Replies to post #291704 on Option Millionaires

[jimmybob]

On The Fly: Weekly technical notes for S&P 500
The bulk of heavy-weighted names have reported in a decidedly mixed earnings season. What is notable are some high-level disappointments, such as Apple (AAPL), that have kept a lid on any rise in the index and may be helping to turn sentiment more bearish. The churn between sectors we saw in the prior week has been repeated, with Energy (XLE) now one of the big stabilizing forces. But that sector may be one which is reaching a peak of near-term price. The Financials (XLF), which had also been an anchor for index price, have begun to roll over as it hit downtrend resistance. We must keep in mind that the Financials and Energy, though better relative performers of late, are still in significant downtrends. Technology (XLK) also hit resistance near its 52-week highs and then began a turn down, almost directly reflecting the behavior of the broader index. In sum, conditions technically have not been overtly bullish even as price improvement lead bulls to declare new highs were in the immediate offing. It may well be a convergence of high bullish sentiment with weak technical price conditions that could trigger a significant leg down. Without major news ahead, it may be difficult for the bullish camp to find additional price sponsorship. That may give the bears an opening to at least test the lower bound of the index's range at 2030. As previously noted, the index could continue to oscillate between 2100 and 2030 until there is a catalyst to end that range. One such, which may seem a bit like feedback, would be a price breakout or breakdown alone without being event driven as a result of post-earnings announcement drift. That could end the mean-reversion trade which has sought to keep recent gains locked in with a presumable aim of scooping dividends in a low volatility environment. A volatility spike and price breakdown could end that strategy abruptly. A big factor which could help that trade end rapidly, and which is likely responsible for some of the downside we've seen this week, is the much stronger yen. The carry trade took a big hit this week when the BOJ opted to not intervene to weaken the yen. That has lead to some very sizable moves in currency markets, which becomes a key factor for next week