Tuesday, July 31, 2012

Market Timing Update (7/31/12)

[EOD] Stocks -
Sideways correction continued ahead of tomorrow's FOMC decision.
SPX has potentially traced out a flat-x-zigzag complex correction (Chart 1).
NDX has potentially traced out a triangle (Chart 2).
It would be bearish if corrective patterns fail.
There's a small degree spike down immediately after the close.

[1225pm] SPX update -

[845am] ES update -
Month end. FOMC. Potential post triangle thrust, bearish if fails.

Monday, July 30, 2012

Market Timing Update (7/30/12)

[EOD] Stock -
Chart 1 tracks the recent surge in SPX. Chart 2 shows the corresponding squiggle counts over the past two days.
[green] a sideways complex correction, potentially involving one or two triangles, and likely complete.
[blue] a zigzag pullback, with [c]-down about to start.
[red] a trend reversal is in progress, with 3-down about to start.

[7am] ES update -

Friday, July 27, 2012

MTU Weekend Ed. - Breaking (7/27/12 Close)

No more waiting. Given the strong surge in U.S. stocks off the lows of a sharp prior decline, the 2012 range (about 1270 to 1420 in SP500) is now most likely to be breached next - according to the development of the wave structure since the early June low.

The SP500 index has now recaptured its long term support, favoring an upward breakout.  However, inter-market divergence and market internals argue the opposite and suggest caution. It is prudent to be mindful of both scenarios (see below).

On the bullish side, this past week’s surge is likely a powerful third wave as indicated in Chart 1-blue.

From the perspective of the entire Hope Rally, the market is on its way to the black label number 5 of the green count or the blue count in Chart 2. Please see prior weekly commentaries for a discussion of this roadmap for the Hope Rally.

Taking a long term view, one notes that SP500 has again conquered its decade-long support/resistance area after multiple failed attempts in the recent past (Chart 3).

On the bearish side, the rebound since the early June low counts well as a corrective double three as long as the 2012 high remains intact (Chart 1-red/gray).

Moreover, in spite of the optimism in large cap indexes, there’s far less exuberance in smaller cap indexes which are lagging (Chart 4).

Finally, there's apparent weakness in market internals.  For example, the advance/decline line associated with SP500 index constituents has so far failed to make a higher high as did the SP500 index.  The negative divergence is easy to spot in Chart 5

Market Timing Update (7/27/12)

[725am] ES update -
A small degree 5th wave is likely underway, whether it belongs to the bullish black or bearish read counts remains to be seen.

Thursday, July 26, 2012

Market Timing Update (7/26/12)

[EOD] Stocks -
Despite the strong rally today, one can argue either a bearish (red/blue) or a bullish case (green/black). See charts. The next pullback should tell. That said, today's high is likely a cap for the bearish case as INDU has already made an exceptionally deep retrace.

[1005am] SPX update -
see the 2nd chart below.
[705am] ES update -

Wednesday, July 25, 2012

Market Timing Update (7/25/12)

[EOD] Stocks -
From a wave structure perspective, odds appear to favor additional near term upside (Chart 1, blue, green), although the minimum requirement for a rebound is already met in cash index (Chart 1, red). The futures chart (Chart 2) offers a fuller view.

[755am] ES update -

Tuesday, July 24, 2012

Market Timing Update (7/24/12)

[505pm] ES update -

[EOD] Stocks -
Top near term tracking counts - (1) end of a five down, (2) end of ABC down, (3) end of 1-down 2-up [i]-down.
[735am] ES update -

Monday, July 23, 2012

Market Timing Update (7/23/12)

[EOD] Stocks -
The two top tracking counts since the June low highlighted in Short Term Update (7/20/12) anticipated today's drop (Chart 1, red and blue).

Given the current decline has not made a lower low (yet), we should add a 3rd count (Chart 1, green), whose EDT would likely frustrate both bulls and bears.

[715am] ES update -
See the latest weekly commentary for more details.

Sunday, July 22, 2012

MTU Weekend Ed. - Short Term Update (7/20/12 close)

Since the rebound off the early June low in U.S. stocks counts best as a series of threes so far (Chart 1), the top near wave structures are thus
(1-red) a bearish triple-zigzag
(2-blue) a bullish leading diagonal triangle initial advance.

Both structures likely have topped at the most recent high. If so, a pullback to at least the 1310 area is likely, short term rebound notwithstanding.

At the same time, implied vol is approaching Hope Rally lows (Chart 2).

Thursday, July 19, 2012

Market Timing Update (7/19/12)

[EOD] Stocks -
Top bullish count (LD-up) and bearish count (triple-three). See chart in the 1250pm entry below. The 2nd chart below offers a squiggle count since the July 12th low.

[1250pm] SPX update -
Top bullish count (LD-up) and bearish count (triple-three). See chart.

[820am] ES update -

Wednesday, July 18, 2012

Market Timing Update (7/18/12)

[EOD] Stocks -
Large caps are leading with a slight higher high in SPX (Chart 1), but mid-caps and small-caps are visibly lagging. Vol is now relatively cheap.

[750am] ES update -

Tuesday, July 17, 2012

Market Timing Update (7/17/12)

[EOD] Stock -
At the squiggle level, today's afternoon advance has the potential to be a small-degree 5th wave out of an expanded flat 4th wave (Chart 1, red). If a pullback develops, it could be

a bullish small-degree 2nd wave,
[Interesting] a small-degree E wave (Chart 2, blue solid and dashed lines) to test today's low or test the 1330-1340 breakout area), in the spirit of More Consolidation (7/13/12).
a bearish 3rd wave (Chart 2, red)
[Interesting] a trend change following a truncated C wave (Chart 2, blue)

Also see the 1105am entry for additional discussion.

[1105am] SPX update -
Larger tracking counts.
Red - very bearish, larger flat or trend reversal
Blue - note the possibility of a truncated final C wave, but could accommodate a higher high (see the green count)
Green - at least one more higher high.
[1005am] SPX update -
The EDT in ES was complete and a breakdown followed. The cash SPX chart still leaves the possibility of an expanded flat pullback 4-th wave. Odds favor the completion of a 5-up (with a post-triangle thrust) at the AM high given the wave structure in ES. See 2nd chart below.
Top candidates for the current high are (1) A/1-up or (2) a truncated C-up (i.e. topped).
[710am] ES update -
ES wrapping up a small degree 5th wave (bullish, black, but what are the odds of a truncation at a larger degree?) or C wave (bearish, red).