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The Markets in Development Briefing for October 15, 2014

Below is the link to today’s Briefing.  As suggested in last night’s analysis, the large move lower did occur.  It appeared at first the Fed may be providing liquidity to stop the slide but that was certainly overcome as the selling persisted.  There are now several pieces of information that suggest we may now see some type of intermediate term rotation back up.  Make no mistake.  The trend is down.  It will be important to analyze any rotation up for its countertrend characteristics.

The Markets in Development Briefing for October 15, 2014

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The Markets in Development Briefing for October 10, 2014

Below is the link to today’s Briefing.  Yesterday I suggested two potential scenarios.  The first was for the Indices to put in a lower low on diverging internals.  That would signal some type of rotation up.  That is exactly what occurred.   As the oversold condition of the market was worked off to a degree, additional selling came in this afternoon and pushed the Indices to new lows, testing extremely important support. 

Going into today’s low, the Indices sported additional divergences in Breadth and Volume.  The final leg down today, did not appear to be impulsive.  Just as I pointed out on Wednesday that the rally was impulsive in price but not structure, so too, today’s afternoon selloff was impulsive in price but not structure.   

I always have to allow for another thrust lower and then some rotation.  However, the structure of today’s afternoon move and the oversold condition of the Markets suggests some rotation back up.  How that rotation develops will be extremely important.  It will allow for re-entering short positions because the next move down will likely be a very good move.  Keep in mind, the trend is down.  The rally trend lines have been broken.  However, there are always countertrend rallies.

The Markets in Development Briefing for October 10, 2014

 

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The Markets in Development Briefing for October 9, 2014

The action in the Stock Indices today was very strong. While I pointed out in yesterday’s Briefing the rally was weak, today’s move down was about as strong as it can get.  This suggests there should be follow through tomorrow.  However, the Indices reached a point of being extremely oversold in the short term timeframe.  Therefore, there are two possibilities.

  1. The Indices will persist lower at the open tomorrow and will test lower support before finding a stopping price and rotating up to work off the oversold condition.  If this occurs, look to the internals to determine if divergences are developing.  If they are, then expect some type of rotation up.
  2. The Indices will begin a slight up move tomorrow that will work off the oversold condition without much price appreciation.  This will allow for another thrust lower on Friday or Monday.

There was a slight divergence between the S&P and the NASDAQ, suggesting the possibility of some rotation, but the Russell may have negated that because it closed at the low as is much weaker.

This is the link to today’s Briefing: The Markets in Development Briefing for October 9, 2014

 

Thanks,

Joe

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The Markets in Development Briefing for October 7, 2014

Below is the link to today’s Briefing.  The move down in Stock Indices did not develop impulsively.  However, as the Market moved lower in the afternoon, volume began to increase and Breadth began to decline.  The NASDAQ is at a point of being oversold, but the S&P still has some room to move lower before being extremely oversold.  If there is persistent selling tomorrow, volume should increase above this afternoon’s volume and Breadth should be weaker than the lowest level today.  Any lower price on stronger Breadth would indicate the potential of some type of rotation up to work off the oversold condition. 

The Russell, as I suggested might happen, broke through lower support a few days ago and then retested the breakout point.  Today, it traded back below the breakout, suggesting a longer term move may be in the process of developing.

The Markets in Development Briefing for October 7, 2014

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The Markets in Development Briefing for October 1, 2014

Below is the link to today’s Briefing. Two important things occurred today.  The first was the confirmation I have been talking about for quite some time concerning the weakening of the market internally.  The structure of the market simply could not support price and we saw the expected move lower.  While it is always possible for the structure to strengthen to support price, that typically happens on a news event.  Unfortunately, the news is not positive for the bulls.  The second is the Russell has broken major long term support.  As I discussed in last night’s Briefing, we can expect a retest of the breakout point.  However, it will be important for it to hold below that level.

Finally, the NASDAQ has reached a point of being oversold, but the NYSE still has some room to go. This suggests we may see some additional downside tomorrow before we see any type of rotation back up.  How that countertrend rotation develops will be important to analyze.

The Markets in Development Briefing for October 1, 2014

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The Markets in Development Briefing for September 26, 2014

Below is the link to today’s Briefing. The development of the Stock Indices did not give conclusive evidence of the next intermediate to longer term move, as I thought it would.  Today’s rotation higher was on low volume and worked off an oversold condition nicely.  That suggests another move to the downside.  However, there was more price appreciation than I like to see in a countertrend rotation and the day pattern from today is a bullish pattern that suggests follow through on Monday.

I outlined three strategies in the Briefing to adopt for Monday. Keep in mind, the bullish day pattern becomes a bearish day pattern if the single prints from today are closed.  Also, I do not think those single prints are strong because they were accomplished on low volume.  But, if the Indices can trade and hold above today’s high, that will suggest, the move down is complete and we are headed back to test the highs.

The Markets in Development Briefing for September 26, 2014

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The Markets in Development for September 25, 2014

Below is the link to today’s Briefing. As I discussed last night, the higher probability was for the Stock Indices to begin moving lower almost immediately.  I allowed for a slight higher high in the first hour, but the selling had to intensify in that first hour, or we were likely headed to new highs.  Selling began immediately and persisted throughout the day.  As of the close, the Indices are short to intermediate term oversold.  The day patterns suggest exhaustion, unless new sellers come into the market early tomorrow.  The first hour of trading will be important.

The probabilities are such that what happens tomorrow will give us enough information to determine if a longer term participant(s) are taking over the market and we are transitioning into a longer term move to the downside. I have to allow for lower prices, but with the current oversold condition, I have to consider some type of rotation to work off that oversold condition before a more persistent move down will occur.

The above does not preclude the Indices from accelerating lower from the open. If that occurs, I have outlined lower support levels that should give the market a reason to pause.  On any lower lows, monitor the internals carefully to determine if they are beginning to strengthen and begin some type of rotation up.

The Markets in Development Briefing for September 25, 2014

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The Markets in Development Briefing for September 24, 2014

Below is the link to today’s Briefing. If today’s move up is a countertrend rotation, then the Indices should start down early tomorrow.  As you will see in the Briefing, there is still some room for them to move slightly higher.  However, if they hold above today’s high and if volume is increasing on any move higher, then the countertrend strategy will diminish in probabilities and we will likely be off to new highs.

I do want to be clear. The above is a short term strategy.  The longer term structure of the Indices is weak and continuing to weaken.  While it appears the move down that began last week is the beginning of something greater, it does not preclude the market from putting in another high before a greater degree timeframe correction takes place.

The Markets in Development Briefing for September 24, 2014