some upside breakout action, something VIX has simply refused to show.

As all other sentiment indicators and internals are at extremes, that is likely the last piece to the puzzle of a significant relief bounce to test the breakdown from the yearlong tops.

A selloff after Christmas likely is the last part of this particular dive lower that yields to some sort of relief move.

Note NDX (NASDAQ 100). It is at some support form 2017 consolidation highs and lows. It is in a ripe position to rebound.

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Re: US - Market Direction 41 (Mar 18 - Dec19)

Postby winston » Mon Dec 24, 2018 8:51 pm

NEW HIGHS OF NOTE LAST WEEK

Not many... It was a tough week for the market.

NEW LOWS OF NOTE LAST WEEK
Bank of America (BAC)... financial giant
JPMorgan Chase (JPM)... financial giant
ExxonMobil (XOM)... oil and gas giant
Royal Dutch Shell (RDS-A)... oil and gas giant
Altria (MO)... tobacco giant
Philip Morris (PM)... tobacco giant
FedEx (FDX)... shipping
United Parcel Service (UPS)... shipping
Marriott (MAR)... hotels
Carnival (CCL)... cruises
Royal Caribbean Cruises (RCL)... cruises
Avis Budget (CAR)... rental cars
Best Buy (BBY)... retail
Target (TGT)... retail
Mattel (MAT)... "retail apocalypse" victim
BlackBerry (BB)... losing out in the mobile revolution

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Re: US - Market Direction 41 (Mar 18 - Dec19)

Postby winston » Mon Jan 07, 2019 8:17 am

MONDAY

Earnings are not far ahead and you have to wonder if expectations are lowered a bit too much.

Of course, if stocks continue upside as they have on this bounce that primes them for disappointment after a strong move.

While NYSE volume was up a bit, NASDAQ trade fell well below average -- not that big a deal for a bounce, but if wanting something stronger, not so great.

For now we continue playing a bounce. When a selloff is rejected as this one was, you play the upside move.

We did not on Friday because the move was so violent you typically get some retracement. Further, with the lower volume on NASDAQ, it is no lock the market continues higher: in an arena of dueling algorithms the swings are large and sudden.

Could be the market heads back lower once the Powell statements are seen as nothing new, just placating the market.

Some are saying Powell could have changed the market's character for now. The Fed wields so much power it could affect such a change.

There are some strong moves that can give us some plays upside in a continuing bounce. If they continue moving we anticipate playing them. Frustrating so see such whiplash action: the futures were up 265 Dow points from the -660 Thursday before any news.

Remember, the market just broke down from a yearlong topping pattern. This is the test of that first break lower. The indices likely move into the range of the prior lows and find resistance that stalls the move.

The likelihood this 20% correction is enough to consolidate the entire move from early 2016 is low. The prior rallies suggest there is more selling to consolidate that tremendous move.

So, we don't despair, we play and take what the market gives us. After the Friday rejection of the rollover we see if it continues Monday. If so, we play more upside as noted.

That said, also note that a mere cessation of hostilities against the economy is not, at this point, enough to stop the decline. The Fed would have to reverse policy, i.e. cut rates, perhaps add QE to turn the ship. The government won't produce any stimulus; the House democrats will not give the President anything so for the next 2 years at least there will be nothing on the fiscal side.

Therefore, play the bounce if it continues; the repudiation of the Thursday selling is strong. Don't fall in love with the upside. Take good gains when in hand and when at or approaching logical resistance.

Then see if good downside setups are in place, particularly if the indices are near the bottom of the prior range they crashed through in December. The downside will likely start from there to continue consolidating the huge move higher from early 2016.

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Re: US - Market Direction 41 (Mar 18 - Dec19)

Postby winston » Mon Jan 07, 2019 8:23 am

CHARTS

After certainly looking like a rollover Thursday on rising volume, stocks rejected the selloff and surged back above pre-Thursday highs.

That looks to have renewed the relief move for a second leg though NASDAQ volume trailed off well below average, not commensurate with the price gains.

SP500, DJ30: Both indices reversed ugly Thursday selling, gapping upside and rallying to the 20 day EMA on the close. That puts them at higher recovery highs with some better NYSE volume. Good enough for a continued move upside in the relief move, at least for now.

NASDAQ: Same action as the other large cap indices, gapping and rallying to close near the session highs and right at the 20 day EMA. A higher recovery high here as well, but short on volume. Not that key for a relief move, however, and NASDAQ may have just put itself in position to rally to 7,000 (closed at 6739).

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Re: US - Market Direction 41 (Mar 18 - Dec19)

Postby winston » Mon Jan 14, 2019 8:40 am

MONDAY

Another week and a second leg up for the stock indices.

It now won't have much more room to do that with earnings approaching.

Combine that with the runs in the indices setting up ABCD patterns at resistance. Pretty serious decision point/inflection point/lick log ahead.

C gets things going Monday, JPM and WFC Tuesday, and NFLX helps get NASDAQ earnings going on Thursday.

Stocks have enjoyed a decent move higher into results, by some accounts the best in 5 or so months. Sometimes a run into earnings take out all the fuel in the tank. In this kind of selloff and recovery they can add more fuel.

Q4 earnings are an enigma. S&P earnings forecasts predominantly fall in a range from 11% to 16% growth.

There are several issues merging next week and the following weeks. Obviously. A move to resistance has good setups downside as well as upside.

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Re: US - Market Direction 41 (Mar 18 - Dec19)

Postby winston » Mon Jan 14, 2019 8:47 am

CHARTS

SP500: SP500 is still just below the 50 day MA, the bottom of the October/December trading range, and the 78% Fibonacci retracement of the December selloff. Those are all CLASSIC levels for the ABCD pattern to consummate. We will see.

DJ30: Carbon of SP500, just below the same trio of resistance though the 61% Fibonacci retracement versus the 78%.

NASDAQ: Very similar pattern here with NASDAQ actually bumping the 50 day MA and the bottom of the trading range, also at the 78% Fibonacci retracement of the selloff from mid-December. It has going for it some big names and not so big names setting up for it again, e.g. AMZN in the former category, TEAM, NOW in the latter.

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Re: US - Market Direction 41 (Mar 18 - Dec19)

Postby winston » Mon Jan 21, 2019 8:26 am

TUESDAY

Market closed Monday for MLK day. Expiration was a big upside move. Perhaps some giveback early Tuesday, but not expecting the move to roll over without some kind of negative news on trade or the Fed this weekend.

If there is some weakness, we plan on using that to pick up some more upside positions. We purchased some Friday while some plays could not make up their mind. We will look at them this week along with some new plays that are set up quite well.

Right now it is that kind of market. The big top is still there, but the rally sparked a third leg this past week.

As long as good plays continue setting up and break higher while providing good entries, we will use those to enter.

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Re: US - Market Direction 41 (Mar 18 - Dec19)

Postby winston » Mon Jan 21, 2019 8:37 am

CHARTS

The indices spent the week moving through more resistance, taking out the 50 day MA's, the Fibonacci retracements, and Friday moved through the barrier at the bottom of the trading ranges (though NASDAQ was already there). A very important move obviously. It speaks for itself.

Of course, when the indices are in such a big hole after December's selloff, moving back up results in taking on resistance after resistance. More is to come, and don't forget, this could just be a third upside leg in a relief move after the breakdown from the massive yearlong 2018 topping pattern.

Thus, we are enjoying the upside for sure with good positions already letting us bank gain and more to come. But, there is a long, long way to new highs and the top is disrupted at this point. Many are now convinced that the bear market of December is over and that a new or continuing bull market is in place.

Certainly there are good patterns that developed over the time of the rally, just as I said could be the case several weeks back. Those have set up the upside move and more are set up and breaking higher as well. Very encouraging as rallies MUST have leadership to succeed. They are getting it as well as others coming up from downtrends and reversing their action. To survive a rally needs that.

Again, however, this rally does not mean the top is obviated. We play the moves the market presents. You also keep in mind the top and watch for actions that start to cut against the upside move continuing, e.g. TEAM announcing great earnings doubling expectations, gapping higher but then reversing. That is just one case, but if it happens again and again, that is a warning sign. Thus far, it has been limited and the market is into its third leg.

NASDAQ: NASDAQ gapped upside to a doji, tapping the 100% retracement of the selloff from the first recovery peak of the December selloff. A bit of resistance there, but after moving through 7000, 7400 to 7450 is more likely a recovery level.

SP500: Gapped and rallied, putting more distance on the 50 day MA and breaking up through the bottom of the October/December trading range. Rising volume, moving back above average, but quite light for an expiration session. 2700 is next resistance on up to 2750ish.

DJ30: Finally broke up into the October/December range, clearing the 50 day MA and 61% Fibonacci retracement as well. Next resistance is 25,000 where the 200 day SMA resides as well as a series of price points from October including a series of gaps. Important level.

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Re: US - Market Direction 41 (Mar 18 - Dec19)

Postby winston » Mon Jan 28, 2019 8:40 am

MONDAY

The third leg is underway for sure with SOX, indeed NASDAQ. The other indices are moving up off the test with a very important group, semiconductors, taking the clear point. A very important group for the overall market and thus a good upside signal.

NASDAQ is following -- thanks in large part to its semiconductor components -- while FAANG tries to reset and lead again and software continues its overall solid moves.

The real key for this week is whether the NYSE indices follow. SP400 and RUTX, really growth indices with NASDAQ and SOX, made very good moves Friday.

SP500 and DJ30 were not bad, but they need more. Always more, more, more, but that is the nature of the fight when coming out of a sharp selloff.

There are still leaders that can push the third leg higher. NVDA is ready to break upside. AAPL could throw in upside. AMZN and GOOG are still in position to really help, but they have to make some serious moves in their four month bases.

Software is solid and not all have broken higher yet, e.g. NOW, NTNX; CRM has consolidated and is at a make or break point. Financials are also there, machinery/manufacturing as well.

Good, but have to perform. Thus far the upside continues to win out on the recovery in spite of the trade, shutdown, world economic, and some earnings have been feast or famine.

That shows a resilience in the move and we will thus continue to let positions run and pick up new positions as they show themselves.

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Re: US - Market Direction 41 (Mar 18 - Dec19)

Postby winston » Mon Jan 28, 2019 8:48 am

THE CHARTS

After 2 to 3 days down following the prior Friday upside gap, downside that did not look very upside positive after Tuesday, stocks resumed the third bounce.

There were clearly leaders, e.g. SOX, while others more or less followed along. SOX is on the run upside while the others are up, but of course face more upside resistance challenges as they resume the climb higher.

Nonetheless, the indices are doing exactly what they need to do and they have some leadership from semiconductors, financials coming back, and of course, software.

SOX clearly led upside, surging Thursday to a new recovery high and Friday as well.

NASDAQ was pulled along by SOX' performance, moving Friday to a new closing high on the recovery -- by a slim margin.

DJ30 moved to a new recovery high as well, just eclipsing the prior recovery high a week prior. DJ30 did fall well off the Friday intraday day high to close, taking some of the luster off the move to near the 200 day SMA at 25,000, the next resistance point to take on and overcome.

SP500 gapped and rallied off the 3-day test, moving intraday past the prior week's closing and recovery high. SP500 faded to close just below that prior high. Volume was up but still below average. The move was upside positive but not definitive, a good rebound off a test of the attempt at a new leg. Now it just needs banks to continue and lead the way higher.

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