Saturday, April 18, 2015

MTU Weekend Ed. - Breakout Failure, minor or major? (4/17/15 close)

... draft in progress, subject to change ...

Stocks succumbed to resistance (See Overhead Resistance (4/10/15)) this past week and pulled back sharply on Friday. SP500 reached a high of 2111.91 on Wednesday but failed to break above its March high, nor its February all-time high. Friday’s low of 2072.37 registered a 1.87% drop from Wednesday’s high. The sell-off has pushed SP500 firmly back into its multi-month consolidation range (Chart 1).

Interestingly, SP400, Russell2000 and Wilshire5000 indexes did achieve fresh all-time highs this past Wednesday. Hence, it’s reasonable to consider Wednesday’s high as either

[bearish] the orthodox high in SP500 if a larger degree down swing has started (Chart 1, red terminal triangle) , OR

[bullish] as the start of a terminal decline in a corrective pullback (e.g. wave C of a downward flat or wave E of a triangle, see Chart 1- blue).

Odds appear to favor the bullish scenario. Consider the following.

Friday’s sell-off represents a downward test of the 50-day moving average of SP500 for the fourth time since its February all-time high, similar to the price actions during the consolidation from November 2014 and February 2015. See the gray circles in Chart 1.

Friday’s emotional and event-driven sell-off is consistent with the personality of wave E of a triangle. Chart 1 also shows how such a triangle fits into the wave structure at one larger degree as

[blue] b-down of (c)-up of [e]-up . Wave c-up of (c)-up is next.

[green] [c]-down of 2-down where wave 2-down is a  [a]-[b]-triangle [c] structure that stock indexes often deliver following the 2009 bottom.

If our assessment of Wednesday’s high is correct, our gap analysis suggest that Friday’s open gap is likely to be filled in the foreseeable future. See past weekly commentaries for details.

Chart 2 presents the corresponding larger degree tracking counts since the 2009 bottom.

We do note that he bearish scenario with a terminal triangle is quite valid and that stocks are in the time window for a top. See Chart 2 and Overhead Resistance (4/10/15).  It'll be interesting to see how price actions in the coming weeks, now that the OPEX week is over.

Friday, April 17, 2015

Market Timing Update (4/17/15)

[725am] ES update -
ES retesting the green line overnight. See chart.

Thursday, April 16, 2015

Market Timing Update (4/16/15)

[EOD] Stocks - As SP500 continues to hug the red dotted line, it will be interesting to see if we end ups with a series of nested wedges/EDTs (red e]E).

[750am] ES update -
ES is probing support. See chart. Yesterday $MID, $RUT, $WLSH made new highs. Odds appear to favor one more high.

Wednesday, April 15, 2015

Market Timing Update (4/15/15)

[725am] ES update -
Another attempt at prior highs. See chart.

Tuesday, April 14, 2015

Market Timing Update (4/14/15)

[EOD] Stocks -
SP500 continues to hug the red dotted line (Chart 1). Chart 2 presents squiggles.

[1010am] SPX/ES update -
Tracking the current decline. See charts.

[735am] ES update -
ES probed the green support line overnight. Need to stay above this line for another attempt at the 2107. See chart.

Monday, April 13, 2015

Market Timing Update (4/13/15)

[EOD] Stocks -
SP500 sold into the "key" red dotted line today (Chart 1), in a double zigzag or an impulse still missing a [4]-up-&-[5]-down (Chart 2).

[1215pm] SPX update -
Potential for SPX to probe the red dotted line and the blue line in Chart 2.

[845am] ES update -
ES is probing the breakout support around 2083. See chart.

Sunday, April 12, 2015

MTU Weekend Ed - Overhead Resistance (4/10/15 close)

So far, stocks have tracked the typically bullish month of April within the Decennial Cycle (Chart 1) and the Presidential Cycle (Chart 2).  The historical tendency according to these two cycles remains bullish for the rest of the month.

However, SP500 is also running into potential overhead resistance based on a potential rounding top (Chart 3) and/or one tracking count (Chart 4, gray line). Furthermore, Q2 or Q3 is also a potential time window of a top (Chart 5, completion of blue [3] or initiation of wave E of the blue [4]).

 A new high is required for a better hint of a continuation of the advance from the April 1st low.