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The Markets in Development Briefing for December 18, 2014

Below is the link to today’s Briefing.  To summarize, today’s rally was strong.  I was extremely surprised to see Breadth be as strong as it was.  While the Indices were overbought yesterday, they are at an extreme overbought condition that I cannot remember seeing.  I always look at the day after an FOMC meeting as more important than the day of the FOMC announcement.  That being the case and with volume and Breadth supporting the rally, the higher probability is to see the upper trend line tested in the 2090 – 2100 area in the S&Ps.  That said, the Indices have been quite volatile.  If most of today’s range is retraced tomorrow, that would be a significant event.  Unless that happens, I expect some type of rotation to work off the overbought condition.  How that develops will be important.  Watch the internals carefully on any additional move above today’s high for divergences that will signal rotation.

The Markets in Development Briefing for December 18, 2014

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The Markets in Development Briefing for December 17, 2014

Below is the link to today’s Briefing.  In typical fashion the FOMC announcement caused exuberance in the Stock Indices and yesterday’s range was traded through.  However, I have found the day after the FOMC meeting is typically more important.  Therefore, what happens tomorrow will be more important than today’s rally.  The Indices reached a point of being extremely overbought like I have not seen in a very long time.  As a result, I have to expect some type of rotation back down.  How that develops will give us a better understanding of the intermediate term direction.  Keep in mind, the environment that caused the selloff in October and the December selloff has not changed.

The Markets in Development Briefing for December 17, 2014

 

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Below is the link to today’s Briefing.  Structurally, the move lower today was strong, even in light of an attempt to drive the futures prices higher.  It was clear in the first hour of trading the Indices were going to head lower.  I have included this in the analysis tonight.  

Monday’s are typically bullish and the market has reached a point of being oversold in the short term.  Therefore, while we may see persistent selling on Monday, watch Breadth.  If it is diverging from today, that will suggest some strength coming into the market and expect some rotation to work off the oversold condition.  There was a good divergence in NASDAQ Breadth today.  However, if the internals continue to weaken on lower prices, then persistent selling will occur. 

Additionally, the Russell is at an important inflection point.  The NYSE has traded through it and the S&P is approaching its inflection area.  What happens next week could be significant.

The Markets in Development Briefing for December 12, 2014

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The Markets in Development Briefing for December 10, 2014

Below is the link to today’s Briefing.  In last night’s Briefing, I was perplexed over the short term bullish signal the Russell gave yesterday and the bullish day patterns in all of the Indices.  But, I also stated the bullish day patterns would become bearish day patterns if they could not trade above yesterday’s highs in the first hour of trading and if the single prints were closed.  The strategy was to be short if the single prints were closed.  That is exactly what occurred today.

Today’s day patterns were bearish.  But the same strategy is true for tomorrow.  Shorts should be considered below today’s low but if they cannot trade below today’s low in the first hour and if the single prints are closed, the day pattern becomes bullish.  I think this is a lower probability because today’s move down was structurally strong.  Also, if there is a lower low tomorrow the market will reach an extreme oversold condition where some type of rotation can be expected.

The Metals may be getting ready to breakout.  Use today’s extremes for trade location, especially to the long side with stops just below today’s high on any breakout.

The Markets in Development Briefing for December 10, 2014

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The Markets in Development Briefing for December 9, 2014

Below is the link to today’s Briefing.  It was a crazy day in the Stock Indices.  Longer term, the Indices have been diverging from each other, with the Russell and NYSE showing much more weakness.  Today, at the low of the day, the Russell showed more strength, followed by the NYSE.  Then, there was a rotation up that closed the gaps and brought the Russell to a very important extreme.  What happens tomorrow could give us more information on the intermediate direction of the Stock Indices.  Watch the Russell carefully, along with the NYSE.  If they trade above current upper extremes and the structure of the Indices strengthens, we could see a move higher into year end.

The Markets in Development Briefing for December 9, 2014

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The Markets in Development Briefing for December 1, 2014

Last week was interesting in the Stock Indices and Oil.  While it was a low volume week, there was a lot of volatility in terms of the Structure of the Indices and in Price for Oil.  Today’s selloff in Stocks could be the beginning of something greater.  What happens tomorrow will be important.  I have outlined critical areas of support that if broken, will suggest the potential for a greater degree timeframe rotation down.  Overall, the Structure of the rally in the Indices is still weak, although it appeared to show some strength on Friday.  Stay tuned.

The Markets in Development Briefing for December 1, 2014

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The Markets in Development Briefing for November 13, 2014

While price in the S&P and NASDAQ made new highs today, the structure of the rally continued to weaken.  Additionally, the NYSE and Russell diverged by not putting in new highs and trading lower.  Unless the internals strengthen in the next few days, the probabilities of a move to the downside are increasing.  Watch carefully for the levels outlined in the Briefing to be broken.  If they are, the selling could increase.  It is obvious.  Buyers are unable to drive price in vertical development away from the current rotation.

The Markets in Development Briefing for November 13, 2014

 

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The Markets in Development Briefing for November 6, 2014

Below is the link to today’s Briefing.  Tomorrow will be extremely important in the Stock Indices.  While the S&P pushed to new highs today, the other Indices diverged.  Additionally, the structure of today’s rally was still extremely weak.  The Indices are coiled and have the  potential for a large move in one direction or the other.  Employment numbers are out tomorrow.  They can change the market structure.  However, if there is a rally tomorrow, the last hour of trading will be very important.  If the Indices cannot hold on to early gains, or if they trade lower from the start and close lower, it will suggest at least an intermediate term top may be in.

The Markets in Development Briefing for November 6, 2014

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Below is the link to today’s Briefing. The announcement by the Bank of Japan overnight certainly has thrown a wrench into the analysis.  That event, while likely having serious intermediate to longer term impact on the markets, supported a move to new highs in the S&P and NASDAQ.  I have been discussing the weakness of the structure of the current rally for several days.  That structure did strengthen somewhat on Friday.  However, it must continue to strengthen, if the current rally is to be sustained.  As I have stated before, the higher probability is always for price to correct to the internals, unless there is a news event.  The BOJ announcement may have done that in the short term.  I am still skeptical.

The coming week and the impact of that announcement will be extremely important going forward. Trade with caution on Monday until the real impact has been flushed out.

The Markets in Development Briefing for October 31, 2014

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The Markets in Development Briefing for October 29, 2014

Below is the link to today’s Briefing.  The Fed statement is out and QE is over.  Now we will see if the current valuation of the Stock Indices is sustainable without help from the Fed.  While today’s action was basically “knee jerk”, what happens in the next two days, will be important.  The structure of the market is still very weak, so if the existing levels are to be sustained, it will have to strengthen.  If it does not, we will see more downside pressure.

The Markets in Development Briefing for October 29, 2014