The NASDAQ and Russell have confirmed the countertrend rotation up is complete.  However, the S&P refuses to break through the 1860 area.  While this gives me some concern, we may see that break occur early in the week.  If that is the case, then the next leg down may be in the process of occurring.    The NASDAQ reached a point of being short term oversold on Friday.  The S&P was not oversold.  This suggests one of two possible events that will occur early next week.  The first would be to see initial downside.  If this is the case, watch Volume and Breadth carefully.  If theRead More →

Markets spend most of their time in rotation in varying degrees of time. Understanding the fractal nature of markets and the timeframes is important to any analysis, especially when that market may be at a significant Key Reference Area in the longer term. The Stock Indices in the longer term broke down in August of last year and traded below a rotation that took most of 2015. That vertical development took only three days. Finding a stopping price in the S&P 1800 area, the Indices have been in rotation ever since. However, at the beginning of January, it appeared they were beginning an impulsive moveRead More →

The weekend Briefing takes some time to analyze the longer term development of the Stock Indices, and bringing that analysis down to the short term.  The rotation up from Wednesday’s low had to be expected and was signaled by a strengthening of the indices going into that low.  However, by the end of trading on Friday, the Indices reached a point of being extremely overbought.  This now suggests some type of move back to the downside.  How that develops will be important.  I cannot ignore the fact the buying off of Wednesday’s low was broad based.  However, volume fell off, suggesting buyers were exhausting themselves. Read More →

The weekend Briefing is longer than normal.  I wanted to be sure to cover the important aspects of the development of price in the Stock Indices and the structure of that development.  Additionally, it is important to compare the current selloff with the one that occurred in August.  Based on that comparison, it appears the Indices will trade below 1830 and like move down to the 1700s in the S&P.  However, 1856 down to 1830 is extremely important support.  We could see a rotation back up from this level.  The degree of that rotation in terms of price and time is yet to be determined.Read More →

The selloff in the Stock Indices the past week has been impressive.  Unlike the August selloff, it is orderly and supported by the internals.  Volume is increasing with each move lower and Breadth is declining.  This suggests the trend down is building on itself, at least for now. On Thursday the Indices reached a point of being oversold, suggesting some type of rotation up to work off the oversold condition.  Friday morning there was an attempt to move higher but by the afternoon it was obvious traders did not want to go home with positions.  That led to the Indices declining on stronger Breadth.  Therefore,Read More →

The Stock Indices sold off impulsively going into the end of the week.  Important to the analysis is the fact the S&P traded and closed below 2035.  I cannot stress enough how important that area is in terms of longer term price development.  While futures volume was decent, total NYSE volume exploded and declining volume overwhelming advancing volume.  The interesting part is the fact that Breadth was negative but not extremely so.  This suggests the market is not yet oversold.  Closing at the low of Friday also raises the probability we will see additional downside follow through on Monday before there is any pause or countertrend rotation.  ThereRead More →

As discussed in last weekend’s Briefing, the Stock Indices attempted to rally on weak and weakening internals.  Inter-market divergences were prevalent.  New lows were increasing and new highs decreasing.  On Tuesday I pointed out an intraday move on three occasions of sellers stepping in and stopping the “buy the dip” mentality.  We have not seen that very often in the past several years.  On Wednesday buyers attempted to rally the market once again but they were met with strong selling pressure.  However, there was an internal strengthening of the Indices in terms of Breadth.  I suggested in Wednesday’s Briefing that unless Breadth eliminated that divergenceRead More →

Friday’s rally was impressive in terms of price and volume.  However, if you look into the move more deeply you will find a very weak structure.  It is important to remember the Indices are derivatives.  This means they derive their value from the shares that make up those respective Indices.  On Friday about 67% of the stocks in both the NYSE and the NASDAQ were trading lower, not higher.   New highs during the week declined with Friday showing an increase in the number of new lows.  Volume was extremely good, so the shares that were trading higher were certainly being supported. Monday’s trading will beRead More →

I hope everyone had a great holiday week.  Due to the low volume in the Stock Indices and most traders being on vacation, the development of price and the structure of that development are somewhat suspect.  It will take a couple of days into the coming week before the internals can be evaluated with any degree of high probability.  As a result, I took the time in this Briefing to explain the longer term development of price in the Stock Indices and the corresponding structural breakdown.  Longer term, the structure of price was not confirming development.  That led to the pause we have seen forRead More →

Next week is a holiday week.  Volume will be extremely low.  That allows for any large fund to distort price development.  While this time of year is typically bullish, there are many news events that could affect current trends.  If you are short term trading, use the areas of good trade location outlined in the Briefing.  On a short term chart, watch volume.  It should be increasing, if even slightly, to support the move in the direction of your trade.  Otherwise, comparing the short term internals to previous development and price support will be worthless.  Longer term price development on the recent move up isRead More →