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Development of the Stock Indices Did Not Confirm a Top…Yet!

Below is the link to today’s Briefing.  It is important to understand both the development and structure of any financial instrument.  The current rally is developing higher but on a very weak structure.  This suggests that, unless the structure strengthens, there will be some type of rotation down.  How that rotation develops will tell us a lot about the degree and timeframe of the rotation.  Today’s move lower in the Indices has the appearances of a structure for a move lower.  However, from a development perspective, it did not close below important support.  That leaves a large question as to whether this is the beginning of a longer term rotation lower.  The signal for that will be closing below 2100 in the S&P and seeing the short term structure of that move increase in strength.  So far, neither has happened.  But, it will be important to watch for that occurrence in the coming days.

The Markets in Development Briefing

 

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Investor beware! Trader get ready!

Below is the link to today’s Briefing.  It is a little longer tonight.  I wanted to take time to review the current structure of the Stock Indices.  While the structure continues to deteriorate, it does not preclude price from moving higher in the short term.  2140 in the S&P is a technical upside resistance area.  While that area could be tested, it will take some strengthening to do it.  Typically, that strength comes from a news event.  However, most of the news now is not positive.  When the selling begins, it will be important to analyze the development of the selling pressure to determine the extent of the potential correction.

The Markets in Development Briefing

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The Markets in Development Briefing for February 19, 2015

Below is the link to today’s Briefing.  It is a little longer than normal.  I spent more time in this Briefing going over the inter-market divergences and weakening structure.  Any trend, if it is going to be sustained, must have a structure to support it.  If the structure does not support price development, then price will eventually correct.  While the internals can always change, until they do, the risk is to the downside.  I wish I could predict the exact timing of the next move to the downside because it should be a very good move, however I cannot.  All I can do is raise the warning flags that a potential move is imminent.

When and if that move begins, it will be important to analyze its development to determine the degree of timeframe of the move lower and its impact on price.

The Markets in Development Briefing

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The Markets in Development Briefing for February 17, 2015

Below is the link to today’s Briefing.  The Stock Indices were slightly higher today, but the internal structure continues to deteriorate.  To me, it looks as if the professionals are doing everything they can to keep retail investors fully invested while they are divesting themselves slowly.  Volume was extremely low.  Breadth was negative.  The number of New Highs declined.  The structure of the market is screaming weakness, yet price continues to move higher.

From an environmental perspective, there are many inherent risks.  One such risk hit home today.  As most of you know the Baltic Dry Index is a measure of the goods and services being produced and shipped worldwide.  It has hit its lowest level in history.  That level caught my attention.  I have been an investor/partner in an import company here in the US for quite some time.  The company imports material from Western Europe to the East Coast of the US, so the labor disputes at the ports in California are not an impact.  Today, for the first time in many, many years the company was notified a shipment scheduled to leave Europe this week had been cancelled because they could not fill the ship.

Traders and investors should be very skeptical of the current move higher in the Stock Indices.

The Markets in Development Brieing

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The Markets in Development Briefing for February 11, 2015

A LARGE MOVE IS COMING IN THE STOCK INDICES

Below is the link to today’s Briefing.  I was as blunt as I could be.  There is a large move coming in the Stock Indices.  Based on the current internal structure of this market, the higher probability is the move will be to the downside.  While they can continue to make slight new highs each day and even make a new all-time high, eventually the lack of internal structure will cause price to correct and correct substantially.  The only thing that will change this would be to see new highs on strengthening internals.  Some will look at price action only and be convinced price is moving higher.  Price action is important, but when not accompanied by a strengthening structure, will result in a quick rotation in the opposite direction.  In my opinion, we will see 1980 in the S&P tested and likely the 1800 area before it is over.  The timing of the move is unsure, but unless the internals change, it will come.

The Markets in Development Briefing.

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The Markets in Development Briefing for February 10, 2015

Price action in the Stock Indices today was impressive.  I say that because the rally was simply not supported structurally.  In fact, there is a divergence between the internals and price in almost every internal measure, including an inter-market divergence.  If any selling pressure comes into this market tomorrow or the coming days, the move down is likely to be strong.  With that said, you have to respect price, but with a lot of caution.  If the internals strengthen on any move higher, the rally will continue.  If they do not strengthen, it is only a matter of time before the structure weighs on price.

Oil sold off today and tested the 50.00 area.  If it trades below 50.0 and can hold below it, short strategies should be implemented with stops above 50.00.

The Markets in Development Briefing

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The Markets in Development Briefing for February 5, 2015

Below is the link to today’s Briefing.  The S&P is at a critical Key Reference Area.  However, going into that area, the internal structure of the Indices is weakening.  The day pattern from today is exhaustive in nature.   Additionally, the Indices reached an extreme overbought condition today.  There are also some inter-market divergences I discuss in today’s analysis.  Either the Indices extend their gains and the structure strengthens, or the structure will weigh on price.

Gold has given us some good areas of trade location.  Oil’s day pattern suggests additional rotation down, unless new buyers step in tomorrow in the first hour of trading and drive it above today’s high and hold it above it.

The Markets in Development Briefing

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The Markets in Development Briefing for January 30, 2015

Below is the link to today’s Briefing.  I took a little extra time to explain the development of the Stock Indices because they are at an extremely important support area.  Breaking through that support will attract additional selling pressure.  However, if they cannot break through, then buyers will realize sellers are simply not strong enough and we will see rotation back up through the range and potentially new highs.  At this point, I believe that is a much lower probability.  If there is going to be a break to the downside, then it should occur early in the week.

So far, the internals of the market are supporting the declines.  However, the NASDAQ is still showing more short term strength than the S&P.  The NASDAQ will need to catch up from a development perspective to confirm the move.  Finally, if there is a break lower, the Indices will reach a point of being extremely oversold.  If that occurs, expect some type of rotation after the initial move to work off the oversold condition.  How that rotation occurs will tell us a lot about the strength of any additional declines.

The Stock Markets is typically an optimistic organism.  It does not like to give up its gains easily.  The volatility we have been seeing, is that organism struggling to hold on to what it has gained.  However, once major support levels are broken, the Market will move quickly to exit.  What happens the first part of this week will give us a good indication of the intermediate to longer term direction of the Indices.

The Markets in Development Briefing

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The Markets in Development Briefing for January 27, 2015

Below is the link to today’s Briefing.  Today’s move lower could be the beginning of something greater to the downside.  However, the Russell and NYSE did not confirm the move in the S&P and NASDAQ.  While the market internals did appear to support the move lower, they did not reach a point where I could say the move was impulsive from a structure perspective.  Certainly it was impulsive in price, but price needs to be supported by the internals.  That said, there is the possibility the Indices are building up to a much greater move lower.  Trading below 2020 in the S&P and then below 1980 will confirm a greater degree move down.  Otherwise, they are still in a countertrend rotation and a basic “pause” in the initial move down.

Tomorrow’s trading will give us more information to make a higher probability analysis.

The Markets in Development Briefing

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The Markets in Development Briefing for January 21, 2015

Below is the link to today’s Briefing.  So far, the rotational pattern in the Stock Indices is corrective in nature.  This suggests when it is over there will be at least one more thrust lower.  What would change this would be breaking out above 2060 in the S&Ps and doing it on increasing volume and strong Breadth.  Alternatively, if the S&Ps trade below 1985 it will increase the probability the next leg lower is in process.  Note as well, the Russell diverged from the other Indices on a development basis today and the day patters are bearish day patterns.

I am concerned over the reversals in Gold and Silver today.  However, if the single prints from today’s reversal begin to get traded through, it will suggest buyers coming back into the market and will be a sign of strength.

The Markets in Development Briefing