Nemo's Findings week of 12/16/2012

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Just to let you know, no update next two weeks....gonna' be a bit screwy with the silly season upon us.  Longer term pivots will likely be ephemeral in effect.  If you're trading the daily pivots, and perhaps the weekly pivots will have some effect, but in the reduced volumes the probability of being algo bait is much greater.  Anyway, the week that was:

 

 

  

The "economic" news was, at worst positive, yet the market sold off after "The Bearded One"  announced the Fed would purchase additional MBS equal to the amount  of the terminating Operation Twist.  So we now have, in the parlance of @Shaq48 (the immortal trader...Jeff Davis)  The Buzz Lightyear Easing, "from infinity and beyond!"  The Fed will buy until they have met their new mandate of lower unemployment...this is big in Fed parlance folks.  The Fed was always pretty much only concerned with protecting the currency value...now, they are concerned with this new parameter.  This moves the Fed deeper into the web of the political equation, and frankly, may give politicians another party to blame for their folderol.

Anyway, the week that is: 

Nemo's Findings week of 12/09/2012

(Course on chart pattern recognition is available now: http://www.realitytrader.com/111trades.html

Wish I had a clock widget for a countdown to the Mayan thingy....anyway, the week that was:

   

 

 

 

I've  again showed the published economic news below the data for that day so you can see how the price action reacted to the news, and of course we have the whole week data for the last chart graphic.  Notice how financials and spy have been holding a consistent trendline since the bottom on Wednesday morning.  Notice how IWM has been steadily wedging upward.  Notice how Bonds (TLT) are looking weak as if they are going to continue to drop.  The dollar has been gaining and losing strength with seemingly little, if not less effect on the moves of the market.  Frankly, it would seem, all this market needs is actual substantive progress on the "FC" talks and the market will move substantively higher.

 

The week that is:

 As we can see, very tight band on IWM with volume-at-price resistance in the $83.75 area.

 

  Hard to tell what goes here because aapl is 13% of the index.  Go compare the charts of aapl and QQQ.  As goes apple so go the Qs...for now anyway.

 

 SPY has volume resistance in the 143.50 area and then the 144.30 area

 

 As we can see, the finnies are pushing upward into volume resistance in 114 area.

 

And my, don't bonds look weak.  Will the 50 SMA provide support?

Notice the dollar has been strengthening with the market either moving upward or remaining fairly flat.  Now the norm has been a negative correlation.  Is this a new relationship dynamic or just a temporary aberration?  Well, my commentary has hinted at the positive, but this of course could go south, but I would expect the 200SMA on the spy to be a relative magnet.  It is relatively close by on many of the indexes.

Nemo's Findings week of 11/11/2012

(Course on chart pattern recognition is available now: http://www.realitytrader.com/111trades.html  





There's an old joke about a parrot with a scatalogical vocabulary, the punch line from which is:

WHAT A SONOFABITCHIN' RIDE THAT WAS! 

 

And in that spirit, the fecal matter hit the ventilator this week...

The election honeymoon didn't last long.  Europe came in  with bad economic news a few hours after Obama's re-election.  Greece is teetering on the edge of anarchisis. Even a good jobs number on Thursday couldn't overcome the economic icebergs showing up ahead.  Along with the economic uncertainty, Obama's second term cinches capital gains and dividend tax increases.  So, it is likely the selling continues so people can lock in gains at lower tax rates and clear the hurdle of the wash sale in the event they want to re-enter positions after the new tax year.   

Then, because of the uncertainty around the new tax rates as well as the 3.8% Obamacare capital gains tax in the offing, and the potential fiscal cliff, assets will have to be repriced around the future expected returns, and economic, environmental uncertainties such as these make that more difficult. 

Then there's that whole Mayan thing...


The week that was:

As one can see on Thursday SPY lost the all important (depending on to whom you speak, of course) 200 day simple moving average.  Which it quickly regained on Friday and refused to relinquish-BARELY!.  The IWM  and Qs lost theirs on Tuesday and have not regained it. The financials have a ways to go to get there.  The loss of the 200 is considered the bull/bear demarcation line.  Had we lost it yesterday and held below today, Monday would have been, and still may be, um....er....interesting in a Black Monday sorta way.  As it is one could argue the closing tape was putting lipstick on a pig.  You have to look closely but the SPY bottom coincided with a fib retracement level within the volume/price level I was tracking.

Here are some of the volume gaps I'm tracking:

 

As you can see from the charts where significant volume was done at what prices, and where there is a volume vacuum, that is where little volume was done. Look at the XLF between here and 15.15, not much to hold it up, below that area, volume is sparse until 14.70.  Notice how SPY was corralled by a volume level.  Notice how IWM bottomed just above a serious vacuum.  Anyway, I don't see any definitive signs of bottoms anywhere across these indexes.  Doesn't mean we're not close.

 

Oh, and for those in the room that saw me make this call Friday at 9:30:

 

This is why:

 

 

First off, market had been pummeled (too hyperbolic?) and was due for a bounce.  SPY on the right opened at a volume/price level I'd been tracking along with a fib retracement.  IWM opened with a bounce off of S1 on the daily.  FAS (the finnies) opened just above S1 on the daily with a hammer in the second minute.  The "indicators" are arguably useless on the open, so this was a pure call on the levels.  If you missed that, see the nice double bottom on all three just before 10? Candlesticks showed bullish engulfing patterns on all three indexes breaking above VWAP, and the indicators all showed divergence.  Even I can figure that one out.

I'm no dumb bunny!

 

 

 Anyway...

The week that is:

IWM's Friday low was just above the volume vacuum between 77.40 and 78.70 that contains a couple of confluence levels, then another volume support down in the 76.25 area.  Those would be the first and second levels of support areas this week, otherwise, it's back to the parrot joke.

Qs come into volume support at the 62.20-62.60 level and then confluence at 612.25ish then 60.25.  I would think, as with the IWM, there will be an attempt to regain the 200 SMA.

SPY has already tested the bottom of one volume support, faces further volume support and pivot level confluence in the 135.60-.90ish area and then again near 135.  Volume resistance is overhead in the 140.80-141.50ish area, with pivot resistance and the 50 SMA in the 143s.

 

Oh, almost forgot the $!:

And it keeps chugging along.  Strong $ =weak market...usually.  It's coming into gap resistance with the 200 SMA immediately above.  Those are likely inflection points.  Let's see what happens.  

 

And the bonds:

That's a serious breakout this week with gap resistance in range.  Same inverse relationship usually applies, strong bonds=weak market...not always, but...

That should do it -te moritori salutamos

 

   

 

 

Nemo's Findings week of 10/29

(Course on chart pattern recognition is available now: http://www.realitytrader.com/111trades.html  

Apology up front, it's now hunting season so I'm resetting my routine a bit.  I was negligent on collecting news.

Week that Was:

Suffice it to say, in general, earnings and guidance have been somewhat disappointing and the market has been selling the news, even if it is good, albeit in a relative range.  

http://www.factset.com/insight/2012/10/earningsinsight_10.26.12#.UIwP38XA-bM


 
I've heard said that tops are not a bang and drop, but a process of distribution that takes time.  As I write this headline GDP came in a tad better than expected and the market is relatively blase about it.  Here are the daily moves for the basic indexes I track:

The market seems to be saying it's not too excited about what comes down the road. As you can see, the major moving averages(50, 200 SMA) have held in the Financials and IWM. Notice too on SPY the reddish bands.  Those are volume at price bands where heavy amounts of volume have been done. It will take concerted bullish energy to break above, and relatively concerted bearish energy to break below-although that scenario is building.  Notice how that level has held.  Here are longer term views:

I've highlighted the areas of significant volume or where they demarcate insignificant volume, also known as vacuums, or as the trading savant @gtotoy likes to call them "Kirbys."  Since this is taken as of Friday, you don't see how much volume has built up  in the range this week, but it is significant.  Should the price action drop below the box, notice the lack of volume down to 138.60ish.  Notice how the bottom of that gap coincides with the gap up on 8/3.  That will likely be the bounce level, if it drops that 136.80 level then 135.75.  Not to be a pessimist, notice the volume kirby that begins above 142.03.  Methinks we test that 143.40 band before we go lower.

The week that is: 

 

As you can see, we have a volume resistance band that coincides with the WR3 and MPP in the 83.75 area, so it will take a little work to get through that area.  Support is formed at the 200SMA with volume support in the 79.75 area with a volume vacuum starting in the area of WS3, 78.60

 


 The Qs also face volume resistance overhead starting in the area of the 50SMA, but it is a band approximately a dollar wide.  Of course volume support is visible in the 64.25 area.

The SPY also shows a couple of bands of overhead volume resistance with the 50SMA sandwiched in the middle.  The Weekly R3 denotes the most recent swing high.  Volume support held the SPY this week with denoted potential volume support levels below and the 200SMA-the bull market delineation.

In general, the market is looking bounce ready, of course the elections are only a little over a week away so....it could be meander.  Having said that, one more chart:

This is a chart of the dollar.  As you can see, it's traveling a band in a range.  Now the standard relationship is $ down=Market Up.  If the $ holds the range, next move is to test support.  As we see with many of the charts above we see they are near support.  So, given the inverse relationship (normally that is), If the $ begins to drop we should see a rise in the market, because if the $ is worth less, then it should take more of them to buy everything else.  Also...

Looks like Bonds want to at least test the 50 SMA.  Very tight band between there and the 200 SMA. If they break higher normal relationship is inverse to the markets also.


Having said that, I'm not sure what will happen to oil.  Frankly, I'm not sure about anything else either, but given the cloudy economic environment, the market for oil could be mixed should the market advance and the $ drop simply because future expectations of demand for energy will be tempered.

O.K. that's enough for now...