Weekly update

Equities: nothing to add to last Friday's comments...still inside the channel, any resistance is futile. On the other hand there is much going on on GBP, EUR, AUD, CAD, JPY....too busy there with all the pairs moving around key levels to comment here . You'd better look too at the forex market if you are looking for genuine volatility rather than the artificially VIX depressed/suppressed  /rigged equity market. Forex is not easy to trade but at least it's funnier than the Spoos! Have a nice w-e!

Daily Spoos June contract

DISCLAIMER

This blog is not intended to provide its visitors with financial advise: no recommendation is being made to buy/sell any stock, commodity, option or any other financial instrument, the articles posted in this blog are for educational purposes only and reflect the personal opinions of the author, you should talk to your investment adviser for any kind financial advice. The methods and examples on this blog are posted free of charge as simple educational material: past results are not indicative of any future results. 

Rigged game: weekly closing comment

Since the SPX index has regained the 1576  level (year 2007 high)  it has not looked back, closing this week at a new all time high. The former all time high at 1576 is now a stronger psychological barrier.

This bull market looks restless and probably the only way to look at it on the charts without being fooled by little intraday moves is to observe the daily chart of the June SP future (the spoos) which is marching higher inside a well defined channel. As loong as prices are inside this channel and above the April lows (see chart at the bottom of this post) there is no point in looking for a reversal point, it is just a useless discussion. This market is ignoring seasonality, cycles, technical patterns and all the things we use to trade this stuff. Central banks are rigging the game and ignoring this is suicidal...earlier today I saw the 10 year BTP bond trading at 3.68%. In a normal world would you lend money to Italy at that rate for 10 years....come on, it is just that all the liquidity created by the BOJ, FED, SNB and ECB has to go somewhere and when all short term paper has a zero or negative yield money  flows to whatever asset has a positive yield, no matter the risk. 

10y BTP yield (one minute intraday chart for today)

This is a serious distortion of the risk pricing mechanism...it is a rigged game, you can play at your own risk. This is another of the reasons while I no longer enjoy blogging and I am reducing the posting activity to the minimum survival level....sometimes it seems that humans are no longer involved in this comedy  in which the only actors left are algos and bots (which are probably no longer profitable, buying and selling just to "auto-cannibalize" themselves).

Daily June SP (keep it simple!)

Have a nice week-end!

Weekly update

As we pointed out last week, trading above 1576 triggered some stops and more importantly it neutralized the most bearish scenario for the SPX index. Now I think that we are left with what looks like a large developing triangle (a continuation pattern) that has still some back and fill to be completed and more time to spend before prices can breakout.  For next week: above 1594 would negate the triangle pattern interpretation while inside the converging  red lines (see chart below) it's neutral range trading.

SPX index hourly chart

No more to add for this Friday: have a nice weekend!

DISCLAIMER

This blog is not intended to provide its visitors with financial advise: no recommendation is being made to buy/sell any stock, commodity, option or any other financial instrument, the articles posted in this blog are for educational purposes only and reflect the personal opinions of the author, you should talk to your investment adviser for any kind financial advice. The methods and examples on this blog are posted free of charge as simple educational material: past results are not indicative of any future results. 

Weekly update

Last Tuesday in my post "Godot has arrived"  I was suggesting that technically the SPX needed a retest of 1576 (secondary top) and a break below 1540 as bearish confirmation: over the last few days we got exactly the retest of 1576 followed by a drop to 1540. So far 1540 is holding so, without bearish confirmation, the risk of another retest of 1576 is still out there.  Basically, as I see it and as the chart below suggests me, we are now inside trading range between 1540 and 1576: below 1540 longs liquidation should be expected driving prices lower to at least 1500/1490 (target of a bearish H&S that may be forming), on the contrary above 1576 stops may drive price higher once again (another shorts squeeze).

Inside the range it's market makers hunt zone. 

SPX index hourly chart

No more to add for this Friday: have a nice weekend!



DISCLAIMER
This blog is not intended to provide its visitors with financial advise: no recommendation is being made to buy/sell any stock, commodity, option or any other financial instrument, the articles posted in this blog are for educational purposes only and reflect the personal opinions of the author, you should talk to your investment advisor for any kind financial advice. The methods and examples on this blog are posted free of charge as simple educational material: past results are not indicative of any future results. 

Godot has arrived

Eventually sellers decided to show up between April and May (a clear pattern over the last 4 years) and an astronomical cycle statistically relevant over the last 100 years:

Weekly SPX  chart: mid spring weakness pattern

US stock market: average returns per sun-sign over the last 110 years

In the short term I would like to see a retest of 1576 (secondary top) and a break below 1540 as bearish confirmation: last week spike above 1576 now looks like a blow off top a kind of final squeeze and with no more shorts to be stopped out and the market long it is about time to drop.

SPX hourly chart

DISCLAIMER
This blog is not intended to provide its visitors with financial advise: no recommendation is being made to buy/sell any stock, commodity, option or any other financial instrument, the articles posted in this blog are for educational purposes only and reflect the personal opinions of the author, you should talk to your investment advisor for any kind financial advice. The methods and examples on this blog are posted free of charge as simple educational material: past results are not indicative of any future results. 

Waiting for Godot

Bear trap after bear trap the SPX managed to print a new all time high: unfortunately my last week's call was  wrong and I got caught in just another bear trap. As I posted last Friday once the SPX managed to clear 1576 and print a new all time high all bearish bets were off: you just cannot short a new all time high with uncharted territory above you. Now what? I still can't believe the SPX is up there despite all the flashing warnings out there being constantly ignored.... but this is something I can't control: markets can remain irrational more than you can remain solvent.  For what it's worth I'll post below my own updated chart count of the bull run from November 2012...apparently the fifth wave is extending: the problem with Elliot Wave is exactly this, when things do now work as expected you can always subdivide/extend the last wave and with a strong trending market this is a real issue. All my technical indicators and cyclical counts demand correction but picking a top is becoming an exercise too expensive. There is too much money being printed every day by the FED, the BOJ and the SNB and it is chasing all kind of returns regardless of risk, I have never seen something like that before: an orgy like that keeps going on without a serious reminder that there's a price for risk. As far as the chart is concerned, a bearish signal wold be a break of 1540 until then better waiting and give this market the time it needs to complete its topping process, be it one day, one week or one month...who cares....there are always other opportunities in different markets while you wait for a signal and there is always a secondary top before the real drop.
PS
"The best of the worst" of this week was the FED minutes being released to few insiders on Tuesday evening rather than on Wednesday....I wonder how many times these things happen without being noticed.

SPX index hourly barchart last 5 months

DISCLAIMER
This blog is not intended to provide its visitors with financial advise: no recommendation is being made to buy/sell any stock, commodity, option or any other financial instrument, the articles posted in this blog are for educational purposes only and reflect the personal opinions of the author, you should talk to your investment advisor for any kind financial advice. The methods and examples on this blog are posted free of charge as simple educational material: past results are not indicative of any future results. 

Gravity

Last week we described the slow upward motion of the Spoos as "inertial motion" typical of a market running out of gas at the end of a strong trend, This week the SPX index eventually conceded to the force of gravity after failing to take out the 2007 high /1576) for just a couple of points. I continue to expect a 4% or 5%  correction targeting the 1500/1480 area: correcting patterns are difficult to read, I think a first leg lower was completed earlier this morning at the open, once this bounce is over another leg lower should follow...should the market take out 1576 my count would be obviously wrong: we will see soon. No comments on the news of the weeks: all the bad news were already there over the last couple of weeks yet the market ignored all of them continuing to climb higher...clearly it's all about cycles moving the market not news. Have a nice week-end!

SPX index hourly candlesticks

DISCLAIMER
This blog is not intended to provide its visitors with financial advise: no recommendation is being made to buy/sell any stock, commodity, option or any other financial instrument, the articles posted in this blog are for educational purposes only and reflect the personal opinions of the author, you should talk to your investment advisor for any kind financial advice. The methods and examples on this blog are posted free of charge as simple educational material: past results are not indicative of any future results. 

Inertial motion

The slow inching higher on low volume of the US stock market for this week looks to me like inertial motion rather than real buying interest. My waves count shows a completed sequence of five waves during the upswing which started on the last November and this may be it. This week's final subwaves looked really weak, slow and short (as I anticipated in my last weekly report):  perhaps funds managers did not want to spoil the party of enjoining a positive quarter end for stocks so they may be waiting for next week to find more volume in order to unload/take profit or to go short.

SPX index waves I-II-III-IV-V of wave 5 from November 2012 may be completed

This week US stocks have outperformed other risky assets and now they look even more expensive on a relative basis, awful news out of Europe have been ignored and that is frankly strange because we are probably watching at the beginning of the end for the European monetary union (Cyprus may well be a point of non return setting in motion capital flows that cannot be stopped).

Low volume ramp up in stocks with credit being sold...more and more suspicious

I continue to think, that a top may be in and that a correction is about to start any moment: 130 days of uptrend since November plus 1 week of inertial motion (this week) is enough time for this upswing and I now expect at least a 4/5% move lower in the upcoming weeks for the major US stock indexes.

There is a lot of energy in the sky in early April with the Sun, Mars, Venus and Uranus in close proximity: time for a change of sentiment.
Good luck and have a nice week-end!
Happy Easter to all of you and your families!

Hubris: week-end update

Hubris also hybris, from ancient Greek ὕβρις, means extreme pride or arrogance. The FED chief says that Cyprus is a little irrelevant thing and the liquidity/POMO addicted US equity markets keep ignoring that we sit on a time bomb (a global sovereign debt crisis)  that can detonate anywhere any moment and that even a small event can set in motion a chain reaction despite all the liquidity pumped in the system on a daily basis by the SNB, the BOJ, the BOE and the FED. In the ancient Greek the Hubris of mortals used to  be severely punished by their gods: this time it will not be different: even if a last minute deal over the week-end to save the banks of Cyprus will be presented as a great thing and markets will celebrate with another squeeze higher   this will only make the upcoming correction worse.

If I had to look at the chart of the Spoos like if was price of lemonade (this is a good way to try to keep your emotions and bias out) it would suggest me to expect another leg higher to complete a 5th subwave of wave 5 of a series of 5 waves started last November.  We are talking about a fifth of a fifth wave of an market which is showing strong overbought divergences and we are talking about a bull market swing that will enter next Monday its 130th day of life.....this tells me that there is no sense in chasing the last move higher because it may not be that big, it may not last long and it may not even materialize: I am already preparing the bearish campaign that will follow shooting  my first small shoots. That 130 days number keeps rolling in my head and make me things of too many cycles interconnected (it is half a sacred Mayan year, 1/6 of a Martian year, a Biblical cycle)....we have just passed the equinox..I want to test this 130 number thing and see if it can be associated with a turn in the market. The number 130 is the number of imperfection, and often failure or outright curse.

No risk no fun.

"SPX index"

  Have a good week-end!

DISCLAIMER
This blog is not intended to provide its visitors with financial advise: no recommendation is being made to buy/sell any stock, commodity, option or any other financial instrument, the articles posted in this blog are for educational purposes only and reflect the personal opinions of the author, you should talk to your investment advisor for any kind financial advice. The methods and examples on this blog are posted free of charge as simple educational material: past results are not indicative of any future results. 

Weekly report

Last week I warned that the Dow Jones Industrial Average new all time high had to be respected while the Nasdaq 100 could be shorted with less risk because technically weaker: in the chart below you can see the last 5 trading days with the Nasdaq 100 closing the week in red and the Dow showing once again  relative strength.

Dow vs NDX this week

I was impressed by the "Dow Industrial" strength so I went back to check what happened the last time it broke a new all time high in the summer 2007: when it broke the former all time high of 11750 of  January 2000 the Dow marched 417 points higher for 17 trading days before a small 200 points correction (which did not retest the previous all time high)...the first real correction came only a couple of months later and starting from 1000 points higher....I do not think this is the same situation....the Dow is already 300 points above the breakout level with no corrections and I can't imagine 700 more points to go before correcting, I think the correction is closer  yet I do not want to mess with indexes printing all time highs because the market can remain irrational more than I can remain solvent.

Dow Industrial breakout  of October 2007

I will prudently give the Dow and the SPX some more time to complete this swing: we may be in wave 4 of 5 with some more upside before turning south....see hourly charts below for an updated count.

DIA: for a live chart go to the  technical charts section of this blog 

SPY: For a live chart go to the  technical charts section of this blog 

This manipulated and doped market stinks and I still can't find a single reason (technical or fundamental) to buy it but before shorting it we must wait for cycles to complete their course (the price action will reveal it).

As I have posted ealier I am restyling WSW blog with new colors, a new layout and new sections: I have also added a technical charts section with live realtime charts of DIA (Dow Jones Industrials Average ETF) and SPY (SPX500 ETF)with my wave count and a set of useful technical and cyclical indicators.
Hope you like it! Feedback is welcome.

Have  a nice weekend!