“Successful investing begins with an analysis of where a market has found value.”

The Structure of Stocks Weakens Significantly

I was traveling all week and returned late Thursday night. As I reviewed the development of price for the week in the Stock Indices and the structure of that development, I was extremely surprised. The S&P moved right into the 2125 area, but it did it on declining volume, declining breadth, the number of new lows exploding and declining volume increasing over advancing volume. In other words, a few tech stocks were carrying a speculative move in price development that was not being supported by the rest of the market. The structure of the move was weakening fast, leaving no other alternative but a move back down.

The importance of what occurred last week is significant. Unless the structure of the market strengthens early next week, I expect to see the S&P test 2030. That will be significant support. However, if that is broken, the continuing weakness of price structure will weigh on price development and there could be a substantial, sustained move lower. Keep in mind, the Indices have been in rotation and unable to breakout since February of this year. 2030 in the S&P is the lower extreme of that rotation. Trading and closing below that level suggests a greater degree timeframe is taking over that will lead to a greater move to the downside.

Markets never move in straight lines. They run and pause, then run and pause again in all degrees of time. Expect periodic pauses on any sustained move. How those pauses develop will be important to analyze in determining the continuation of any move.

The Metals were slammed this week. I have felt and stated many times I think the Metals may be reaching a point where we could see a significant move to the upside. I have not suggested long positions because I have expected a continuation of selling, but I am looking for a bottoming pattern. One possibility is the move lower this week could be a blow-off bottom. This occurs when sellers dump all positions and exhaust themselves. There is nothing left to sell and buyers begin to step in. If this is the case, we will know through an analysis of the structure of any move off of the lows. However, until that time, be wary of any long positions.

Oil appears to have much lower to go. Price development and the structure suggest a possible move down to the 33 – 34 area.

The coming week will be very important to the intermediate to longer term analysis.

This is the link to the full Briefing:  The Markets in Development Briefing

Market Structure Not Supporting Price

Below is the link to today’s Briefing.  I took a little longer time tonight to analyze the price development and structure in multiple timeframes.  I think you will find it informative.  Basically, the current rally up to test the upper Key Reference Areas is not supported by the market structure.  In fact, today there were declining new highs and increasing new lows.  Breadth was negative most of the day.  Volume is non-existent.   Unless those change, the Indices are in a position of a potential rotation down and are at significant resistance where rotation has occurred since February of this year.

I will be traveling the first part of next week and will be unable to prepare a Briefing.  However, if there is a significant move, I will address it in an email to subscribers.

The Markets in Development Briefing

Price Development Is Confirmed By The Structure

Below is the link to today’s Briefing.  Yesterday, as I suggested it might be, was a one day wonder.  Obviously someone was trying to kick off a significant rally, but they failed.  Yesterday’s range was completely retraced today.  I am not interested in the news events of today.  What I am interested in is the participants reaction to the news in the various markets and the strength of their conviction to any price move.

Yesterday I pointed out the incredible rally in the Indices was not confirmed by the structure of the market.  That left the rally very suspect, unless the structure strengthened.  That did not occur today and we were down significantly.  The Indices reached an important low today that was confirmed by the internals.  However, they are at a point of being extremely oversold, suggesting the possibility of some type of countertrend rotation to work off the oversold condition.  This does not preclude the Indices from trading substantially lower first.  However, it will be important to look for the potential for a bounce, especially if there is a divergence in Breadth tomorrow.

Trading and closing below 2032 will open up the higher probability of a move down to the 1970 in the S&Ps.

The Markets in Development Briefing

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