03.14.2012 -- Blow off top?

Last time I posted, I went over how the market had to make a decision and the decision was made to move higher and we have now broken the rising wedge to the upside.

This, IMO, is a classic blow off top with a false breakout. This is what I wanted to see. Finally.

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Key Levels

Upside -- 1400, 1450?

Downside -- 1391, 1373, 1354, 1335, 1286, 1260

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SPX Daily;

So obviously the market feels really bullish right here, so lets go over some of the hidden things that are bearish.

1) First move is usually wrong. That is the underlying premise of our fake breakout higher and blow off top.

2) You can see in the chart that the RSI and MACD is declining while the S&P is putting in a powerful move north. That is a bearish divergence.

3) Yesterday the Transports tried to make a move north and got back over the 50DMA.. that reversed heavily today and is back underneath the trannies greatly underperformed today. This is still a DOW theory non-confirmation, which is bearish.

4) Sentiment is getting extremely bullish with things like CNBC having an "analyst" on this morning that when asked, essentially said he was buying pretty much anything and everything.

5) The financials were trying to stage a breakout yesterday. Today the XLF closed flat.. but the internals were quite mixed.. with some stocks like Citi and Goldman Suchs taking a big hit and others like BAC rallying hard. The XLF was very bi-polar today.

I know it doesn't seem like it, but something ugly is about to come out of the woodwork here soon. It could be that housing prices start tanking again with rates looking like they've put in a long term bottom. I still believe there are simply more houses than people to occupy them and it will remain a fundamental problem for the housing market. It could also be when the CDS trigger on Greek debt is pulled. It could be a large country like Spain or Italy that suddenly starts spinning the toilet bowl... but it will be something and soon.

GL

CJ

03.08.2012 -- Decision time..

So we did what I expected in my last post, we broke, we are now backtesting. Believe it or not, it took the last 2 days of rallying to backtest the old trendline.

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Key Levels

Upside -- here to 1374

Downside -- 1325, 1320, 1279, 1259

Again still at a point where 110 S&P points breaks all support.

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SPX Daily;

So pretty clearly you can see the break below the trendline and then now the perfect backtest.

We either break back into the wedge now and most likely put in another round of new highs, or we will fail right here.

If we fail right here, I suspect we will test the full bounderies of completely falling apart which would be the lowest moving average which currently sits at 1259 and rising. Below that, the market has a real problem on its hands.

its pretty much do or die for at least 50 points here, the break higher must happen tomorrow if its going to do it. Either that, or it would need to be a very narrow range day and explode up on Monday.

Otherwise, i expect us to re-fall hard here soon.

GL

CJ

03.05.2012 -- Potential roll over..

As a side note, I am finding it harder and harder to make the time to do these with our 2 month old and our 2 year old right now, so they may not continue to be 4-5 days a week and might just be 2-3 days a week for a little while.

Moving to the markets.. i think we have a rollover in process. The outstanding question is what kind of top it is. The power of the eventual selling will help answer that question.

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Key Levels

Upside -- 1366-1377

Downside -- todays low to 1360, 1319 (big drop to next support), 1275, 1258

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SPX Daily;

So you can see there what happened today. We sold back into the wedge, which qualifies as a false break north, but would have liked to see a bigger blow off. After falling back into the wedge we fell to the bottom of it and then bounced and closed back in the bollingers.

I think within the next few days, we will again test the bottom and break lower out of it. Which will produce (after a possible back test) at least a 50 point S&P selloff just to start.

Could we have a fake out here and THEN complete a final surge that is the real blow off I was looking for? Yes.. its possible. But if we break convincingly below this wedge on close, that will be it for the rallying for awhile.

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Lots of rotational selling going on right now. The Russel 2000 and Transports were very weak last Thursday/Friday while the market tried to hold its own and stocks like Apple still closed green. Today the Russel held up o.k. while Apple sold off hard and sent the NAS down hard.

Right now.. the Russel 2000, Transports and SOX are being a drag on the market. Leadership had really narrowed and we have parts of the market starting to show cracks in the armor.

The trannies, Russel and SOX are especially important as a group. The Trannies failed to reach a new high and therefor have a non-confirmation of a DOW Theory buy signal. A non-confirmation is bearish. The SOX is important becuase its the semi-conductors and they often lead during bull markets as strength in manufacturing shows up and chips are needed in so many products. The Russel is important because it represents small business in America and generally is a better represention of the local economy and not so much how our economy is benefiting from the debasing of our currency and government deficit spending.

Without those three sectors also participating and hitting new 52 week highs with the S&P and DOW, it's really a bearish divergence in the market.

GL

CJ

02.29.2012 -- Reversal?

Today was a miniture version of what i've been waiting for. We broke the upper trendline of the wedge intra-day and then proceeded to sell off and close red.

I would have liked to see a bigger blow off and a larger reversal, but today could qualify.

So far, I would say this appears to be another pullback (which we havent seen in awhile) and then yet another ramp sometime before a sell in May event. We will see how the trading goes if a sell off occurs here. A major top will involve major selling.

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Key Levels

Upside -- Here to about 1375

Downside -- 1361, 1354, 1310, 1300, 1269, 1258

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SPX Daily;

Here are all the potential support areas. It's interesting how the trendlines end up so closely following the moving averages right now.

Even though the market didn't end down a ton, there was some heavy selling in areas of the market. The Russel 2000 again got hammered. The Russel is one of the areas that was still a big move away from new highs.

AAPL was up 1.3% but the NASDAQ was down 20. That tells you most things were hammered pretty good and AAPL kept it from looking real ugly. Probably done on purpose.

Early next week is a phi mate turn date. So this could be just another fake out, but those dates are +/- a few days, so today may have been it for at least a couple weeks.

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Bernanke was probably not happy about the reaction to his speech today. By downplaying QE3, his intention i'm sure was to hammer oil prices back down. Knowing that in doing so, he might ding the market and knock treasury prices down.

Well.. he spoke.. market didn't like it, treasury prices sure enough headed lower, but oil held steady at 107. Oooohh.. i bet that burns his ass.. hahahha.. he is pissed tonight I think.

He did though manage to beat down the precious metals. But in the end, precious metals probably don't matter a whole heck of a lot to him, but oil does.

It really is sad.. I can't stand Ben Bernanke and everything he stands for, but at the same time, I know that the downfall of what he's created will mean terrible things for this country and my own children. In the end though, what he's doing has no other outcome, it is unavoidable, the outcome can only be delayed. I'd much prefer to get it over with now.

GL

CJ

02.28.2012 -- on the edge..

Don't have a ton of time today, so will just get right to it. The S&P is right on the edge of new highs. The NASDAQ is already there.

BUT.. odd divergences. The DOW Transports were down today and are over 10% from new highs. While at the same time the DOW has hit new 52 week highs. Thats a big Dow Theory non-confirmation. Probably never seen the Trannies lag by 10% like that.

The Russel 2000 is also nearly 5% off of new 52 week/all time highs. The Russel today was down and was trading like an anchor to the market all day.

The NASDAQ had a nearly even Advance/Decline print today, despite the NAS being up 20 points. I believe this is all Apple all the time.

Leadership is very narrow.

They are attempting to rally the financials and light the spark to send us to new highs on the S&P,... BUT.. even if we do, we still have the Russel 2000 and probably more importantly the DOW transports a very good clip off new 52 week highs, which will remain a big divergence and DOW theory non-confirmation.

The market at or approaching 52 week highs and some indicies like the Russel 2000 near all time highs.. I cannot believe that the 10 year yield still sits at 1.92%. The amount of liquidity to pull off new market highs and all time record low yields is staggering.

God help us all if inflation sets in. There's no one in the FED that has a rats ass chance in hell of stopping it.

Anyways.. no time left..

SPX Daily;

02.23.2012 -- More of the same..

Nothing much changed today. We bounced off the mid-bollinger bands yet again and are continuing to ride up the top of the wedge.

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Key Levels

Upside -- 1360-1370

Downside -- 1354, 1347, 1310, 1298, 1257

support continues to rise while the market is stalling and gyrating. We are now at the point that a 105 point sell off in the S&P would put the market below all support.

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SPX Daily;

Not much to add today from our recent view. We continue to ride up the top of the wedge. We bounced off the mid-bollinger bands yet again which of course resulted in another trip to the top of the wedge.

We have a shot here to get a false break higher out of this wedge and then I would wager a collapse would be right behind it.

One change that I did not mark is that I think the EW count has changed for this particular rally that began just before christmas. It appears it is a wave structure in which we have a very large first wave, a much smaller 3rd wave and we are now in wave 5. I believe wave 5 is a micro copy of the entire structure. If so, there are 2 very small waves left.. a very small sell off and then one more very small lift. Under that count, that would complete the rally.

If my current count is right, I would guess sometime around next Wednesday could be a target for the end of this, but as usual EW counts can morph and can vary quite a bit from person to person attempting a count. Its not a primary indicator for me, but it does at the moment match all other technicals that this rally is nearing a major end.

GL

CJ

02.22.2012 -- Tired..

Is the rally tired? yeah.. its real tired. Its like a bullet shot straight up in the air that's just about stalled.

You know whats more tired than the market? Me. I'm so sick and tired of the lies and bullshit that comes from the so called leaders of this country.

Here we are in election year and what are the headlines coming from our "leader" and potential "leaders"? Corporate tax reductions and closing some loopholes and lower the top bracket tax rate to 28%.

We are running trillion dollar deficits and these assholes are flapping their mouths about lowering taxes.

It's become nothing but a contest about who can promise the most bullshit not about who can fix problems and actually be a leader.

Apparently this country is so full of morons that they will elect a snake oil salesman over and over and over again.

To be honest, I don't like any of the choices. I think they all suck. I think the founding fathers are rolling over in their graves.

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Key Levels

Upside -- 1360-1370

Downside -- 1352, 1342, 1300-1296, 1257

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SPX Daily;

Same wedge we've been following. The bollingers though are starting to flatten out here, which is always a pre-cursor to turning down. Doesnt have to be a trend change, but the bollingers will always flatten before a trend change.

The interesting part about it this time is that the bollingers are flattening while we are still riding above the top of them. That's a set up for a big sudden fall that goes right through them with first support being just above 1300.

The market is obviously tired here. The only question again is what kind of selloff we get when it comes.

If we get a mild selloff that eats up time but not much % off the S&P, then there's likely another ramp coming.

If we get a very impulsive and powerful selloff, then questions will be asked about whether we've already seen the highs for the year.

GL

CJ