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".....the market has reached resistance......"
http://www.pretzelcharts.com/
"So the Fed went ahead and cut rates by 50 basis points. As mentioned last update, the last two times they did this after a hike cycle were 2008 and 2001, and we all know what happened after that, so this is not particularly encouraging for bulls. We're left to conclude that the Fed thinks the economy is slowing way too fast (potentially already in a recession) and that they need to play serious catch-up. I've heard another theory floated that they cut 50 bps because the election is coming, but that can't be it, because we all know the Fed is a completely independent and politically neutral part... (goes into fit of coughing).
Pardon me, I forgot what we were talking about. So let's get right into the charts! Starting with SPX, which captured its August target:"
"INDU also captured its trendline target:"
"In conclusion, the market has reached resistance and an inflection zone. This doesn't preclude further sideways-up action, but bulls will need to power through this level convincingly to generate new momentum to achieve anything beyond that. Things could reverse from this zone. Trade safe."
Now back above 15 min 50MA..Wa sREZ most of day yesterday afternoon, Just have to see what Fed speak does
https://schrts.co/cuGAftVe
https://schrts.co/XKIneAqj
One guru I read every day tho thinks prices have gotten a little ahead of them selvesd and thinks we need a good sized down move. But every one is waiting to see what the Fed does or says after it cuts rates by .25...today.
RCKS...Yes Avi the premier Ewave guru has been saying that for a few months now and I saw it another place but can't remember where...On the internet someplace by a self proclaimed Guru..
Retail sales seem to be holding up..Maybe credit cards are not all Maxed out. I would hate to have a million bucks in the market right now tho..Woldn't have the slightest idea where to place it and on which side.::)
"The next President will inherit a recession."
http://www.pretzelcharts.com/
"SPX and INDU finally made new all-time highs, so let's get right into the charts to examine the implications, starting with the near-term INDU chart:"
"INDU's long-term chart shows overhead resistance not far away:"
"SPX seems to have squeaked out a new high, which is all it needed, but ideally it would look better if it could run up into the target zone from August 19 (which, incidentally, would probably line up pretty well with INDU's overhead trend line):"
"And of course, today is a Fed Day. Or a "Fedday" if you hate the Fed. Bulls are hoping for a 50 bps cut, but Lord only know why. 50 bps cuts for the first cut after a rate hike cycle are not typically bullish -- at least, not over the next 4 years, anyway. (This is because the larger cut implies the Fed realizes it overshot and is now rushing to catch up to the looming recession.)"
Incidentally, I'm going to call it now, so there's no question later: The next President will inherit a recession.
"In conclusion, the double "only three down so far" calls (from early August and then again for the last smaller decline) have both proved out. Bigger picture, the market is getting into a major inflection zone, so let's see how it reacts. Trade safe."
Market waiting on the FED decision Wednesday it seems
http://www.pretzelcharts.com/
"Well, most of us made it past Friday the 13th without getting attacked by men in hockey masks, though it seems former President Trump had another close call. Considering that prior to July 13, America hadn't seen an assassination attempt on a President or former President for 43 years, it's pretty noteworthy that there have been two attempts on Trump in as many months. Let's hope people calm down.
The market has run back up to its prior resistance zone:"
"INDU is in a similar spot:"
"Not much else to add to recent updates. We'll see if bears offer any pushback here or not. Trade safe."
Stock Market Commentary 09/13/24
By Lawrence G. McMillan
"A week ago, things looked rather bearish, with $SPX having broken down from a 5560-5650 trading range, and plummeting quickly to 5400. An oversold rally ensued, but by Wednesday of this week, $SPX was plunging again and reached that 5400 level for a second time. For whatever reason, buyers emerged en masse at that point, and $SPX has rallied 230 points in about two trading days.
This brings the Index right back into that 5560-5650 trading range where it spent over two weeks in the latter half of August. So, there is resistance at the top of that range, 5650, and at the all- time highs, 5670. Meanwhile, there is very solid support at 5400, since the market bounced off of there twice. There is also support at 5370, which I continue to believe is quite crucial: a close below 5370 would be very negative for the market. In the final analysis, it appears that $SPX is still within a rather wide trading range, from 5400 to 5650.
Our indicators are mixed, which is somewhat typical with $SPX in a trading range. Even with the strong move upward over the past four days, some sell signals are still clinging to life.
Equity-only put-call ratios remain on buy signals, because they are continuing to decline. They declined right through the recent selling in stocks, mainly for two reasons: 1) there are relatively large numbers coming off the 21-day moving averages, and 2) put buying has just not been all that heavy during the recent market decline.
Breadth has gone from extremely negative to extremely positive in a very short period of time which has not only canceled out the sell signals, but has produced buy signals.
The two main $VIX indicators continue to be in opposition to each other. A new $VIX "spike peak" buy signal was issued on September 5th. Conversely, the trend of $VIX is still upwards and that is a sell signal for stocks. I suppose it is rather fitting that both $VIX signals are in place while $SPX is within a large trading range.
In summary, the indicators are mixed and the market is in a wide trading range. It looks great for a few days, and then looks terrible for a few days. We will continue to trade confirmed signals and will roll options that are deeply in-the-money."
https://www.optionstrategist.com/sites/default/files/SPX.JPG?v=1726332352378
https://www.optionstrategist.com/sites/default/files/PC21.JPG?v=1726332352378
https://www.optionstrategist.com/sites/default/files/PC21_W.JPG?v=1726332352378
https://www.optionstrategist.com/sites/default/files/VIX.JPG?v=1726332352378
Bulls do not have a lot to look forward to?
http://www.pretzelcharts.com/
"As the title implies, today is... Friday the 18th? According to the predictive text function:"
"So never mind. That wasn't what I was going to say, but I always believe predictive text, so I guess it was a false alarm anyway. Whew, that was a close one! But this means we're free to get right into the charts!
First up is COMPQ, which held its key trend line and bounced, so nothing new to add:"
"Next is INDU, which captured its 2nd downside target zone and bounced:"
"Finally, SPX, which held its key level and bounced, then captured (and since exceeded) both its upside targets."
"Hopefully all those levels and targets were helpful to readers. Going forward, as we can see, there are two viable counts in SPX (for now) and they're diametrically opposed -- which means it may be best to watch the next key levels (blue 3 on the upside, ~5483 on the downside). We can also see that if bulls exceed the prior all-time high, that doesn't necessarily mean a lot for them, because that could well complete blue 5 and end up going nowhere. Bulls would need to hope for an extended fifth to keep things running (over the near-term, anyway) after a new ATH. Trade safe."
9/11 Update 23 years and counting......
http://www.pretzelcharts.com/
"No real change from last update, but I have sketched-up some potential near-term upside targets for SPX:"
"COMPQ probably still best illustrates the zone bulls need to continue holding:"
"Not much else to add. Over the years, I've commented a number of times when the update falls on September 11, to the point that I feel like anything I try to add here today would feel contrived and trite, so I won't add any commentary beyond what I've already written in the past -- but I likewise did not want the day to pass without any acknowledgement. Trade safe."
"......"I'd probably lean toward saying it looks slightly more likely that it may need more downside to form any sort of complete wave." And that turned out to be a hit....."
http://www.pretzelcharts.com/
"In the prior update, a hypothetical guy with a gun forced me to give a prediction, so my reply was: "I'd probably lean toward saying it looks slightly more likely that it may need more downside to form any sort of complete wave."
And that turned out to be a hit. Now we have two markets trying to make our lives difficult, so let's get right to it. First is INDU:"
"Dueling with INDU is SPX:"
"And the tie-breaker may be COMPQ, and what it does with the blue trend line:"
"In conclusion, INDU appears to be 3-waves down SO FAR, while SPX might be 5-waves down, though the razor-thin margin of the prior high vs. the ATH means it might also be 3-down so far. Some part of me wants to just flat out declare the bull market as over -- but another part of me wants to caveat that heavily because there is no technical confirmation of that yet, and it's entirely possible we've only just entered the topping "process," which could take months. And I'd also note that we're in the ballpark of a downside inflection point, given that INDU and SPX could both be completed waves to the downside (plus/minus) and COMPQ just tagged a major support zone -- so if it's going to head back up, it could do so from here. COMPQ may provide the next big picture clues. Trade safe."
"............ if I had a gun to my head and had to say something, I'd probably lean toward saying it looks slightly more likely that it may need more downside to form any sort of complete wave...."
http://www.pretzelcharts.com/
"Since last update, SPX rallied back into the zone of the blue resistance line and was rejected. After that, it went on to form something that's best described as opaque garbage. The annotation below explains the conundrum:"
"INDU briefly broke its support line, but looks like it's going to whipsaw that directly:"
"In conclusion, there's not a lot of clarity in these charts, but if I had a gun to my head and had to say something, I'd probably lean toward saying it looks slightly more likely that it may need more downside to form any sort of complete wave. But that's really only because some hypothetical person is holding a gun to my head. If I hadn't invented that person, I might not say anything other than "wait and see," so don't hold me to it, I'm under hypothetical duress here! Have a great weekend and trade safe."
"..........things aren't locked down for bears just yet. SPX is only three waves down (at present) and INDU has only retested its prior breakout, which has held (again: so far)....."
http://www.pretzelcharts.com/
"Last update noted that we were getting into an inflection zone, and on Tuesday, the market put an exclamation point on that.
Let's look at the charts to see if bears can continue celebrating, or if they need to tread cautiously for the near-term, starting with INDU:"
"Next up is SPX:"
"So, as we can see on the near-term charts, things aren't locked down for bears just yet. SPX is only three waves down (at present) and INDU has only retested its prior breakout, which has held (again: so far). Since we can only trade what we see, what we see is a market that's been rejected at a potentially major inflection zone, but has yet to indicate whether it's going to make another run back up into that zone.
Bigger picture, we see the nature of the current inflection zone clearly -- but we need to keep in mind that big inflection zones have big ranges, too, so there's plenty of room for INDU to run up to new highs again and still be within the inflection zone."
"In conclusion, bear had a fun day yesterday, but they haven't yet proven they're ready to take over (since they've only formed three waves down so far) and thus we can't yet rule out another run up. We'll see how things develop for the remainder of the week. Trade safe."
Stock Market Commentary 08/30/24
By Lawrence G. McMillan
"The "new all-time highs" party on Wall Street is all set, except for one nagging problem: $SPX has attempted to move to new all-time highs several times, but has not been able to do so. It's not that $SPX is declining, either (see the green box on the chart in Figure 1), but a breakout from that box on the downside is probably going to instigate a good deal of selling. The same can be said of the upside: a breakout of the top end of that box and a move to new all-time highs would generate strong upward momentum.
Specifically, the box ranges from 5560 to 5650. New all-time highs would be achieved with a close above 5670, although we always prefer to see a two-day close for a new all-time high to be verified. On the downside, there would be some support at various levels, but a close below 5370 would be very negative.
Equity-only put-call ratios have officially rolled over to buy signals, belatedly. They will remain bullish for stocks as long as they are declining.
Breadth has been somewhat mixed. Even though there have been some days of negative breadth, the breadth oscillators have remained on buy signals throughout, since they were so far into overbought territory that a few days of negative breadth sprinkled in amongst the positive days were not enough to deter these indicators from their bullish status.
One lingering bearish indicator is the trend of $VIX sell signal that continues to remain in place. It would be stopped out if $VIX were to close below its 200-day Moving Average, but so far that has not been the case (Figure 4). That 200-day MA is at 14.40 and moving sideways.
The other $VIX indicator is still bullish, though: the "spike peak" buy signal.
So, the indicators are mostly bullish and we are probably going to get an upside breakout. However, that is not certain. In any case, we will trade confirmed signals as they appear and we will continue to roll deeply in-the-money options."
https://www.optionstrategist.com/sites/default/files/SPX.JPG?v=1725123088777
https://www.optionstrategist.com/sites/default/files/PC21.JPG?v=1725123088777
https://www.optionstrategist.com/sites/default/files/PC21_W.JPG?v=1725123088777
https://www.optionstrategist.com/sites/default/files/VIX.JPG?v=1725123088777
Recognize The New Leaders NOW!
August 31, 2024 at 11:53 AM
Tom Bowley
Chief Market Strategist, EarningsBeats.com
https://stockcharts.com/articles/tradingplaces/2024/08/recognize-the-new-leaders-now-552.html
"We had a sneak preview of emerging leadership on the morning of July 12th. That was the morning the June Core CPI came in well below expectations. The immediate rotation into several areas was quite evident and you can see it right here on this RRG Chart:"
https://d.stockcharts.com/img/articles/2024/08/31/1b810569-e9e9-4e5f-b90b-5845e02feb25.jpg
"Financials (XLF), industrials (XLI), small caps (IWM), mid caps (MDY), and transports ($TRAN) were all poised to benefit from a change in Fed policy and the beginning of rate cuts. But Fed Chief Powell announced, and botched the announcement, in my opinion, with no rate cut and mentioning that a potential rate cut would be "on the table" for September. Now, I say "botched", because the FOMC minutes came out two weeks later and the minutes suggested an upcoming rate cut was likely. "Likely" and "on the table" are not the same to me, but maybe others interpret it differently. Anyhow, that Fed announcement reversed the strength that we had seen in the groups mentioned earlier in July. Here's how that RRG looked after the Fed announcement and leading up to Powell's Jackson Hole address:"
https://d.stockcharts.com/img/articles/2024/08/31/56e9c524-f137-4f18-b100-8d1d5424bc4b.jpg
Does that not look like the exact opposite of what the market was looking at after the June CPI report was released?
"Then comes the Jackson Hole speech on Friday, August 23rd, where Powell said, "it's time for Fed policy to change", or something to that effect. For 3 years, the Fed has been looking for proof that the decline in the annual Core CPI rate was "sustainable". Did something happen between July 31st (Fed policy statement) and August 23rd (Jackson Hole speech) that suddenly made the Fed more comfortable of that sustainability? Was it the July CPI that showed inflation met expectations for that month? The only thing he's proven to me, especially over the past 7 weeks or so is that the Fed changes directions more than a chameleon changes colors.
So now let's use the RRG to track rotation once again, this time the 6 days since the Jackson Hole speech on August 23rd:"
https://d.stockcharts.com/img/articles/2024/08/31/47cea455-e31b-489a-aa28-bca96a4f6692.jpg
"Here we go again! Now we're beginning to see a repeat of what we saw in the middle of July as technology (XLK) and semiconductors ($DJUSSC) roll over on a relative basis, allowing the XLF, XLI, IWM, MDY, and $TRAN to lead the way.
Keep an eye on this rotation in upcoming days, weeks, and even months, because it's exactly what I would expect to happen during a rate-cutting environment.
I look much deeper into this rotation, discussing the major indices, sectors, industry groups, and a few individual stocks in my Weekly Market Recap on YouTube, "Which Stocks Are Leading The Market". Simply click on this link and enjoy!"
Also, in my EB Digest newsletter on Monday, I'll be featuring a now-leading stock that I believe could soar between now and year end. You can CLICK HERE to sign up for our FREE EB Digest newsletter and gain access to this stock on Monday!
Have a great long Labor Day weekend and Happy Trading!
Tom
"......as the market appears to finally be approaching an inflection point that has significant and real MAJOR top potential:..."
http://www.pretzelcharts.com/
"Last update projected that INDU would need at least one more fourth wave correction, followed by another wave up to new all-time highs, and that has since happened:"
"As the chart notes, it's getting trickier now, which stinks because I won't be able to devote as much time to goofy jokes, since the market will become less predictable and there will now be fewer updates that say "no real change" and that allow me to reprint the same charts but with smiley-face stickers on them.
It's also getting tricky at long-term scale now, as the market appears to finally be approaching an inflection point that has significant and real MAJOR top potential:"
"In conclusion, the odds probably slightly favor one more 4/5 unwind still left, but I wouldn't bet the farm on that, especially since we're getting into the ballpark of a MAJOR (yes, I'm capitalizing it again) inflection zone. Don't forget Monday is Labor Day, so the market is closed because it's disruptive to have traders going into labor right in the middle of the exchange floor. Trade safe."
"We should finally get a decent correction again once those waves complete."
http://www.pretzelcharts.com/
"Since last update, INDU made a new all-time high, as expected:"
"This SPX chart is a wonder to behold:"
"In conclusion, presuming we're dealing with a simple impulsive rally off the August lows, SPX and other indices should need roughly the same 4/5 unwinds that INDU needs, so that chart serves as a reasonable proxy for the broad market right now. We should finally get a decent correction again once those waves complete. Trade safe."
*** MY PLEDGE that I am a time traveler willing to divulge the stock market actions on November 5th onward ****
Well, how about a pledge of CHAIOS and that spells bad news for stocks. In the short term. But what a short, lovely drop that would be.
What we have here a confluence of events and chart pattern that squarely places the November 5th date as a major turning point. The 3-month rallies have been pretty much symmetrical in time and length. The last low was on 8/5 coincidentally. The election can ONLY go one way. CHAOS on November 6th no matter what the outcome. Then we have the praying that, yet another rate cut after the September one is seen on November 7th.
Here are the likely scenarios and all will cause CHAOS.
1 - Trump wins flat out on the electoral college. His announcement, backed by the immunity from the Supreme Court, will include how he intends to delve out retribution to states and individuals, enact a 5 trillion-dollar tax cut for the very wealthy and add tariffs for everyone else. Round up millions of illegals in internment camps to ship them out.
2 - Red States are not just disenfranchising at the 11th hour those undesirables by passing strict election certification they are ALL making it easy for the states and counties to refuse certification of the winner if it is close. It will be close in all of the 8 states contested today. The reason: If they can't certify the Governor decides. The seditionists on the Supreme Court will make sure this happens.
3 - Trump losses by small margins BUT the crucial electoral college votes will be held up and in court. The delay will FORCE Trump to declare he was cheated and won on November 5th. The GOP and FOX will shout it as if a fact and violence with protest will result in deaths over the next 3 days.
What will NOT happen is a smooth transition. Even a clear win as i stated in the first instance will result in a man on a mission to PUNISH those that didn't kiss his ring. he has complete immunity and will follow the letter of the ruling to assassinate, punish states, fire, imprison while delivering the largest give-a-way in history as the conservative GOP nod their approval.
Then we have the FED decision on November 7th. I suspect the slowdown in inflation by then would have stalled. The data coming out is too damn strong despite the Job weakness. A Trump win means supercharging the already smooth sailing economy into overdrive. The FED will likely think twice about that second cut.
This is so juicy, and some savvy analysts and investors will realize this. Like a known date on the Pandemic, we have a known date to start the CHAOS rolling.
This is ALMOST as defined as the Pandemic. Odds favor CHAOS immediately after the election. It also coincides with the anniversary of the 3-month wave.
A 10 percent drop in 4 to 7 days from November 5th is a great bet to make.
*** I started this post to let ya know I will be coming back in that time period to gloat or whimper. ***
"...SPX and INDU will need at least one or two more 4/5 unwinds higher before completing the wave up from the 3/c low."
http://www.pretzelcharts.com/
"On Friday, Powell wandered out to the microphone from the dark underground depths of Jackson Hole, appearing drunk, grabbed the mic forcefully and muttered something about, "too many lost socks," before passing out, still holding the microphone and drooling.
The market wasn't sure what to make of this, so it traded sideways for the day.
Which means, you guessed it, nothing has really changed from the updates of the past few weeks. Although, INDU has now made a new high to match NYA:"
"SPX appears poised to resolve its previously-discussed probable fourth wave to the upside (which is/was the expected outcome of a fourth wave down, of course)"
"In conclusion, not much else to add other than -- assuming we're in a simple straightforward impulse rally -- a reminder it still looks like SPX and INDU will need at least one or two more 4/5 unwinds higher before completing the wave up from the 3/c low."
New YAHOO private group football contests set up--as noted previously, we are moving our contests to YAHOO
you will need to register a free YAHOO account if you don't already have one:
https://login.yahoo.com/account/create
1. Pick 'em
Group name Hubnutz
Password: Hubnutz
Group ID 4953
to join private group, use the group ID 4953 and password:
https://football.fantasysports.yahoo.com/pickem/register/joingroup
2. Survivor
Group name:Hubnutz Survivor
Password: Hubnutz
Group ID: 3433
to join private group, use the group ID 3433 and password:
https://football.fantasysports.yahoo.com/survival/register/joinprivategroup/
*** when you join our contest groups, edit your pickset name to whatever entry name you want others to see
Jackson Hole Jay Doesn't See His Shadow, Worst Market Weather Behind Us
August 23, 2024 at 12:32 PM
Tom Bowley
Chief Market Strategist, EarningsBeats.com
https://stockcharts.com/articles/tradingplaces/2024/08/jackson-hole-jay-doesnt-see-hi-470.html
"It's been nearly two years since Jackson Hole Jay saw his shadow and we all endured 6 more weeks of harsh market weather. If you need a reminder, August 26, 2022 was the day Fed Chief "Jay" Powell climbed out of his Jackson "Hole" Economic Symposium to announce "more pain ahead!" This is how the stock market weather turned out after Jay saw his shadow in August 2022:"
https://d.stockcharts.com/img/articles/2024/08/23/35ebd01c-348c-449b-954e-d7850e6ff912.jpg
"Wall Street was seeing the "light at the end of the tunnel", while Jackson Hole Jay saw an avalanche from a brutal winter approaching. The bulls sought hibernation for 6 more weeks, while short sellers were skiing the slopes of Colorado. Eventually, all was fine and the secular bull market emerged a bit later than I expected.
Now let's fast forward to August 2024 and today's speech. Jackson Hole Jay poked his head out and saw nothing but cloudy skies - no shadow, so potentially a mild market winter ahead. He went back into his Symposium and Wall Street was left feeling like the worst of the market winter was behind it. We know that August/September is not typically kind to market bulls. It's one of the reasons I've been waving that caution flag for the past 5 weeks or so - even longer if we talk only about semiconductors ($DJUSSC). But it's also difficult to ignore the risks that we could see a melt up - especially in certain areas of the market now that the Fed has FINALLY changed gears. Jackson Hole Jay all but guaranteed the first rate cut in September in what is likely to be a series of rate cuts. Everyone who follows me knows I'm a stock market statistician/historian. I ALWAYS approach August/September with caution, because of historical precedence. But there have been plenty of exceptions where Wall Street ignores those seasonal risks and bids prices higher.
2024 may be one of those years.
Over the coming days, after watching more rotational clues, I will provide our EarningsBeats.com members a game plan to attack the many opportunities ahead. I see certain asset classes and sectors that are likely to outperform, possibly in a very significant way. I see many stocks that are likely to double, triple, possibly more.
Despite the Fed's much more dovish tone that will benefit U.S. equities, we'll have HUGE opportunities on pullbacks. And it's really hard for me to envision a straight-up move in August/September. There's a chance of that, but much more likely will be the occasional pullbacks that we can use to build positions in key stocks and ETFs that will sweeten our portfolios as equity prices rise in 2024 and 2025."
I will be announcing the 10 equal-weighted stocks that we'll "draft" into our 3 portfolios - Model, Aggressive, and Income" on Monday, August 26th, at 5:30pm ET. It'll be designed, hopefully, to take advantage of what's likely to happen during the balance of Q3 and into Q4. I'll also be discussing this Fed change in policy and how I believe it'l impact the stock market. You can attend this with a FREE 30-day trial of our service. Be sure to click that link, kick the EB.com tires, and join me on late Monday afternoon. I'd love to see you!
Happy trading!
Tom
Stock Market Commentary 08/23/24
By Lawrence G. McMillan
"The rally that began with an upward intraday reversal on August 5th continues to plow ahead. It has now brought $SPX back to nearly its all-time highs. The pattern of lower highs has been broken, and all that remains for the bulls to re- establish complete control is for $SPX to trade above 5670. That is probably going to happen.
As for resistance, that only exists at the old highs near 5670. Given the speed of the advance, there has to be some leeway for a correction without calling for outright bearishness. There is a gap down to 5450. If that were filled, it would be in the normal course of activity. However, a decline below 5370 would be far more negative. So, any pullback that is limited to 5370 or higher is still within the realm of a new bullish leg in the market, but anything more raises the prospect of a deeper correction.
Equity-only put-call ratios have rolled over, but only now are the computer analysis programs finally agreeing that these could be back on buy signals. The standard ratio (Figure 2) buy signal has been confirmed. The weighted ratio (Figure 3) has not, but to the naked eye how could this NOT be a peak?
Breadth has been strong (see the Table on Page 1), although there have been a couple of pretty negative days this week. Regardless, the breadth oscillators remain on buy signals, and they remain in overbought territory. It is a positive thing when the breadth oscillators are overbought and the broad market is beginning a new leg upward as is the case now. From current levels, the breadth oscillators would still be able to withstand a couple of days of negative breadth and remain on those buy signals (as was the case this week).
$VIX continues to give mixed signals. First, the "spike peak" buy signal of August 5th remains in place. It will last for 22 trading days, or until September 5th. So, it still has more time. Conversely, the trend of $VIX sell signal remains in place, because $VIX has not closed below its 200-day Moving Average.
We continue to trade confirmed signals as they appear, and importantly we are rolling options when they become deeply in-the- money. This rolling action takes partial profits, and reduces the risk when a large reversal occurs, as has been the case recently regarding some of our sell signals."
https://www.optionstrategist.com/sites/default/files/SPX.JPG?v=1724622361096
https://www.optionstrategist.com/sites/default/files/PC21.JPG?v=1724622361096
https://www.optionstrategist.com/sites/default/files/PC21_W.JPG?v=1724622361096
https://www.optionstrategist.com/sites/default/files/VIX.JPG?v=1724622361096
"The only question pundits have is whether he'll decide to cut rates by 25 or 50 bps next month......" "...Powell's speech will probably set the tone for today's session....."
http://www.pretzelcharts.com/
"So, the big news since last update is that the BLS (Bureau of Laughable Stupidity) "overestimated" the yearly jobs number by 818,000 jobs. So instead of yearly job creation being 2.9 million, it was 2.1 million -- an overestimation of nearly 40%, which would get the BLS fired from the private sector. This is the biggest yearly revision to the NFP number since the Great Recession, a time when everything was in complete chaos.
Many pundits believe this will give Jerome "the Gnome" Powell the reasons he needs to justify a discussion about cutting interest rates during his Jack's Son Whole speech today (10 a.m. sharp, coat and tie encouraged, but cut-off jeans and t-shirts okay). The only question pundits have is whether he'll decide to cut rates by 25 or 50 bps next month.
Chart-wise, still not a lot to add, but bears are back into a price zone where they do have an option (classic 3-3-5 flats of the "non-expanded" variety need to retrace 90% before they can work, so this wasn't an option at lower prices), even if it appears to be the underdog at the moment:"
"Not much else to add today, Powell's speech will probably set the tone for today's session. Trade safe."
"And, of course, NYA & INDU making new highs, implies SPX will probably follow along with the crowd....."
http://www.pretzelcharts.com/
"Since last update, NYA made a new high:"
"This has implications for INDU, since it's almost a clone of the same pattern."
"And, of course, all of that implies SPX will probably follow along with the crowd:"
"In conclusion, at some point, we do need to see a larger fourth wave develop, to pair with the 1s and 2s of the bull nest noted in INDU (so a micro fourth wave within the rally wave since the swing low, then leading to a micro fifth wave for that same rally wave), and it's at least possible that the first wave down (a/1) for that occurred during yesterday's session, though I have little confidence in this market at the moment. Trade safe."
If this is a Bull drive higher the Target would be 5700 +/-
http://www.pretzelcharts.com/
"Ah yes, another day of saying basically the same thing I said in the prior update, which was basically the same thing as the prior update, which was basically the same thing as the prior update...
Supposedly, an infinite regress is impossible, but I'm starting to wonder.
Anyway, since there's not much else to say, I did add an initial bull target to the chart, in the event we're witnessing a straightforward impulsive rally wave unfold from the most recent low:"
"I've added nothing to the INDU chart, because there's nothing to add:"
"In conclusion, there are no new conclusions to be drawn that would add anything substantive to the prior conclusions. Trade safe."
"....if bears are still in the game, they probably need to turn it lower directly......"
http://www.pretzelcharts.com/
"...for All Good Men to Come to the Aid of Their Country. And it probably is, seeing as we just had a candidate for President (yes, of America, not of some mosquito-ridden third-world country) propose price controls(!) as a "solution" to government-caused inflation, for crying out loud, but that's a whole 'nother discussion.
...for bears to put up or step aside. This was actually my original thought with the "Now Is the Time" title, but you know how word association works, so by the time I started typing, my mind had already moved on to the infamous sentence from old typewriting tests. Which ultimately led us here. And thus the Great Circle of Life is complete.
Anyway, we'll see why (why bears need to put up or step aside, that is, since we got a little sidetracked there) on the following chart:"
"SPX has continued rallying and is now close to overlapping the presumed 2/B high, so here again, the implication is that bears need to make a stand fairly soon:"
"Now, were SPX to overlap 2/b, it doesn't mean there are no other bear options afterwards, it just means there are no easily-tradeable bear options afterwards. Although, frankly, I've felt that way anyway about the market ever since SPX reached its downside target earlier this month, which is part of the reason I didn't rush to stick any new targets or bear labels on the chart.
In conclusion, if bears are still in the game, they probably need to turn it lower directly. If they can't, then it's on to more and more highs forever and ever -- or at least until the price controls kick in and destroy our economy once and for all. Trade safe."
Thanks RCKS..Sure wouldn't surprise me. Maybe no rate cut in Sept and that is good news for the market? I think that is the same thinking about Harris,,?
".....it's entirely possible that was it for the downside....."
http://www.pretzelcharts.com/
"Since last update, SPX did overlap the first key upside level noted on August 7:"
"COMPQ has also continued its bounce:"
"In conclusion, there's good reason that I stopped providing targets after SPX captured its fourth target (the downside 5100-25), and that's because, as I mentioned, I didn't have any. The 3/c inflection zone was big enough that I felt it unwise to try to see around that corner without enough data to do so accurately -- and I don't regret that decision. As it sits now, if bears are going to make a stand, they probably need to do so fairly directly. Were the markets to sustain trade below their 3/c lows now, that could suggest a big bear nest. That said, as I've warned since we captured that final target, it's entirely possible that was it for the downside. We'll see what the next few sessions bring. Trade safe."
Thanks RCKS...Am heading for Dr appt. be back in a couple hours or sooner. Have to drive to downtown Portland for todays appt.
An Option Among Options: Don't go betting the Farm on it..............
http://www.pretzelcharts.com/
"Since Wednesday, the market has continued to grind along resentfully, perhaps angered that Jerome "Colon" Powell still exists. Accordingly, there's still not much to add since Wednesday, but I did notice one option for the near-term, as shown on the SPX chart below:"
"I can't stress enough (that's kind of a strange turn of phrase -- of course, no one wants any more stress than they already have!) that the pattern above is just one of the common outcomes here -- there are plenty of other options, too, so don't go betting the farm on it.
Bigger picture, nothing has changed lately:"
"In conclusion, as I've noted before, bears do still need to claim the 3/c low to confirm a change of trend at the next higher degree, so still nothing new to add. Trade safe."
Stock Market Commentary 08/09/24
By Lawrence G. McMillan
"The market broke down badly once the support at area at 5370 gave way. It eventually became oversold, and is still trying to sustain an oversold rally. Typically, oversold rallies carry up to the declining 20-day Moving Average, or perhaps just a little higher before turning downward once again. That could occur just below the 5400 level. There is also a gap on the $SPX chart which would be filled at 5410, so 5400-5410 is about where the extent of this oversold rally should reach.
Equity-only put-call ratios continue to rise sharply, and thus they remain bearish for the stock market. These sell signals will remain in effect until the ratios roll over and begin to decline. The weighted ratio is rising much more quickly than the standard ratio, but neither would be considered oversold at this point on their chart.
Both breadth oscillators are on buy signals as of last night's (August 8th) close. The NYSE oscillator has been the stronger of the two, and it has already confirmed this buy signal for two days. The "stocks only" breadth oscillator needs to hold in buy territory today in order to confirm with a 2-day close there.
Implied volatility ($VIX) is trying to generate some bullish data, and in fact the $VIX "spike peak" buy signal was the first confirmed buy signal that we had from our indicators.
Countering that is the fact that a trend of $VIX sell signal (for stocks) has occurred. That sell signal will remain in effect as long as $VIX is above its 200-day Moving Average.
So, several things are happening all at once. We still view this as a bearish environment, but this oversold rally could attempt to reach 5400 or so on the $SPX chart."
https://www.optionstrategist.com/sites/default/files/SPX.JPG?v=1723434074431
https://www.optionstrategist.com/sites/default/files/PC21.JPG?v=1723434074431
https://www.optionstrategist.com/sites/default/files/PC21_W.JPG?v=1723434074431
https://www.optionstrategist.com/sites/default/files/VIX.JPG?v=1723434074431
Everyone is trying to understand this stupid market. But so far the Daily 100MA has acted as REZ...Within a few points anyway
"The market has barely budged since last update........"
http://www.pretzelcharts.com/
"Ah yes, it's Wednesday again, the ever popular "Day with a Silent D." Wait a second. (Checks calendar.) Apparently, two entire sessions have passed since last update, which means today is actually Friday -- though you'd never know it from the price action. The market has barely budged since last update, and long-time readers know what THAT means. It means I have to try to kill time with paragraphs like this one so that I don't feel like I'm being lazy when I say, "no change."
But...
No change. Obviously.
So here are Wednesday's charts again, in lieu of the oft-requested cute bunny pictures.
First up is SPX:"
"Ha, gotcha! Lord only knows why Dall-E can't spell "photorealistic" or why it even chose to print that below "SPX," which was the only thing I actually asked for, but no man knows the mind of an AI. Anyway, a forum member suggested that Bunnies might be our new good luck charms, so I figured: Why not?
Here are the real SPX charts, unchanged from Wednesday:"
SPX 15 min:
"And finally, COMPQ, changed only in that it's trying to edge the annotations off the chart, and I refuse to recenter them because it will entail entirely redoing them:"
"Nothing to add beyond that. Trade safe and have a great weekend."
"....the level bears need, and thus the level bulls need to hold, is clear."
http://www.pretzelcharts.com/
"Chartwork took longer than expected, so I don't have much time for chit-chat here and we'll just let the charts do the talking:"
"SPX did end up capturing its most recent T2:"
"And I finally updated the annoying COMPQ chart"
"Not much else to add beyond that -- the level bears need, and thus the level bulls need to hold, is clear. Trade safe."
Not Much Good Takes Place When This Happens
August 06, 2024 at 11:48 AM
Tom Bowley
Chief Market Strategist, EarningsBeats.com
https://stockcharts.com/articles/tradingplaces/2024/08/not-much-good-takes-place-when-232.html
"As a long-term stock trader, one development in the stock market takes me and many others to our collective knees. It's a Volatility Index ($VIX) that rises past 20. There has never been a bear market that's unfolded with a VIX that remains below 20. FEAR, besides the obvious price decline, is the common denominator in every bear market decline.
I've shown this VIX chart many times, but now that the VIX has soared since the Fed meeting, it's certainly an appropriate time to remind ourselves of one simple market fact.
Stock market performance is at its absolute worst with a VIX above 20. Check out the chart below."
https://d.stockcharts.com/img/articles/2024/08/06/a4ce4ecb-d140-401f-aa64-d356ef8e8e47.jpg
"This should at least open your eyes to the possibility of lower prices. These calculations date back to S&P 500 ($SPX) performance after April 10, 2013, when the S&P 500 cleared the double top from 2000 and 2007, confirming a new secular bull market was in place.
The rally since Monday's opening bell has been nice, but very few key resistance levels have been cleared. Early tests are here, or rapidly approaching, right now. Let's look at a few key indices on an hourly chart. Many times, the declining 20-hour exponential moving average (EMA) provides solid near-term resistance, stopping the initial bullish wave in its tracks. Take a look:
S&P 500 ($SPX)"
https://d.stockcharts.com/img/articles/2024/08/06/a207778d-7a83-4934-893a-5b51df38bbd2.jpg
NASDAQ 100 ($NDX)
https://d.stockcharts.com/img/articles/2024/08/06/752c44fa-5c62-49f6-8dce-d3a53e841350.jpg
Semiconductors ($DJUSSC):
https://d.stockcharts.com/img/articles/2024/08/06/cad87392-aa2d-400b-ab8e-956ed2a35ed9.jpg
"Failing at these key resistance levels doesn't mean a bear market is underway. It simply increases the odds that the resistance levels provided will be difficult resistance to overcome initially. Likewise, a break through above key short-term resistance isn't a precursor to new all-time highs around the corner. I'm simply watching these levels as a "piece" of the Q3 puzzle, trying to determine whether the odds of a further decline are increasing or decreasing.
Nine days ago, I held a "Why the S&P 500 May Tumble" webinar, providing members with a ChartList of various price and economic charts they should watch in determining the likelihood of a big decline. That webinar paid off handsomely as our EB members were able to plan ahead for the increasing odds of a significant market decline. Now members, not too surprisingly, are asking in droves whether this is a pullback to buy back stocks cheaper or if this is more likely to be a much deeper correction or even a bear market that's developing.
These two choices are miles apart and getting this next step right will be the difference between a very painful Q3, one in which a lot of money might be lost, or setting up one of those "buying opportunities of a lifetime.""
I can't answer all of our members' questions one at a time, so late yesterday afternoon, I decided to host the obvious next step webinar, "HUGE Selling and Rising Fear: Pullback or CRASH??" This is a members-only event and it will begin at 4:30pm ET, just after today's close. If you're not a member, but would like to attend, we've got you covered. Simply CLICK HERE for more information and to register as a FREE 30-day trial member.
This is another HUGE event and I'd love to see you there!
Happy trading!
Tom
"..... it remains entirely possible that we're witnessing the death of the bull market....."
http://www.pretzelcharts.com/
"On Friday, July 26, I wrote:
[I]f bears can sustain a breakdown at yesterday's low, things are going to start to look bleaker for bulls. Worth noting that yesterday's bounce sure felt like a short-covering rally.
I think we can now say with complete confidence that the noted bounce was indeed a short-covering rally, since futures are set to open with SPX down 53,000 points. Futures actually captured both of my downside target zones in the overnight:"
"Bigger picture, here's where we are currently:"
"COMPQ also confirmed my read of it from July 31:"
"In conclusion, it remains entirely possible that we're witnessing the death of the bull market, but there are still some technical hurdles bears need to claim to add confidence to that idea. Keeping both sides of the trade in mind for now: The most bullish case would be that the current decline is wave C of an ABC, in which case the market could bottom directly. Trade safe."
Stock Market Commentary 08/02/24
By Lawrence G. McMillan
"The pattern of lower highs and lower lows on the $SPX chart continues to signal that this is now a bearish environment. A very manipulative month-end rally (using the FOMC meeting as a smoke screen) carried $SPX well over 100 points higher in a blink so that month end performance fees could be charged (why isn't that ever investigated?). Once that was out of the way, though, reality set in and $SPX is down 300 points in a little more than 24 hours worth of trading. This latest plunge has now broken support at 5400 -- a level at which had held intraday declines several times in the last week and a half. Furthermore, the gap down to 5370 has been filled. A close below 5370 will add another bearish element to the $SPX chart. The next support level could be as low as 5200 the late May lows.
Equity-only put-call ratios remain on sell signals. They did alter their upward (bearish for stocks) course this week, even when $SPX rallied. These will remain bearish until they roll over and begin to trend downward.
Breadth has been fairly strong, which indicates that small caps are doing much better than big-caps in the current environment. Even so, if breadth is negative again on Monday, these breadth oscillators will be on confirmed sell signals.
Implied volatility is signaling a bearish state for the stock market, although there have been some mixed signals.
First of all, there was a "spike peak" buy signal at the close of trading on July 31st, when $VIX closed exactly 3.00 points lower than its previous peak of July 25th. Today, that signal is blown to bits as $VIX has exploded through the old peak and is now trading at a near-panic level of 28. Saving the day, to a certain extent, was the fact that there was also a trend of $VIX sell signal on July 31st. See the box on the right-hand side of Figure 4. That is where the 20-day Moving Average of $VIX crossed above the 200-day MA. Since $VIX itself was already above that MA, it was a sell signal. That sell signal will remain in effect until $VIX closes below its 20-day Moving Average for two consecutive days.
The market has gone from a bullish juggernaut in mid-July to a complete shambles of itself in just a couple of weeks. We are seeing more sell signals emerge, and we will trade them as they are confirmed."
https://www.optionstrategist.com/sites/default/files/SPX.JPG?v=1722713882047
https://www.optionstrategist.com/sites/default/files/PC21.JPG?v=1722713882047
https://www.optionstrategist.com/sites/default/files/PC21_W.JPG?v=1722713882047
https://www.optionstrategist.com/sites/default/files/VIX.JPG?v=1722713882047
".....presuming SPX breaks 5390, then that would most likely resolve bearishly...."
http://www.pretzelcharts.com/
"SPX captured its target zone for the third time in a row, then reversed (for the third time):"
"As noted on the chart, bulls do still have a "gotcha" option, where they could revisit the current 2/B high before declining again, but presuming SPX breaks 5390, then that would most likely resolve bearishly. If it holds 5390, then anything is possible. Not much else to add beyond that, but do continue to keep in mind that big picture, we were looking for a possible MAJOR top when the market topped, so the most bearish long-term potential is that we just ended the bull market. Trade safe."
RCKS..We have only 3 types of people running our Govt.
1. Unqualified
2 Corrupt
3 Both
M
Unbelievable! The Fed Creating Its Own Nightmare And We're The Puppets
August 01, 2024 at 10:58 AM
Tom Bowley
Chief Market Strategist, EarningsBeats.com
https://stockcharts.com/articles/tradingplaces/2024/08/unbelievable-the-fed-creating-481.html
"This Fed has got to go. It's time. You've overstayed your welcome, Fed Chief Powell. I literally was just shaking my head after reading the changes to the Fed's policy statement. The changes were in the first two paragraphs, so let me jump right in and show you what changed in the wording and, essentially, what the Fed acknowledged:"
https://d.stockcharts.com/img/articles/2024/08/01/8eecf3b0-238e-491a-8c40-8ceb52ecfb88.jpg
"Wording in red with a line through it was wording from the prior policy statement that was not in the current policy statement. Wording in red and underlined is new wording in the current policy statement. I think the most important change is the last line in the second paragraph. At the prior meeting, the statement said the FOMC "remains highly attentive to inflation risks". That clearly showed that the Fed was much more concerned about inflation than the economy. The economy wasn't even mentioned. But the latest statement now reads that the FOMC "is attentive to risks to both sides of its dual mandate." The dual mandate, of course, is to maximize employment (economy) and stabilize prices (inflation). So the Fed is now acknowledging that the economy is weakening, which is EXACTLY what I've been saying for the past several weeks. We dedicated an event last Saturday to this exact topic to warn our members of the deteriorating economy and what that could mean for the S&P 500.
It's not pretty.
In order to avoid recession, the Fed needs to act and cut rates. But no, no, no, not this Fed. They're still looking for a "sustainable" path to its 2% target on inflation, as if this chart doesn't CLEARLY show a sustainable path:"
https://d.stockcharts.com/img/articles/2024/08/01/9ead0b11-43af-488f-92e9-7bb9e0810719.jpg
"I've been in the camp of a soft landing. Now I've decided I don't like camping. I also don't like this Fed, if you couldn't tell. Not only did the Fed leave rates unchanged and fail to give us all a sense of security that rates will drop in September, but it was a UNANIMOUS decision. They're all going along for this ride with the Fed Chief of Sustainability Powell.
Powell is in the business of creating pain for investors globally. His infamous speech from the stage in Jackson Hole in 2022 completely derailed a massive 700 point-rally in the S&P 500 over the prior 9-10 weeks. This isn't new.
Do you know how many trillions and trillions of dollars trade every day in the U.S. bond and stock markets? There are BRILLIANT economists in the world's largest financial firms and all of this money has been SCREAMING at the Fed to cut rates. But they have their own agenda and are the LEAST transparent Fed that I've ever seen. Would you like to see some immediate fallout from the Fed paying ZERO attention to the stock and bond markets?
How about this 5-day chart on the IWM (small cap Russell 2000 ETF):"
https://d.stockcharts.com/img/articles/2024/08/01/6eb0d043-b52a-49d6-bbed-555ea618b138.jpg
"Wednesday 3pm: The moment that Wall Street realized that all its hopes and dreams of a rate cut were crushed and that our economy is as good as gone. Soft landing? Very, very doubtful. The good news is that Christmas specials should be great this year as companies try to get rid themselves of massive inventories."
Listen, it's not too late to get the recording from last week's "Why The S&P 500 May Tumble". It may turn out to be the most important video you watch this year. A FREE 30-day trial membership will do the trick. I laid out the path for the S&P 500 and key growth areas. The only thing I'd change, 5 days later, is the title. A more appropriate title would be "Why The S&P 500 Will Tumble".
Also, I just recorded a YouTube video last night, "Fed Makes Wrong Move AGAIN!". Be sure to "Like" the video and "Subscribe" to our YouTube Channel. I appreciate your support!
Sleep well Powell.
Happy trading!
Tom
"Keep in mind that in the event SPX is done correcting, then Target 3 would be "a retest of the all-time highs, plus/minus."
http://www.pretzelcharts.com/
"Today is, of course, a Fed day, which means that precisely at high noon (plus two hours), Jerome Powell will emerge from his pod and fight a dramatic Duel to the Death with the financial press corps, armed with only his notes and a Browning .50 caliber heavy machine gun. (He keeps that hidden in the podium most of the time.) Everyone is expecting the Fed to keep rates steady -- but they're also expecting the Fed to provide lots of Happy Talk about how things are going swimmingly and thus hint at rate cuts coming down the line.
If this Happy Talk doesn't happen, then keep an eye out for the .50 cal.
Chart-wise, it's still a case where nothing of any technical significance has happened since Friday's update, but don't worry, I'm not going to publish more bunny pictures today. That was a one-time thing (unless I decide to use that joke again in the future, in which case... anyway, no promises). Despite SPX remaining range bound, I am able to provide some potential target zones (one of them being the same zone I mentioned on the forum on Monday):"
"Keep in mind that in the event SPX is done correcting, then Target 3 would be "a retest of the all-time highs, plus/minus."
INDU is still not entirely playing along with the bear ideas, which continues to make me feel like at least some degree of bear caution is called for:"
"Of note, COMPQ did make a slight new low yesterday, which makes it look a bit more like maybe it will want another wave down after this bounce, so it and INDU still feel like they may not be on the exact same page, with SPX somewhere in the middle. Not much to add beyond that. Trade safe."
LOL..One Guru that I read is looking for more down and another one is also looking at down...Maybe down to 3900 type stuff. I have no clue as to how today is going to end...::)
Bunny Pictures
http://www.pretzelcharts.com/
"Literally nothing happened in SPX since last update.
Which means nothing has changed -- so today, we should just enjoy these cute bunny pictures:"
"As we can see from these images, there's really no reason to stress about doing an update with nothing to add today. We should just reread Friday's update if we have any questions.
The only thing worth mentioning today that's different from Friday would be INDU:"
"In conclusion, we can see that, although there appear to be four bunnies in the second picture, all four look pretty much the same, so we can't be 100% certain it's not one bunny in four different poses. Also, INDU managed to get back above blue resistance, at least for now, which gives bulls some options if it sticks. No other change beyond that."
New Highs Coming or Will We Collapse? What Say You, Fed Chief Powell?
JULY 26, 2024 AT 11:28 AM
Tom Bowley
Chief Market Strategist, EarningsBeats.com
https://stockcharts.com/articles/tradingplaces/2024/07/new-highs-coming-or-will-we-co-194.html
"This will be one of the most interesting quarters in recent memory. The Fed has got to choose its poison. Do they stand pat once again next week, leaving rates "higher for longer" and awaiting more data? Or do they finally take the step that just about everyone is waiting for them to take and start a cycle of interest rate cuts to save our economy from spiraling lower?
One side is the inflation side, which perhaps is not convinced that we're out of the woods. The other side, which I'm on, is watching closely as initial economic warning signs begin to emerge. This side believes that the inflation job is essentially done, while waiting too long to lower rates may unnecessarily result in an upcoming recession and, potentially, a big market decline.
Pick your side.
Listen, there are genuine arguments on both sides. I would definitely be much more comfortable, however, debating the merits of cutting rates NOW. First, the Fed has called for a sustainable path toward its 2% core inflation target at the consumer level. I can't help but look at the Core CPI chart below and wonder how much more sustainability the Fed needs to see before attacking the slowing economy. Remember, the Fed has two mandates, not one. It strives to maximize employment and stabilize prices. It's spent the past few years doing the latter, and it's time to focus on maximizing employment. Here's the current Core CPI picture:"
https://d.stockcharts.com/img/articles/2024/07/26/136acf00-f918-4231-9a16-3ae518a878f0.jpg
"The one-month rate of change (ROC) of Core CPI has been trending lower since peaking in early 2021. That's three years of a sustainable decline. I'm really not sure how much longer the Fed needs to see it drop unless they're literally waiting for it to hit 2%. Furthermore, the last reading in June showed the lowest reading yet—just 0.006%, less than one-tenth of one percent. The last two months' Core CPI readings, annualized, is just 1.32%. Again, what do we need to see?
Many argue that the economy has remained resilient and doesn't need any help. That is partly true, but the fed funds rate was not hiked multiple times due to a weak economy. Rates were hiked to stave off further inflationary pressures. Once those inflationary pressures are subdued, there's no reason to keep rates elevated. It only risks the Fed's other mandate to maximize employment.
To give you one example of the beginning of economic weakness, check out the history of initial jobless claims and their tight correlation with previous recessions:"
https://d.stockcharts.com/img/articles/2024/07/26/01cfaa32-2e3f-4cd7-a975-ee22f9d6c5bb.jpg
"The 2020 recession is in red because it's the oddball. That recession had little to do with systemic economic weakness and instead occurred out of our first pandemic in 100 years. The other six, however, were directly tied to economic weakness. Before the start of each of those six recessions, the initial jobless claims began rising. Rising claims lead to a rising unemployment rate, which is a harbinger of poor economic activity to come.
Folks, we're at a major crossroads here. I've maintained my steadfast secular bull market position since 2013, briefly turning bearish as corrections and cyclical bear markets unfolded. Currently, I believe we remain in a secular bull market. The Fed, though, needs to cut rates now, or my long-term position may change. Powell, forget about the ghost of inflation and address the problem at hand, before it's too late!
Whether we can (1) withstand Q3 weakness and return to all-time highs quickly or (2) spiral lower into year-end will depend a great deal on Fed action or inaction. And, like I said, maybe they've sat on their hands too long already. There are critical technical, historical, and economic signals to be aware of to navigate what we're about to go through. It's important enough that I've decided to host a webinar for our EarningsBeats.com members on Saturday morning at 10:00am ET, "Why The S&P 500 May Tumble". This session is FREE to EarningsBeats.com members, including FREE 30-day trial subscribers. I believe you will appreciate this walk through history and understand the implications of Fed actions should you attend. For more information and to register for this critical event,"
I hope to see you there!
Happy trading!
Tom
".....the simplest version of things is this: SPX reached its first downside target and bounced; if bulls can continue that bounce, then we can't rule out new ATHs coming. But, if bears can sustain a breakdown at yesterday's low, things are going to start to look bleaker for bulls. Worth noting that yesterday's bounce sure felt like a short-covering rally."
http://www.pretzelcharts.com/
"Since last update, SPX captured its first downside target zone (immediately after capturing its upside target zones!):"
"I didn't update the COMPQ chart, because I didn't want to redo all the annotations (which delete themselves any time I update it), but this appears to be an impulse down. The bull counterargument here would be that said impulse is wave c of an expanded flat, and that's not impossible:"
"The bear counter would be the long-term, which continues to look iffy for bulls:"
"INDU has given a bearish signal with its breakdown and failed back-test of blue, but not yet overlapped black horizontal support, so it's only a partial signal so far and thus still can be subject to being reversed:"
"In conclusion, the simplest version of things is this: SPX reached its first downside target and bounced; if bulls can continue that bounce, then we can't rule out new ATHs coming. But, if bears can sustain a breakdown at yesterday's low, things are going to start to look bleaker for bulls. Worth noting that yesterday's bounce sure felt like a short-covering rally. Trade safe."
Have We Bottomed? Here Are 3 Charts To Watch
JULY 23, 2024 AT 02:06 PM
Tom Bowley
Chief Market Strategist, EarningsBeats.com
https://stockcharts.com/articles/tradingplaces/2024/07/have-we-bottomed-here-are-3-ch-405.html
"Tops and bottoms are so much fun to predict, but key signals are not always accurate. That's where a healthy dose of skepticism comes in. At EarningsBeats.com, we try to put as many signals together as possible, looking for corroboration. That helps to build confidence in the signals. For example, I turned short-term cautious last week for a few reasons.
First, I'm a student of history and I know that the period from the July 17th close through the July 24th close is the 3rd worst week of the year historically. That covers all trading days since 1950 on the S&P 500 and since 1971 on the NASDAQ. The annualized returns for this July 17-24 period on the S&P 500 and NASDAQ are -16.37% and -32.12%, respectively. Also keep in mind that the worst period of the year is NOT May 1st through October 31st as the "go away in May" folks, who obviously do little research, would have you believe. Instead, it's July 17th through September 26th. During this period, the S&P 500 and NASDAQ have produced annualized returns of -2.36% and -5.40%, respectively. That may not seem like much, but consider that the -2.36% annualized return on the S&P 500 covers 3,643 trading days since 1950. That's the equivalent of 14+ years. How excited would you be about investing if I told you that the S&P 500 would go down an average of 2.36% per year through 2038? Probably not too excited. Well, that's the equivalent of what has happened during this bearish period since 1950. The NASDAQ's -5.40% annualized return for the same period covers 2622 trading days, or roughly 10 years. This is just a small sample of the quality research that we provide our members every day.
Second, last week was max pain week. That's the week when monthly options expire. This is generally a very difficult period for U.S. equities and last week was no exception. Every month, we provide our members a list of approximately 135-140 stocks, showing their closing price as of the Friday before monthly options expiration Friday. We then provide each stock's max pain price, which essentially is the price point at which market makers would pay out the least amount of options premium. Let me give you a few examples of how this worked so beautifully last week. Below I'm providing stock symbols, their closing price (CP), their max pain price (MP), and their low price (LP) last week:
NVDA: 129.24 CP, 100.89 MP, 116.56 LP
AMZN: 194.49 CP, 172.48 MP, 180.11 LP
AMD: 181.61 CP, 160.07 MP, 150.62 LP
MSFT: 453.55 CP, 426.13 MP, 432.00 LP
AMAT: 243.40 CP, 217.99 MP, 210.26 LP
Do you see the value in knowing about max pain? It literally saved many of our members thousands of dollars. I don't use this information to guarantee me that a stock is going to drop to its max pain price. Instead, I use this information as a directional clue, no different than a positive or negative divergence, key price support or resistance, overbought and oversold territory, etc. It's simply one more clue that max pain provides. And I'd say the clue was quite helpful for July.
Next, how about the reversal just as the 5-day SMA of the equity only put call ratio ($CPCE) hit a key complacency level that tends to mark tops?"
https://d.stockcharts.com/img/articles/2024/07/23/d1ef63bd-8ae4-40b5-aa15-007656f0bfa9.jpg
"The red circles highlight the two times that this signal didn't work out well, but plenty of others worked just fine, especially last week's, tipping us off to a reversal to the downside.
Finally, any time I see the correlation between the S&P 500 and the Volatility Index ($VIX) turn positive, the odds increase that we'll see a reversal in the S&P 500 - either lower off an uptrend or higher off a downtrend. Check this latest positive correlation that once again sparked a reversal:"
https://d.stockcharts.com/img/articles/2024/07/23/b08c843a-6624-4bb7-ad22-8cb43efce539.jpg
"You can see that the VIX and SPX move opposite one another most of the time, resulting in a correlation that is almost always in the -0.50 to -1.00 range. Trips above zero, however, do offer a hint as to a possible market reversal and this latest signal also worked again. Remember, these are ALL short-term cautious signals, not long-term.
What To Look For Longer-Term
There's a TON to watch, but let me give you 3 short-term technical clues I'll be watching, in order of importance:
Technology (XLK)
Semiconductors ($DJUSSC)
NVIDIA Corp (NVDA)
It's no secret that technology represents 32% of the S&P 500 and 50% of the NASDAQ 100. If this group breaks down, the odds of a further drop would increase significantly. Let's look at the XLK:"
https://d.stockcharts.com/img/articles/2024/07/23/31addbe3-082c-4e22-9e13-03ce5a6bc1ac.jpg
"Let me say that bearish patterns forming during secular bull markets MUST confirm. I give the benefit of the doubt to the bulls every single time during a secular bull market advance, which is exactly what we've had on our hands since the April low. But we have external factors like the Fed that could quickly change the technical picture, which is why I'm watching these other signals so closely.
This is an absolutely CLASSIC head & shoulders topping pattern. All of the markers are present. First, a negative divergence printed with a bearish engulfing candle at the top. The resulting low changed the character of the chart, at least temporarily, by printing a lower low. Note that the selling did stop at the 50-day SMA and also above both gap support and price support. Unfortunately, we're left with a down-sloping neckline, which if violated, would be much more bearish. The bounce that we're seeing could be the formation of an important right shoulder at the now-declining 20-day EMA and/or the bottom of gap resistance, or possibly slightly higher to rein in the last buyers before a much more significant decline. The measurement of this head & shoulders pattern, if executed, would be roughly 205, a far cry from the current 226 level.
We should also keep an eye on the RSI. The bounce off 40 was beautiful, but normal bull market pullbacks touch that level and then take off. A return trip to RSI 40, or below, would start to paint a more bearish picture.
Next, semiconductors:"
https://d.stockcharts.com/img/articles/2024/07/23/f294f898-717d-47ca-9c66-16893209abe7.jpg
"Semiconductors will be the primary key for technology. This chart doesn't look a whole lot better than the XLK chart itself. I circled 4 very bearish days in the past month that suggest significant distribution. Prior to mid-June, I don't know if we had 4 similar days earlier in all of 2024. RSI support is teetering with one test already at 40. We have a double bottom on the AD line and a rapidly-deteriorating PPO, though, for now, it remains above centerline support. We don't have a major breakdown just yet, but key warning signs are there. And the semis represent a huge chunk of the XLK. I'm not showing it here, but the DJUSSC has a negative divergence on its weekly chart, so short-term breakdowns could become much more severe.
Working our way down the totem pole, next up is NVIDIA Corp (NVDA), which has problems of its own. Because it's the poster child of semiconductors, a breakdown in this critical stock would be very detrimental to both the semiconductor group and technology, as a whole. Check out NVDA and zero in on its key areas of support:"
https://d.stockcharts.com/img/articles/2024/07/23/4faef632-6095-4a3a-98aa-d39548212b54.jpg
"Listen, here's your leader in semis. Everyone will be watching to make sure NVDA holds support. Make no mistake, I am BULLISH NVDA, the semis, and technology over the long-term, but could Q3 be a problem? Yes, it very well could.
To conclude, I'm worried about the market here. I see issues building not just on the charts above, but within our economic structure. The Fed may have a lot to say about how deep the current selling/downtrend goes. I'm not a fan of Fed Chief Powell and I've been quite vocal about the Fed's delay in cutting the fed funds rate. This lack of rate cuts is just now beginning to show up in deteriorating economic conditions. This is important enough that I wanted to hold an event this Saturday for our EB.com members. I'll be discussing the many warning signs that are now popping up, along with what it would take for me to turn much more bearish. If you've followed me, you know that I don't get bearish every other week. I have not been bearish since I said to go long U.S. stocks on June 17th, 2022, during the depths of the 2022 cyclical bear market."
If you would like to join this event, "Why The S&P 500 May Tumble", on Saturday, July 27th at 10:00am ET, simply CLICK HERE to learn more and to register. We are very likely to reach capacity, so please register TODAY. We'll get your FREE 30-day trial started and you'll be able to experience all the benefits of an EarningsBeats.com membership.
Be careful out there!
And, as always, happy trading!
Tom
RCKS, Thank you for info. I'm sure glad I do not have to write a stock market letter every morning...
"Futures are suggesting a new swing low for SPX -- if that holds and if COMPQ does the same, then COMPQ in particular is going to start to look pretty impulsive off its suspected wave 5 high:"
http://www.pretzelcharts.com/
"Last update anticipated that no matter what pattern SPX was in, it would likely head toward two possible targets, both of which it then captured before reversing:"
"Futures are suggesting a new swing low for SPX -- if that holds and if COMPQ does the same, then COMPQ in particular is going to start to look pretty impulsive off its suspected wave 5 high:"
"INDU was the market throwing me for a loop, but if it can overlap the black line, and especially the red line, it's going to have a more bearish technical look (though then we'll have to worry about the ATH as a b-wave, we'll burn that bridge when we get there)."
"In conclusion, SPX captured its upside targets and reversed. COMPQ hit noted resistance and reversed and will start to look impulsive with a new low. INDU is still a bit of an outlier, but maybe that will resolve soon, too, we'll see. Trade safe."
According to one guru I read we needed to reclaim the 5540 level to favor the Bulls again...That has bveen doen.
Thanks for the info and chart
".....If bulls are still in the near-term driver's seat, this is an opportunity for them to run it back up to new ATHs............"
http://www.pretzelcharts.com/
"On Friday, I let three charts do the talking, while the SPX chart noted that the decline could be closing in on completion. Futures are currently indicating a big bounce from Friday's low, so here's the updated state of things:"
"COMPQ ended up dropping right to its new "or 4?" label before bouncing:"
"In conclusion, Friday's low (give or take) is probably a pretty important inflection point, since it could mark three down in COMPQ and the bottom of the c-wave of an expanded flat correction in SPX. If bulls are still in the near-term driver's seat, this is an opportunity for them to run it back up to new ATHs. If bears can instead sustain trade below Friday's low, it might indicate a shift, as that would start to look like 5 down in COMPQ, at least. Trade safe."
Pretzel Drills down with the Charts doing the Talking
http://www.pretzelcharts.com/
"Last update discussed the conundrum, today I want to drill down and use the charts to illustrate it, and to discuss some things that may help map the way going forward -- starting with INDU. INDU's near-term pattern is one of the main things keeping my bearish angels in check right now; the annotation explains why:"
"SPX discusses the options:"
"And with any luck, COMPQ may help point the way going forward:"
"In conclusion, those three charts probably say just about everything there is to say right now. Trade safe."
Pretzel :
(1) Pretzel presents both a Bull and Bear case.
(2) Pretzel gives both Triggers and Targets
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