Indeed, the markets have bounced and when considering today's robust rally the general sentiment should be nothing less than bullish. The DJ transportation average appears primed to make new highs but that verdict is still out. As mentioned in previous posts this could all change on a dime, but until then the rally hats are on...
Looks like a bear wedge pattern may be developing with current prices at an apex though WHR continues to maintain a medium term uptrend. A downside break could happen any day, supported by several recent bearish daily candlestick patterns. Examples: 1/9/15 doji, 1/12/15 bearish engulfing, 1/20/15 dark cloud cover, today (closing dependent) another doji. Resolution should be known very soon.
Primarily agree however upside resistance may occur at the previous high per 12/29/14 @ ~2093. If the SPX breaks out making new highs then the 2130 projection seems a reasonable target as it is within the upper boundary of an uptrending channel pattern. On the downside it's clear that the 2000 price level is a significant support zone. Some are anticipating an inevitable break of this zone followed by a market descent to the October lows. e.g. Tom O'brien @ TFNN. Thus far the SPX continues to trade within near term support and resistance while the long term uptrend remains in tact.
It will be interesting to see the markets reaction tomorrow. Will they sell they sell the news? If so then all has been priced in and the markets will likely break key support levels and test the October 2014 lows. If the markets bounce here, then the bubble continues to bubble.
Probably down a fraction pre-market and early trade followed by an intra-day reversal transitioning into a continued rally for a couple days in anticipation of the Jan 22nd ECB QE announcement. In the near term a break and close below ~ 197.86 will not bode well for the SPY and general US equity markets. This rather significant support level is the result of the following lows: 12/16/14 (197.86), 1/6/15 (198.85), ~1/14/15 (198.57). If this primary support level breaks the next likely target for the SPY will be @ ~ $190 (3/14 - 5/14 resistance zone and 8/7/14 support level). And of course if this last support zone cannot hold the SPY should then test the 10/15/14 lows @ ~ 182.
The DIA and general markets have closed beneath their aforementioned uptrend lines favoring lower prices near term. A breach of the 1/6/15 and 12/16/14 lows would then target the 200 dma. Trading beneath this range should lead the markets into a test of the 10/15/14 lows. Conversely, support at the 200 dma or higher could create a bullish consolidation pattern but this scenario will likely only develop after an initial near term down-move.
Break or Bounce: The bounce scenario appears to have unfolded. A continuation of the current uptrend should initially target the 12/5/14 high @ 17991. If this level is breached then the most recent high of 12/26/14 @ 18103 should be challenged. A breakout of these levels will place the DJX/DIA and general US equity markets into new highs but all may find resistance at the price levels originally mentioned at the beginning of this thread ~ DIA 183-185. In the meantime a reversal pivot price level is currently the low of 1-6-15 @ ~ 17262.
Currently the DIA has broken the intraday lower trendline per 10/15/14 and 12/16/14 session lows. A close below the line will favor a continued descent initially targeting the 12/16/14 intraday low @ 170.74 then the 200 dma @ ~ 169. If these levels are confirmed broken with conviction the next likely support will be the 10/15/14 intraday low @ ~ 158. An intraday rally above the trendline today 1/6/15 would favor a bounce scenario and would likely initiate the next leg up. Today's close is important.
If one plotted the following intra day session lows: 10/15/14; 12/16/14; and 1/5/15, one could observe that the DIA, NAZ, and S&P are positioned virtually on top of their respective bear wedge lower trend lines. Though the higher resistance levels prediction may not occur, the bear wedge pattern may unfold. Trading action near term should be telling as a close beneath the lower trend line will not bode well for the US equity markets while support at the line may indicate a continuation of the current uptrend.
The DIA trend continues to advance however a possible bear wedge pattern is developing per the 10/16/14 and 12/16/14 lows and 9/19/14 and 12/5/14 highs targeting ~ 183. If this price level is surpassed, further resistance may occur at an upper trend line per the 5/28/13 and 12/31/2013 highs at ~ 185. A possible near term outcome involves a continued DIA advance to the 183-185 price zone that should occur within 2-4 weeks at which time market conditions will be overbought naturally triggering another correction. It would seem improbable that the general markets can continue higher without yielding to some form of correction in the near future.
Another pull back to ~$27 on VXX could be a great volatility buying opportunity. The chart pattern would be interesting appearing to be a non inverted head and shoulders bottoming formation. It's highly likely I will take a VXX long position if such price action unfolds especially if it occurs during early to mid January 2015. I will follow up on this post as time progresses.
The indicators point to overbought and could remain there at length. Thus far it would appear by T/A standards that a top is not in place. Pay attention to todays close as a return to unchanged could be the start of a well deserved correction.
Correct. A notion that was summarized well in a ~4 minute youtube video titled, "Dow Sell Off - Massive Market Divergence in 3 Charts - Mike Maloney." He states at :56, "this market here is not a healthy market. This means that less and less of the public, the real investors are in there and more and more of this is basically black box trading, where its programs." Whether Maloney is correct or not can be determined, but in my opinion the video and perspective are worth taking into consideration.
Personally involved with the financial markets for over 25 years and don't recall ever seeing anything like this. I'm now conducting a search, unsuccessfully, for correlations of past price action vs. the current trading environment. If anyone can identify such similarities I would be interested in obtaining that information. The best explanation I've heard thus far claims the US equity markets are primarily driven by black box trading.
Historically bubbles have always popped - always. Watch the four minute video on youtube titled, "Dow Sell Off - Massive Market Divergence in 3 Charts - Mike Maloney". He essentially states, "what is being set up here is probably the biggest market crash in history."
Technical trader Oscar Carboni may have coined a new name for a chart pattern he refers to as the "F-flag". Although the name may be new the pattern is not and when relating this formation fundamentally via traditional TA terminology the "F-flag" is simply a 'flag pattern'. However, when viewed in context within current market conditions this particular pattern could differentiate itself from standard flag patterns in that it has potentially developed during market price highs and slants in the same direction as the current trend. Conversely textbook flag patterns, primarily considered continuation formations within pre-established trends would slant in a direction opposite to the major trend. If Mr. Carboni has indeed identified a true topping bear flag pattern the confirmation of such will be known if/when prices resolve per a sharp decline. Loosely speaking Carboni would refer to such a resolution as 'getting effed'.
Seems mechanized, purchase programs automatically triggered during pre-defined market declines. It would seem systems of this kind can only be successful when the underlying price action is bullish. If the long term trend turns and becomes bearish, continued use of such algorithms will incur significant losses. The current trading environment for US equities and other global markets has been referred to as 'Black Box Trading'.
As stated in my previous post on 10/27/2014 regarding the REGN ascending channel price pattern, support 'may' potentially be found (without any guarantees) per the noted price ranges however if the lower channel line should break ~ 300 the possibility of a trend reversal would significantly increase. Currently REGN continues to maintain a long term uptrend. Good luck.