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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

 

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The Markets in Development Briefing for September 22, 2014

Below is the link to today’s Briefing. It is too early to determine if an intermediate to longer term timeframe top is in.  However, as I have been stating for the last several weeks, the structure of the Stock Indices is weak and weakening.  It is not supporting price.  Also, we have now entered a time period when Stocks typically do correct.  The development of the Markets tomorrow will be important.  Additionally, if we close the week lower, it could signal the balance of this year will be extremely weak.

The Indices are oversold after today’s extreme negative Breadth reading. Therefore, I have to expect there could be a lower low tomorrow, but some type of rotation to work off the oversold condition will occur.  The psychology is to buy the dips.  If we are entering a potential trend change, the rotation up will have to be contained and once it is complete, selling pressure must overrun the longs.

The Markets in Development Briefing for September 22, 2014

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The Markets in Development Briefing for September 16, 2014

Today’s move higher in the Stock Indices was impressive in terms of price.  However, volume was light and Breadth was not strong.  More importantly, with the S&P only 18 points away from putting in all-time new highs, the number of individual new highs on the NYSE is declining, as the number of new lows expands.  The structure of this market continues to weaken.

Obviously, there is anticipation the FOMC announcement tomorrow will not do anything to bring reality back to the Indices.  I fully expect the Fed to say exactly what the market wants.  At this point, their intention is to keep asset prices high………..until the structure of the rally collapses.  Of course, the internals could always begin to increase to support the current level of price.  Until they do, the risk grows to the downside.

You can access today’s Briefing by clicking:  The Markets in Development Briefing for September 16, 2014.

NEW HIGHS NEW LOWS 140916

 

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The Markets in Development Briefing for September 11, 2014

Below is the link to today’s Briefing.  Based on the current analysis and information from the market, I believe the higher probability is for slight new highs.  That said, I also think the market is sending signals that a longer term top may be forming.  While that does not preclude slight new highs over the next few weeks, the structure of the market continues to weaken.  The current environment is such that anything can tip the market over.  However, without that tipping event, sellers are not strong enough to outweigh buyers.  Longer term, buyers appear to be weakening.  One day, unless the structure of the market changes, those buyers will become sellers also.  For now, the trend is up but the risk is to the downside and it increases with each new thrust higher.

The Markets in Development Briefing for September 11, 2011

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Does Participation Matter Part II

After sending out my analysis titled, “Does Participation Matter,” I had some excellent questions and comments.  One questioned the 1990s bull market and the fact that the Russell lagged.  Therefore, I went back to the 1990s and analyzed the participation by the Indices up until the correction that took place in 1998.  You will see, the Russell did not confirm the new highs in the other Indices and that led to a substantial rotation down.

You can access the analysis by clicking here: Does Participation Matter Part II.

Currently, the structure of the Market continues to deteriorate.  The last six trading days were a battle between buyers and sellers, with neither being able to take of control of the Market.  The trend in price is up, but the structure supporting price is declining.  Until that changes, use caution on long positions.

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The Markets in Development Briefing for September 4, 2014

An interesting battle has been going on in the Stock Indices for the last two days between buyers and sellers with neither on being able to take control of the markets.  Longer term, the market internals are not confirming the rally and the inter-market divergence with the Russell still gives me great concern.

Employment numbers are out tomorrow morning and they will likely give ammunition to either buyers or sellers to move the market in a large way.

You can access today’s Briefing by clicking the following link: The Markets in Development Briefing for September 4, 2014.

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The Markets in Development Briefing for August 28, 2014

Volume continues to decline going into the long holiday weekend.  Expect the markets to continue to push higher.  However, the risk is to the downside.  Any event that is geopolitical, or economic that hits the market environment, will likely result in a large move lower.  However, until then, the trend is up.  The market internals are not confirming it, so use caution.

You can access the Briefing here: The Markets in Development Briefing for August 28, 2014.

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