Update January 13th, 2011

Market has me feeling like this.

Quick Update December 31st, 2010

Last year, on Thursday, December 31st, many of you may remember the huge sell programs that hit the market just a few minutes before the close. The sell programs took no prisoners and the whole market fell off a cliff. Today’s action certainly looks about the same but, unlike last year, today most of the indexes were able to recover, except for IWM and its sidekick, KRE.

This is a one-day 15min chart of IWM showing that huge closing candle. IWM also closed below 78.31 which confirms the double top formation in the 60min time frame.

Chart of $NASI with the expected negative tick.

Chart courtesy of StockCharts.com

The problem I see right now is that two key sectors are exhibiting weakness, the $RUT and the $COMPQ. We’re seeing internal, under the hood weakness in the $COMPQ and overt distribution in the $RUT. The $SOX index is hanging by a thread and any more selling in the $RUT is likely to become contagious and the $SOX appears susceptible. And if the $SOX should falter then that will bleed over the the $NDX and $COMPQ. So caution is the word of the day for now and until the view gets a little clearer.

Happy New Year!

P.S. This is the last post that I’m going to do during the week. From now on, I’ll just post on the weekends. But, if I see something important, like this distribution in the IWM I’ve been following all week, I’ll put up a post during the week. Thanks for stopping by.

Celebrating The Return Of The Sun

Thousands of years ago our ancient ancestors understood and lived in harmony with the cycles of the sun, moon, and seasons. Every major culture, from the Anasazi of what is now New Mexico, to the ancients who built Stonehenge, recognized the importance of the returning of the sun. By whatever means, a mark on a cave wall, a shadow pattern on the steps of an ancient Mayan temple, our ancestors watched for the sun to stall its descent on the southern horizon.

Anyone who pays attention to the sun during this time of the year knows that there are days in and around the solstice where the sun does not change course much. The ancients knew this as well and waited for confirmation that the sun was slowing and then finally halting its descent in the sky. Once the ancients were convinced that the winter solstice had occurred, they informed the populous to make preparations to celebrate the returning of the sun. These celebrations usually lagged the actual solstice by 2-3 days.

Regardless of what name you give to your solstice celebration, may this day find you among friends and loved ones, may you eat heartily and share tokens, and may you find comfort and respite in knowing that more light will shine upon you and that the seasons begin anew.

Oz

Update December 22nd, 2010

This market reminds me of Icarus, who made wings out of wax and then tried to fly to the sun.

$VIX closed 15.45, its lowest level this year and at its lowest close since late summer of 2007. I opined the other day that $VIX could go to 12 or so but that I doubted that would happen. Now I’m not so sure. A close anytime in the next few sessions at 14.99 or less could mean 12 or less.

$VIX:$VXV closed at .79 and I believe that’s the its lowest level ever. I can only get data going back three years on this so I’m not 100%.

$TRIN was above 1.xx almost all day and I have the close at 1.07 so some signs of stealth distribution but needs follow through to be meaningful.

AAPL has been consolidating for more than two months. Is this a topping pattern or a bottoming pattern? As goes AAPL, so goes the $COMPQ/$NDX and probably the $SOX to boot.

Until there are some obvious signs of distribution and as long as trend lines continue to hold, then bulls remain in complete control of the market and its direction. In the past, market environments similar to the current market environment have led to pull backs and in some cases serious declines, but if it was that easy we’d all be out of the market or short, wouldn’t we? As Joe Granville is credited with saying, “The obvious is obviously wrong.”

Be careful.

Update September 30th, 2010

20% increase in volume off the top and the biggest volume down day since the market bottomed, AKA distribution. Doesn’t mean the market is headed straight down but bounces from here will most likely be sold as word spreads that the Big Boyz are getting out. And though I continue to say that longs are at risk I still think shorts are front running, unless maybe you caught this morning’s exact top.

Most of the ADX lines on the majors ticked up today. Go figure. The ADX line on the $NYSI chart will either stall or tick down tomorrow, unless there’s a mega rally. Most breadth indicators not really showing much change today.

Chart courtesy of FreeStockCharts.com

$RUT/IWM 60min chart is still holding up well. Could come down to test that inner trend line. Only a break of that would be concerning to longs.

$RUT/IWM 60min 9/30/10

Chart of $SPX showing possible Parabolic SAR sell signal tomorrow. Also some different Stochastics, all of which are saying time to say bye, bye to the rally, IMHO, of course.

$SPX w/Parabolic SAR 9/30/10

Update September 20th, 2010

At the close:

Market has spoken and wiped away all the negative divergences from last week. $TRIN closing near .36 suggests market is extremely overbought but Asian markets will probably rally insanely this evening and THEY’LL probably pump the ES up 10pts or more by tomorrow’s open. Maybe the morning pump won’t hold this time, but then again it might.

Looks like another 90% day, which makes two Monday’s in a row. Really thought last Monday’s 90% day would be an exhaustion event and with the market going sideways the rest of the week it sure seemed that way, but there you go.

The RSI on most 60min charts is now above 70 and this should initiate some profit taking in the next day or so, but should doesn’t mean much without evidence.

This chart is a capture I did back in March of 09′ when the $SPX was just coming out of its nose dive. According to the 60min trading strategy, the $SPX should have been a sell when the RSI went above 70, but that didn’t happen. This same thing happened in July of 09′ and in the February/March rally of this year which is the same as saying that the market can remain overbought for much longer than you would expect. This also could be signaling a paradigm shift in market environment. Where I have said in the past that the market was weak and nothing like the past market where every decline ended with a V-shaped rally, well guess what?

I am still in cash and feel very foolish about that, but at least I’m not short and I hope none of you were going into this session.

Right click on the image to see the full size and feel free to copy it and/or print it out.

Intra-Day Update August 17th, 2010 IWM Pennant Breakout

IWM breaks out of pennant in 15min time frame

August 6th, 2010 Turn your speakers up to eleven & hit “Play” or buzz off!

Update January 22nd, 2010

Tremendous amount of damage done in the past two days. The market will take a while to heal. Now that the $INDU & $SPX have broken decisively below their respective 50MA’s, I don’t really see support until the 250EMA, which is around 9600 on the $INDU and 1030 on the $SPX. Maybe the markets will reverse long before then. I don’t know.

Except for $RIFIN & $KRX/KRE, all of the financial sector ETF’s look almost identical to this chart of XLF. Notice on the daily chart how that 250EMA has offered support in the recent past. With the red DI line on top and the ADX turning up, I seriously question whether that 250 will hold.

The weekly chart hints that XLF is about to break down and head south in a big way. But the proof will be in the pudding.

Charts courtesy of StockCharts.com

Pre-Market Update October 1st, 2009

I believe that at turning points in the market a bell actually goes off. A bell went off yesterday morning at the open. Those huge, high volume, red candles that appeared everywhere were the result of one big player getting out and then the algorithms on hundreds or thousands of other computers triggered and the selling intensified. The big players showed their hands yesterday and while the market closed down only a little the fact that these big players have started selling in earnest should be of major concern to everyone. Due to yesterday’s high volume I am considering it a distribution day even though the market closed flat. But everything needs confirmation and a follow through to the down side is necessary.

The $SPX is crawling along the 9EMA and is now sitting just above ST trend line support and the 20MA in the 1050 area. The key number is still 1041. If the $SPX can stay above 1041 on a closing basis for the next several sessions, then the SG will show a loss of downside momentum and begin the reversal process.

10 of 20 stocks in the $TRAN are now below their 20MA’s and the railroad stocks in the index are now below their 50MA’s. The airline stocks and the truckers are holding up the $TRAN. Should weakness appear in FDX, UPS, AMR, or CAL, etc, then the $TRAN will continue its decline and will eventually pull the rest of the market down with it.

16 of the 30 stocks in the $CYC are trading below their 20MA’s and the $CYC closed yesterday right on the 20MA. Any more selling in the key stocks in the $CYC will drop the $CYC below its 20MA.

If the market is going to hold up without further decline, then the $TRAN and the $CYC must stop their slide. Should weakness in these two key indexes spill over to the $SOX then I don’t think the $SPX will be able to stay above its 20MA.