ChartsEdge (U.S. equities) map for 7/1

Market Map for July 01

Posted: June 30th, 2009
Author: Mike Korell
Filed under: One-Day Market Map Comments to ChartsEdge »

If the S&P 500 cannot retake 922 and make it support, then more bearish prospects reappear

In this post, Divergence appearing in the predictions by different technical analysis methods now making us more alert as shown in these charts (Sat., 6/27/09) included an hourly SPX chart (copied in below) with Fibonacci levels marked on it. The fact that this morning's high was almost exactly on the .618 retrace level of 930.49 is a warning that this morning's high may have completed an Elliott Wave 2 up. And even that this morning's drop may have been the first wave down in whatever movement is to follow. If you have been tracking the Elliott Wave possibilities, you know that one is moderately bearish (perhaps a pullback to about 850 in SPX), the other is very bearish (retesting the March lows, with the further possibility of seeing 400 SPX). If the SPX cannot get strongly above 922 (a small .618 retrace level for a second wave up from the intraday drop, if it was a first wave), this will be quite bearish. We were expecting some movement higher the next two days - and perhaps, even in these bearish scenarios, that could still happen. But investors and traders should keep a keen eye on whether the SPX can get to and above 922. And certainly, on whether it can remain above the low already put in today. If it cannot remain above today's low then it would look like the more bearish scenarios are coming into effect.

There still is another level to watch. SPX 904 could be a support area, underneath 912. If you look at the SPX price channel chart I posted earlier today, you can see that 904 would break the lower channel line, but since it's a .618 retrace to last week's low, it could theoretically be a level that gives support on a retrace pullback.

Falling under last week's low will be widely viewed as bearish (the head and shoulders scenario), so these are some levels to watch in the meantime. By the way, Tony Caldaro mentions in his OEW update this evening (links at right) that today's 930 high is also the level the "left shoulder" had reached ... so the index has some real work to do, to avoid the bearish scenarios. **Update Note: Tony also states, the 927 level is the one SPX really needs to mount, to get back into a more bullish outlook.** The cycles view might be more optimistic, but cycles can "fail" by cresting early when markets are in bearish mode. So for example, keep considering them for timing but don't forget they don't guarantee price levels. We'll have to see whether or not the new month, new money and holiday approaching the next two days can either turn positive or at least postpone more immediately bearish market prices.

(remember the chart below is from Saturday, just to restate the Fib levels and swing trade context)

SPX - watch to see if it gets support at this channel, or it's a bearish engulfing bar

As bearish as the SPX is starting to look today, with that nasty drop poking under yesterday's low, we still need to be careful this week. It may well be a precursor of what's to come. And it may well close with a bearish engulfing bar. But as I said, we still need to be careful before wading in short, as the SPX may yet receive interim support from the channel trendlines as I've marked on the hourly bar (chart at right).

We'll be sorting out the Elliott Wave implications as well of course. Part of that will depend on whether or not price loses support at this price channel.

VIX moving up from a new low - is it enough?

The VIX went down to 25.02 and is moving up, while the S&P 500 looks somewhat heavy. Is it "enough" and is this it? Heavy as it looks, the SPX is still above its 13 day exponential moving average and still above yesterday's low. From a swing trade perspective, the SPX is still in the game until it forms a swing high by moving under the low of a prior today - classically when that prior day's high was higher than reached on the "trigger day." Since this morning, the SPX also poked a slightly higher high (as the VIX poked a new low), we aren't there yet. Now, if the SPX does close under yesterday's low, that will create a bearish engulfing bar. Notice that the SPX's move down from its morning high of 930.01 is also a drop from Bollinger Band midline (20 day moving average) resistance. So, we can see that the equities markets' rise out of last week's cycle low, is rather weak. Consistent with that is the volumes yesterday being relatively low.

All in all, we can see that equities look weak but it would be too soon to rule them out. Besides, I do have a level of 24.78 for the VIX - not saying it "has to get there," but since it has come so far under 33.81, then I'm just about expecting to see it test 24.78 before it's all ready for a turn.

Meanwhile, the dollar is up and gold is weak, so it's all looking still consistent with our thesis.

ChartsEdge (U.S. equities) map for 6/30

Market Map for Jun30

Posted: June 29th, 2009
Author: Mike Korell
Filed under: One-Day Market Map Comments to ChartsEdge »

From "sham wow" to "slap chop": Maybe the Slowsky's are investing in the bankszzzzzzzzzz

The "sham wow" was when the banks were largely upgraded, with many placed on GS' conviction buy list, and we were all supposed to wade in with huge purchases, right as they were issuing more equity and - The "slap chop" is what you're experiencing if you are trying to trade this range-bound, low volatility sector. You can see by looking at the weekly chart at bottom, it's still nudging along a major downtrend line, and on the daily chart, the BKX should try to stay above 34.56, and then there's that prior swing high, and then there's that red thingy, that red line, angling down toward that blue thingy, that blue line, and ..... uh, the BB midline thingy still just above, and ........ zzzzzzzzzzzzzzz. Oh! what was I saying? uh ..... I'm kinda glad I warned my readers not to jump in with all that "sham wow," and, uh, I suppose there's something important going on under the surface, if I can just stay awake long enough to - uh ....... uh, ..... zzzzzzzzzzzzzzzzzzzzzzzzz

Anyone want to hear about Treasury bonds again?! They're ba-a-ack! - with a good first rally effort

Remember all those posts I made about bonds, first as they were dropping into that big consolidation, and then as they dropped out of it for another leg down? I remember posting many times, pointing to symmetry targets for the long bonds ($USB), Treasury notes ($UST), and the ETF called TLT. I finally got quiet as they moved into my target zone! Let's take a quick look - notice that the good bounce already has moved them into position where they can go for the 50% retracement I mentioned as one likely objective. Volume really picked up in TLT at those lows and the beginning part of the bounce, too, confirming that bond traders also decided it was time to switch from short to long. It's interesting to see that $USB has put in a higher high already, while the T-note ($UST) hasn't. TLT has done so, and is just slightly under its VWAP (volume weighted average price). Getting to a 50% retracement will mean making an effort toward the 200-day moving average. It's too early (for me at least) to discern from the price wave movement whether bonds will move impulsively in a manner that suggests actual new highs, versus (more likely) a good correction upward before bonds roll over again to lower levels. For now, they are doing all right, and we'll want to see them respect their recent swing lows. The classic stop level would be just under the lows of early June (although I recognize that some like to keep a tighter stop level, or to assess using short-term moving averages now that bonds have already put in a good first bounce).

What today's rise in equities markets means in terms of the bigger picture across markets

Although equities rose today, there actually was not enough movement - including in the height of the rise, and in other markets such as the very important dollar - to truly change anything from the bigger-picture perspective. For those thinking about whether or not we'll see a new high (such as 963 or above 980 in the SPX, and 1912 or better in the Nasdaq composite), or just a right shoulder for a bearish "head and shoulders" pattern - here's the best way I can explain what I see happening right now. We appear to be dealing with a market cycle low, that bottomed last week, and it's producing a reaction by equities rising out of it. With interestingly similar timing in the cycles for oil, gold, and the dollar. As I'm not a deep cycles expert I won't get into the details of trading cycles versus seasonal cycles and all that. I just know that this is affecting the markets right now - and that it doesn't guarantee one way or the other, whether the cycles rise for equities will "guarantee" new highs.

From another perspective, another way to explain it is this: On the bearish side, we know that a LOT of people caught onto the "head and shoulders" idea and probably too many people saw it - that's often a clue that an idea like that, is wrong. On the bullish side, a lot of people are aware that this is traditionally a window dressing time period, plus many fund managers put new money to work at the beginning of the month and there are some studies indicating that prices do tend to dip a bit into the 25th or 26th of a month and then rise into that new month-new money time period. And, well, there's just that holiday coming up and sentiment can be positive heading into it. (That Schaeffer's Monday Morning Outlook discussed it too.) This idea tends to be more resistant to contrarian action.

Being practical, we now just have to see whether or not rising equities during this time period will produce a new high (above SPX 956) or a lower high (whether it stalls at 935 or 946). That basic concept actually seems to be true not only for equities but other markets like oil and gold. And for the dollar, whether it produces a new low or a higher low.

The VIX intraday low went to 25.29, so it got almost to my next significant Fibonacci retracement level for it, which is at 24.78. If we see 24.78 tested this week or later (can be exceeded slightly on the test), then we can think seriously about following VIX up on a rebound from there (and the inverse for equities).

For now, the daily chart below shows how the SPX's rise looks for the day. It moved up toward the level that would make a right shoulder at the same price level with the left shoulder. I also posted a "charts roundup" overview across many markets at my UBTNB3 blogspot (link at right), where I'll also post the McClellan technical data when available.

ChartsEdge (U.S. equities) map for 6/29; and my comments on preparing for how the equities markets are shaping up now

Market Map for Jun29

Posted: June 28th, 2009
Author: Mike Korell
Filed under: One-Day Market Map Comments to ChartsEdge »


=============

Thanks once again, Mike and ChartsEdge!

And, thanks to Andre Gratian who graciously allowed me to share his insights that he communicated in recent posts along with his charts of Friday afternoon.

Readers, you'll also want to check out Terry Laundry's new "T" at his T Theory website including his T chart and his audio comments. I haven't had time to listen to them yet myself, but just looking at that chart it's clear that Terry is saying something consistent with the bullish "T" idea he's been seeing shape up for a few weeks now - so let's check it out.

So, it's evident now that there are several lining up to say that the markets are not rolling over quite yet - including Andre Gratian, as well as ChartsEdge, and Terry Laundry. Despite many seeing the bearish "head and shoulders" possibility, and a solid Elliott Wave count saying that the markets are vulnerable to another move lower. For that matter, I remember seeing Andy Askey at PTV-Investing Blog, as well as Charts and Coffee blogspot, both (independently) posting discussions recently about market potential to move higher. And, Schaeffer's Monday Morning Outlook even spoke about bullish tendencies into this time period.

Well, we've seen the McClellan Oscillator bounce up from the trendline I've marked on it, right along with Terry Laundry's oscillator moving and obviously Andre Gratian's indicators as well. In my post yesterday about the McClellan charts, I annotated onto the Nasdaq chart and included in the post, some comments about possible higher levels for the Nasdaq including a gap fill as well as a Fibonacci extension level that it could reach to 1912 ($COMPQ).

My only additional comment, I don't think all of this is unequivocally bullish. It's still a good idea to watch for the McClellan Oscillator to actually break above the downtrend line I've also marked onto that chart (and I think there is a similar point to remember about Terry Laundry's chart too). As Andre also pointed out, we should keep an eye on whether the SPX can get past 946.

And there's the comment by Raymond Merriman in his weekly preview comments - there's some "fog" on the markets (or maybe rather on the participants) for another two weeks. Whether or not you go for financial astrology, it's interesting that this "fog" is occurring as several different excellent market technical methods are giving different indications for the next path (and as we're going into window dressing and Independence Day).

Maybe one way to sum up my point of view is, not to commit seriously bearish or bullish. Unless a serious trend kicks in, this may be more of a range-trading type of environment. For those preferring intermediate swings, it may be entirely reasonable to "buy on Monday" (maybe with an intraday low on Monday) and let it ride through Thursday, and TMAR in time for the holiday. Just a thought!

S&P 500 technical analysis, trendline and projections: Turning Points update information from Andre Gratian

Turning Points
by Andre Gratian

June 28, 2009 update - Andre has been unable to prepare a full Newsletter update due to an illness this weekend (should not be severe, we certainly are hoping). He has authorized me to post something for readers using his charts from Friday afternoon, June 26, and comments he has made during the last few trading days [with my (Ariel) wording inserted in a few places for clarification]:

Long-term trend - Down! The very-long-term cycles have taken over and if they make their lows when expected, the bear market which started in October 2007 should continue until 2012-2014. This would imply that much lower prices lie ahead.

SPX: Intermediate trend -The counter-trend rally which started on March 6 is still up, lost momentum after the SPX hit 956, then reversed into a low last week.

Analysis of the short-term trend is done on a daily basis with the help of hourly charts. It is an important adjunct to the analysis of daily and weekly charts which discusses the course of longer market trends.
Daily market analysis of the short term trend is reserved for subscribers. If you would like to sign up for a FREE 4-week trial period of daily comments, please let me know at ajg@cybertrails.com

Overview:
The bear market secondary reaction is still intact. After losing momentum, the market declined from SPX 956.23 to a short-term low last week at 888.86. What's next?

Some are expecting a great deal of weakness to develop in the equities markets. [Many people are seeing the formation of a "head and shoulders" (H&S) pattern and expecting the market to break under its neckline about 880-888, to fall lower.] However, this is not what the A/D (advance/decline) behavior is telling me. Mid-week this past week, it reached the highest positive number in the whole month of June. Since it was not countered by extremely negative numbers later in the week, it was a sign that we are near a turn [as Andre communicated to his subscribers].

The other positive is that the NDX outperformed the SPX, both on the upside and in the pull-back. These signals were a departure from the trend down from SPX 956 and provided preliminary signals. The daily indicators were oversold and showing a bottoming pattern mid-week last week. As I expected, this was followed by the markets turning up immediately afterward.

At the same time, both indices, SPX and NDX, did not break [underneath] their trend lines and channels. If they had been going to make a new low, 878-880 would have been the likely target. That's a major support level. If broken, we were looking for a potential move to 840-850.

But - The NDX cleanly broke out of its down channel last week, in what looks like a 5-wave pattern. This is bullish. The SPX broke above its downtrend line. Both were approaching the end of their first up-wave. For the SPX, the target was about 918 [met now]. The NDX may already have met its initial target. Then, the SPX futures' projected correction level from that first upwave was at about 910-912 [the level expected to provide support].

It is now apparent that the SPX low was made on 6/23, but there was enough uncertainty in the price action to delay confirmation of a reversal until later in the week. This was the "B" part of the A-B-C counter-trend rally which started at 667. After the new short-term uptrend "C" wave has run its course, a severe decline will take place as the bear market resumes its downtrend.

So for now - The market movement last week represented the end of the decline [the "B" wave] from 956, and the beginning of a new short-term uptrend [the "C" wave to complete the counter-trend rally that started at 667].

The weakness on Friday was correcting the first thrust of the new rally which is expected to last for several weeks, perhaps into the end of July. When the SPX has finished this small correction it should challenge the 927 level successfully and move to about 946 as its next target.

Technicals:
The longer term charts show that the market is overbought and vulnerable, but no sell signal has been given just yet. There is not "give" to the rally - no one wants to sell. This a sign that we want to go higher. A move above 920 could get something started. Actually, the sell signal when it arrives, will come from the daily chart, and that one just gave a buy!

The hourly oscillator needs a little more work before we are in a position to move higher, so the market ended up sideways on Friday. For that matter, the other oscillators are still overbought. On Monday, we should get a little more consolidation before moving ahead.

The pattern of the A/D over the past two days has been typical of a reversal and break-out with the best positive numbers since the decline started. The NDX already made a new high which went slightly beyond its 6/19 high, but pulled back.

There is a possibility that the correction [from the first upwave of the "C" wave] will be very short. Buyers are stepping in on every dip. The momentum indicators were overbought late Friday, and may want to correct before we move higher, but in a strong market, they can stay overbought for a while as prices move higher. The A/D of both indices were slightly negative.

It is difficult for the market to move ahead if the A/D index is not ready. On the 60-minute chart (below), the bottom oscillator (A/D) may not be ready for a break-out, just yet. It will have to turn up first.

And the 30-minute chart is below:

[The NDX:SPX ratio chart is at left, courtesy of Stockcharts.com.

As mentioned above, the NDX is leading the SPX upward, which is bullish.

Sentiment did become more positive as indicated by the SentimenTrader gauge.

But it doesn't necessarily signal that the markets won't continue up with an overbought continuation of the rally.

It is likely that a continued consolidation on Monday will help to correct sentiment in any event.

Breadth as measured by the McClellan Oscillator - moved upward as the markets moved up out of the lows last week.]

Summary:
I have felt all along that the cycles called for a move into July before we found a top.

Now that the correction is over, and with the move out of it expected to continue for several more weeks, it is very likely that we will see new highs instead of simply a test of the highs. Let's put the H&S idea into the background. We can always resurrect it if we appear to stall around 946. A new high could be as high as 985.

Andre

Forecasts for the week ahead in equities and gold: Cycles forecasts from ChartsEdge

Here are the cycles-based forecasts for the week beginning June 29 for equities and gold, from Chartsedge:

Monday Morning Outlook for the July 4 Holiday Week

As we're deciding this is the right day to head to the beach (beat the holiday crowds), I'll just point to several areas for reading now. Sometime today the cycle forecasts will issue from www.Chartsedge.com (link also at right; click Daily Forecast or Gold Forecast to locate), and I'll also post this evening.

As usual, check out Schaeffer's Mondat Morning Outlook: A Potentially More Bullish and Less Volatile Outlook for the July 4 Holiday Week for views incorporating sentiment and technicals. Todd includes a mention of the bullish bonds position, which I'm glad to see. It's still working (watchful eye still good of course) and I'm looking forward to it gaining traction.

Reminds me of the dollar - it's trying to finish out a cycle low without tanking lower - we'll see if it's successful in that effort!

Don't overlook the work and thoughts of Terry Laundry's T Theory; Andy Askey's Gann work at PTV-Investing blog; Charts and Coffee; and the AllAllan blogspot. These are among the good sites of interest at the right side of the page.

I know many look forward to Andre Gratian's newsletter this weekend, and I'm also looking forward to reading and posting it here this afternoon.

I noticed that John Murphy's Market Message included among other things, a discussion of the importance of SPX 956 and 891 with respect to the 50-day-based price channels. Not only interesting for a behind-the-scenes look at how moving averages "work", but of course as these numbers keep popping up in the various analytical methods as important now.

Enjoy your day and "see you later"!

S&P 500 and equities markets in jeopardy of testing the March lows: Objective Elliott Wave update from Tony Caldaro

Folks, here's Tony Caldaro's Objective Elliott Wave update (from his Elliott Wave Lives On site, always included in the "other sites of interest" at the right side of the page here). By the way, if anyone's curious why I rely on Tony as my go-to Elliott Wave expert, it's because I consider his work consistently high quality and reliable (unlike that outfit in Ga., sorry to say).
Seeing his comment at the end reminds me, I noticed that the U.S. celebrates its 233rd anniversary this summer. Hmm, 236 is a nice Fibonacci number - so that puts the U.S. having its 236th anniversary in ... 2012 ... hmm!
But without further ado, let's see what Tony's saying about the S&P 500 and other financial markets this weekend:
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the ELLIOTT WAVE lives on
Market analysis using proprietary Objective Elliott Wave techniques

June 27
weekend update

REVIEW
Economic reports for the week were generally in line with expectations. Existing homes sales were higher, new home sales lower, and home prices continued to decline. Durable goods orders continued to rise, and the final revision to Q1 GDP was raised from -5.7% to -5.5%. Over the past four quarters the GDP has dropped 15.1%. Weekly jobless claims remained over 600K, yet personal income and consumer spending reportedly rose. The markets started the week on the downside, and spent the rest of the week recovering. For the week the SPX/DOW were -0.8%, and the NDX/NAZ were +0.6%. Asian markets rose 1.6%, Europe was -1.9%, and Commodity equity markets were +0.7%. Currencies were volatile with the Euro (+0.9%) and Yen (+1.2%) rising, and the USD (-0.6%) declining. Bonds gained 0.3%, Crude lost 1.2%, and Gold added 0.6%. This upcoming week ends the the first half of the year, and non-farm payrolls with be reported on Thursday.

LONG TERM: bear market
From the bull market high in October 2007 at SPX 1576 the bear market has declined in two sets of five waves. We continue to label this structure as Major wave A (March 2008 SPX 1257), Major wave B (May08 SPX 1440) and Major wave C (Mar09 SPX 667), a Primary wave A zigzag. Since all bear markets unfold in three waves. Upon the conclusion of Primary wave A, we expected a Primary wave B rally to be followed by a Primary wave C decline to end the bear market. This is the overall pattern we projected way back in early January 2008 when OEW first confirmed the bear market. Nothing has changed. A few days after the completion of Primary wave A at SPX 667, we projected that the Primary wave B rally should now be underway. We initially projected a 50% retracement of the entire bear market, and then lowered our expectations in May to either a 50% rally (SPX 1001) or 50% retracement (SPX 1122). Historical rallies of this wave degree have displayed both potentials. Thus far, the SPX has rallied to 956, a 43% rally from the 667 Mar08 low. When the end of Primary wave B is confirmed, the next downleg of the bear market, Primary wave C, will be underway. There are two potential downside targets for Primary wave C. First, a gradual five wave decline and retest of SPX 667. Second, a more dramatic decline, taking the form of a zigzag, which should bottom around SPX 400. Currently we favor the second scenario. With somewhat limited upside potential, the current risk of remaining invested in the equity markets is high.

MEDIUM TERM: uptrend may have topped at SPX 956
A couple of trading days after the SPX hit 667 in March. We noticed some very strong buying which aligned with a few economic/political events. Primary wave B had apparently kicked off. As the uptrend unfolded the initial surge was quite impulsive, which is bullish. However, as it continued to unfold it started to display the typical signs of a counter-trend rally: diagonal triangles and overlapping waves. We have counted the uptrend as an ABC: Major A (SPX 833), Major B (SPX 780), and then a five wave Major wave C rally up to SPX 956. This count displays that Major wave C (176 points) is nearly equal to Major wave A (166 points), which is a common relationship for a zigzag. After the SPX hit 956 on June 11th, negative divergences appeared on all time-frames. Over the next eight trading days the SPX dropped to 889, 67 points. This is the largest short term drop since the uptrend began in March. Also, during the decline the SPX triggered one of our OEW leading indicators for trend changes. This indicator has been spot on during this bear market. From Tuesday's SPX 889 low the market rallied to SPX 922 on Friday (33 points), which is about a 50% retracement of the 67 point decline. This type of action has been typical of the beginning of previous downtrends. For example, the downtrend that started in May08 at the Major wave B SPX 1440 high, was a 67 point decline wave 1, followed by a 33 point wave 2. OEW has not confirmed the downtrend yet, but indicators suggest that it may be underway. Also three of the SPX sectors (XLB, XLE, XLI) are in downtrends, as well as, the DAX and the FTSE.

SHORT TERM
Support for the SPX remains at 912 and then 848, with resistance at 935 and then 961. Short term momentum is rising and not overbought. Initially we counted the decline from SPX 956 as a 1-2, i into the 889 low. With the rally from SPX 889 to 922, we are now more comfortable with labeling the entire decline from 956 to 889 as a Minor wave 1, and the rally Minor wave 2. The DOW made a lower low with the final push down, but the SPX did not. This divergence may have helped the market rally as it did. The DOW, however, displays a clear five waves from its high at 8876 to 8259. Best to your trading!

FOREIGN MARKETS
The Asian markets rose 1.6% for the week, as Hong Kong outperformed the group. Negative divergences still appear on most of these indices.
The European markets dropped 1.9% on the week, and both the DAX and the FTSE are now in confirmed downtrends.
The Commodity equity markets were +0.7% on the week, but both are displaying negative divergences.

COMMODITIES, CURRENCIES
Bonds were +0.3% on the week, and 10YR yields have dropped from 4.01% to 3.49%. It appears a downtrend in yields will be confirmed shortly.
Crude was -1.2% on the week. The uptrend from February appears to have ended with negative divergences.
Gold gained 0.6% for the week, as it held support at the previous 4th wave $915, and is now trying to extend its uptrend from April.
The USD (-0.6%) has been going sideways, but expecting some strength into early July. The Euro (+0.9%) and Yen (+1.2%) gained on the week.

NEXT WEEK
Tuesday kicks off the week with the Chicago PMI and the Consumer confidence reading. Wednesday: ADP employment, ISM manufacturing, Construction spending and Auto sales. On Thursday the regular weekly Jobless claims, along with Non-farm payrolls, the Unemployment rate (10%?), and Factory orders. Friday is a holiday in the States, Independence day. "The answer to 1984 is 1776". Best to your weekend and shortened trading week.

CHARTS: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987

Not feeling the love with gold, OR silver - both are threatening to break chart support

I'm not feeling the love with gold! Readers here for a while know that we were going up with it and nailed its projection to 1000 (actually it edged over that to 1007, but pretty close!); and since then have been evaluating whether it's going to meet bullish projections higher to 1192 (maybe someday when it's ready, above 1400), or conversely, a bearish "C" wave down that might take down as low as $550. If the U.S. wins the "race to the bottom" by devaluaing the dollar below its recent support, then the picture may change. Then there's information like this, US Approves IMF Gold Sales; What Does It Mean? (courtesy of Mike "Mish" Shedlock, posted at Phil's Stock World, 6/24/09 (nice site but seems less about stocks than options...? in terms of actual trades...)). Apparently he's thinking in terms of pullback or consolidation as well, which is especially interesting coming from him. At any rate, my views are based on Elliott Wave interpretations and to some extent Fibonacci, so that's why my more bearish sentiment nowadays seems confirmed as gold is having trouble holding the newest set of uptrend lines (first chart below). My weekly view of gold (second chart below) looks to be telling the same story. If this were the bullish view, second wave of a larger 3rd wave up, then it really needs to get itself together and move on up! Otherwise, from the bearish perspective, if it's finished part or all of a first and second wave of a 3rd wave down, then look out below.

I know some have been thinking in terms of gold doing a "reverse head and shoulders" - I'm not buying that idea, but if you are, then you've got to agree it cannot fall below the support/resistance pivot where the "right shoulder" formed at about 850/860. The other point of view could be a triple top on the weekly. Now, if gold were to fall to that support/resistance pivot quickly, it could do that and still remain within the larger uptrend channel lines on my weekly chart. Maybe it could still be working out the "c" of an "abc" second wave for the more bullish count - will see!

I've started review of silver, with a weekly chart of the ETF (SLV) (see last chart below). It looks much weaker than gold, and also has fallen off after hitting resistance recently. The volumes definitely picked up with the recent drop, which is bearish. I haven't assigned probable Elliott Wave counts. It does look like it can share the overall bearish count for gold, namely a large, complex-correction wave A, followed by a B wave up to resistance. That would leave the next movement as wave C down, likely lasting into next year. After completing a low like that, both silver and gold should be a fantastic buy. They may not complete their respective lows at exactly the same time, so we'll try to wade in long with each one when its time is right.

Oil's initial move down looks consistent with rolling over to Kondratieff winter deeper cycle lows; and gasoline may follow it down

Let's check on how oil's faring since we adopted a bearish point of view on it (USO)(WTIC) - and, I'm also going to initiate review of gasoline (UGA) with this post, as well. On oil, of course readers here know that we've been measuring it for a while, including when we went bullish at the low, stepped aside on its first consolidation, and re-entered a bullish perspective until it reached a symmetry target and then started zeroing in for its turning point for trend reversal. Anyone remember what happened the day after I posted this, Psssst! Tomorrow's finally a better day to test oil's price for weakness (6/11/09)? You can always track this, and any posts here by topic, using the labels in the labels list at right. Earlier today I saw an article describing how oil's weakness during the past week might normally have been due to NYMEX futures expiring and rollover as traders not planning to take actual delivery should have been selling and rolling over to the next month; but the actual data indicate otherwise. I'm not sure if I can locate that one right now, but then there's also an interesting review in this article at Financial Ninja, The Phantom Commodity Bull Market and the Consequences (6/10/09 - interesting timing that it came out right before the high). Ben's article also draws on data and charts about the Chinese "growth" miracle in The China Syndrome (Macro Man, 6/10/09). None of these alter the point of view we've had for weeks now, but it's definitely interesting to see some more reviews of the fundamentals with insight that may explain bearish implications in these charts.

The first chart below is actually for UGA, an ETF that tracks gasoline. One of the cycles analysts whose work I follow is turning bearish on gasoline, which I've never traded before. Having an ETF available makes this accessible for many more traders, naturally. On a preliminary basis I'm going to think it's traced out a three-wave bear market rally. After all, the move in UGA doesn't look like a five-wave impulse in Elliott Wave terms - the movement is more comparable to the move in oil, which also looks essentially corrective to my eyes. I've marked off a couple of probable channels based on UGA's daily chart movements, and set up a Fibonacci retracement series from the recent high to the low. Interesting volume spike on the selling recently, and the indicators are turning. A conservative level for a pullback would of course be the 200-day moving average, which would be slightly under the 38.2% retrace, where there's also chart support based on the prior consolidation level in early May. The 50% retrace would also be a classic pullback level and it coincides with chart support at prior swing highs in March and April. Deeper than that gets to 61.8% retrace where there were prior swing lows in March and April too. If we're going to really get bearish on gasoline then we'll just look for it to retest its December lows and maybe go under them. (Interesting to consider how that would play into political and budgetary discussions!) We'll gauge the wave pattern in UGA and the indicators, assuming it does indeed continue to roll over, to help determine whether it's going to be just a pullback or something more bearish like a 5th wave or "C" wave down pointing below the December lows.

Next are the daily chart of USO, daily of WTIC, and monthly of WTIC. Looks to me like the last leg (which I consider a "C" wave) up has an extended 5th wave, which is one thing that threw us off (probably many others too) with the whipsaw in late May after it met its symmetry target and initial Fibonacci target. But then the next day it reasserted its bullish path, as I commented that day, so we backed off of course. Finally after counting a full 5 waves up, we took the bearish point of view as I mentioned with that post above. It didn't give a proper trigger confirming until the following Monday (since that next day was a Friday that only provided an inside day). Since then it's been down in both USO and the WTIC continuous contract. What's the target here? Well, maybe the similar idea of a pullback that could test down to a 38.2 or 50% retrace ... but as readers know, I'm agreeing with the more bearish idea indicated by Tony Caldaro's Objective Elliott Wave count for a "C" wave down in oil that should at least retest the lows if not go lower. My monthly chart shows that WTIC got support at its 200 month moving average, and we'd been looking for it to do a kissback to its broken channel trendline on the monthly. It did that, and even poked above it, but is poised to lose it again.

I've discussed my views of the big-picture Elliott Wave possibilities for oil, and as I mentioned I think they are in line with those indicated by Tony Caldaro. I'll be posting his weekend update soon, which focuses mostly on equities but also mentions other markets, and as always includes his chartlink (and his site is always included in the "other sites of interest" at the right side of the page here). Yes, I know that Goldman Sachs and others are still talking about oil going to $85 or $90 (and isn't it interesting that since the lows, the Goldman Sachs stock price seems to have been approximately twice the price of oil along the way? but that probably just shows I've been thinking about it too much, LOL). From a pure play chart perspective, that could happen, and even the default P&F chart at Stockcharts.com for WTIC has indicated that same target (for both oil at about $90 and for GS at about $187, again LOL). But the view of my monthly chart, and the Elliott Wave count and Fibonacci levels (together with a resistance level that Tony has at $70 in WTIC), all have me adopting the bearish point of view.

By the way, the title here is Unbiased Trading but don't be misled, it doesn't mean that we don't have points of view and that we don't trade on them. It just stands as a goal and a reminder that we arrive at these points of view based on analytics as objectively as we can, avoiding predisposition or bias. One of the big-picture analytical frameworks that I maintain for this is the Kondratieff or long-wave view that we're still in the "winter" phase, so that it's unlikely that commodities in general have completed their long-wave cycle low. So even if price were to surprise us and pop higher to that level around $85, it would still likely roll over to lower levels.

Sentiment "6 ways" on equities markets show contrarians should be cautious about continued upside potential

The "typical" window dressing expected for the end of quarter, end of June time period - that would also be consistent with the more immediately bullish scenarios I discussed in my prior post here - may be too widely expected this time around, at least from a contrarian standpoint. Let's look at six sentiment measures. At left is the gauge from SentimenTrader, showing investors got happy again with their short-term views even notching more bullish (i.e. for contrarians, bearish) than their intermediate-to-longer-term views. What about "max pain"? Well, it's a bit early to check on that, but just as information the July "max pain" is currently showing as 91 for SPY and 36 for QQQQ, according to the Option Pain CBOE (Max-Pain) Calculator from OptionPain.com. If you go there to actually look at those graphs, they're already rather "v" shaped, and interestingly the "call wall" (as I like to call it) is already very high especially for the QQQQ (thinking it's going above $50 or $60 by July 17?! - hmmmm!).

As of Tuesday, June 23, looks like the commercial traders were thinking otherwise for both the ES (S&P mini/futures) and the Nasdaq 100 (QQQQ) according to the COT (Commitments of Traders):


Below are views of the ISE (the ISEE charts and data) showing the All Equities, and the All Indices and ETFs. The All Indices and ETFs which I've noticed has spiked high at significant market low points, has trended down yet more recently - so I'm wondering if this indicates the markets are due for a stumble. The All Equities shows that after the recent scare we pointed out here (after which equities rebounded nicely), complacency has returned as this measure returned to 160 at the close Friday.

(By the way, contrarian traders might want to know that among the three "Top Bullish" marked by the ISE Friday, is Ford (F) with calls numbering 4,920, far outweighing puts at 180. The others were WYE with 9,181 calls to 116 puts, and MU with 13,169 calls to 313 puts.)

The CPCE after spiking above its 200 day moving average, returned to the territory of that coiling wedge I'd referred to, but looks like it's finding support at its 50 day moving average. With the shorter-term moving averages converging back toward the 200 dma after their "bow tie" in March, we can think either they stay converged for a while, or perhaps exhibit a new "bow tie" and move higher along with the CPCE for a while. It's interesting there's positive divergence with the indicators since April. So the CPCE looks similar in the sense that it was running for a while with sentiment looking bullishly complacent as the VIX also dropped, but it's already moving up (and its Bollinger Bands look like they are on board with the idea of a movement higher too).


What about the VIX, then? Here are my daily and weekly charts along with the trendlines already carried on them for a while, and a few notes I've marked for today. The longer the VIX has remained under the 33.81 Fibonacci retracement that it achieved with the Armstrong date in mid-April, and moving down along my downtrend channel line, the more it's been looking like it wants to tag the next lower major Fibonacci level at 24.78 (a .786 retracement to its February 2007 lows). It got amazingly close to that level yesterday. Why not finish that task on Monday and then rebound up to give me a new, uptrending channel line? Can I be that lucky?

My weekly VIX chart at bottom is consistent with this idea too. Notice as I marked on it, that the indicators on the weekly have remained very soft and haven't crossed up, while the daily indicators rolled over again the past couple of days. Just as I was ready to get bearish equities once I saw VIX tag 33.81 - but then had to change my tune as the VIX didn't want to rebound from that - I'm going to get bearish again if and when I see the VIX tag 24.78.

Divergence appearing in the predictions by different technical analysis methods now making us more alert as shown in these charts

Divergence is starting to appear in the equities market predictions derived from different technical analysis methods, compared to how things were back in March as many methods were pointing to that being a significant low. In this post I'll show an overview of the pullback scenarios offered with Elliott Wave, the looming bearish head-and-shoulders pattern, and the alternative view painted with the Bradley model cycle. There's plenty to cover this weekend in commodities, currencies and bonds too, but we'll start with this overview of the equities markets. Looking more closely at the short-term S&P 500 (SPX) chart, the markings I made on it yesterday morning still reflect useful thoughts and that chart is below (as posted in Levels to look for in the S&P 500 today and near-term based on technical analysis, Elliott Wave, cycles and Fibonacci (6/26/09)). Yesterday's action didn't change much for the SPX' level on this chart. Although on Thursday it had pushed past the blue downtrend line, it had touched up to (maybe poked a bit) another downtrend line that would be parallel to the shallower brown line ... meaning, the Elliott Wave count potential that we've seen wave 1 down off the 956 high, then wave 2 up, and getting ready for wave 3 down, is still viable. As noted on the chart, you can also see that there remains another potential that we've seen wave "a" down from the 956 high, then wave "b" up, and getting ready for wave "c" down that can take the SPX to about 850. That "abc" target would be consistent with both a head and shoulders target, as well as the default P&F target, as well as with Tony Caldaro's alternative idea that all we get is a moderate pullback and then the markets spend many more weeks completing another rally leg up. The more bearish primary count is that a wave 3 down takes the indices down to test and likely drop underneath the March lows.


The swing-trade perspective question is, of course, whether or not the equities markets do push above near-term resistance to defeat the potential of a bearish right shoulder of the head-and-shoulders pattern (and the Elliott Wave 2 idea) in order to stamp a new high, into next week and perhaps even into mid-July as indicated on the Bradley model?

There are other ideas besides the two alternatives I've summarized above. There are two more bullish ideas. One is bullish short-term, that the markets have yet to achieve an upside target at perhaps 963 (one of the Fibonacci levels on my weekly SPX chart, at bottom; and note that Tony Caldaro has a pivot at 962 which he finds was already tested at 956 but if we see more upside then it would come into play again of course). This could coincide with the "Bradley model" discussed below. I believe the Bradley model also looks similar to Chris Carolan's "Solunar" cycle forecast, although I haven't seen his recent updates which he's now making available only by subscription (his site is also in the list at right). Below is the Bradley cycle forecast as provided by Manfred Zimmel at his amanita.at website, which I've posted several times including most recently in this post, Cycle peak for S&P 500? Time to look at the Bradley model's cycles again (6/2/09). I also posted more information about the Bradley model in this post, "B" on Cycles: Part III, information on the Bradley siderograph model used in market cycles analysis (5/16/09) and you can find prior posts about it using the "Cycles on Bradley model" label in the labels list at the right side of the page.

*A reader has commented with the reminder that the mid-July date can also be a low, since the Bradley dates are turn windows and not necessarily highs or lows. (Separately - Might also fit with what the COTsTimer blogspot is talking about this weekend?) The note about this fact on the Bradley model is actually marked by Manfred Zimmel onto his Bradley chart, below, but it's still a good reminder. Anyone not already familiar with how to factor in the Bradley model should read the "B" on Cycles: Part III post cited with link above (part of a cycles review I did - use either the Bradley model label, or the Cycles review label for more on all that).

Another more bullish idea as espoused by Terry Laundry in recent weeks with his T Theory (which he'll update this weekend or on Monday at his T Theory site, see links for all these various analysts included at the right side of the page here) is that the markets have already started the first move up in a bull market that will run for 17 months. **UPDATE - turns out Terry DID already post an update on Wednesday at his T Theory website saying, sure enough, that low might have been the low to kick off his new "T" (and I'm sure he found the rise the next two days consistent with early confirmation of his idea on that).** That idea should be enough to cause any bear to switch sides, if we see upside extending past the Bradley's mid-July cycle trend change date! As I recall from Terry's update last week, he thought that the markets would test down to the 55-day moving average and then get ready to move up again. Well the SPX certainly did test to and slightly under that on Wednesday, and then rebounded the past two days; so we'll find out with his next update if he thinks that was it for the pullback. I'm guessing for now that his breadth indicator is similar enough to the McClellan Oscillator that it's showing a similar rebound and we'll have to see if it's breaking above resistance in his indicators this weekend.

Does the market have the "strength" to move higher? We'll be continuing to examine that using technical analysis of course. For now, here's an update of how the McClellan charts are looking for the NYSE and Nasdaq. The Nasdaq does look stronger, which won't surprise a number of people who follow certain cycles forecasting, and yet both show that the breadth improvement of the past few days is once again testing resistance levels. On the Nasdaq chart I've also marked off an interesting gap that this index might be wanting to fill - and I've also got a Fibonacci extension level at 1912.89, as well as the slightly higher Bollinger Band (20,2) midline on the monthly chart currently at 2040.19, so these may tie in with the gap fill possibility if the Nasdaq can muster the strength to do it.



Below is my weekly SPX chart and I'll apologize again for not having taken the time to clean up the older markings on it. I still like the Fibonacci levels, and even my clunky trendlines although Andre Gratian's trendlines are more detailed and fine-tuned (we can look forward to Andre's newsletter update to post here tomorrow). Also notice that the indicators have weakened off again and the raw volume bars show solid selling. These indications raise the possibility that if we do see a higher level into mid-July, it might occur with intermarket divergence with the Nasdaq making a higher high while other indices put in a lower high. For now that's just speculation on my part however.


I do want to caution once again that the indicators on the monthly chart still do not look like the 2002/2003 lows and therefore I don't see them giving support to the idea that we're putting in a low comparable to that time frame. For most of the indices and most trading styles, I think it remains valid to adopt a skeptical approach (short or flat) against the mid-June highs. Nimble traders and daytraders can play the shorter-term waves, while swing traders and position traders should work with the trendlines and levels I've referred to above. On my daily SPX chart (below) I've placed markings associated with the major concepts, and even added a green path that the SPX may take if it breaks over resistance, along with a red path if it remains under resistance. The green path shows a higher level into mid-July consistent with the Bradley chart - but then what, roll over to re-test the March lows, or something more bullish like Terry Laundry's scenario? One idea that I could have marked, but did not, was the idea that if we follow the red path down, it could bottom around that 850 level and then leave it far behind by rebounding upward in the continued rally that I mentioned as Tony's alternative count, or as Terry Laundry's more bullish scenario. Time will prove all but one of these ideas as mere hypotheticals of course, and it isn't a bad idea to retain the mental flexibility to see all sides of a trade and be prepared either way.

When financial astrology points more clearly than mainstream financial news: Comments for the week of June 29, by Raymond Merriman

Comments for the Week Beginning June 29, 2009
Written by Raymond Merriman - at Merriman Market Analyst Weekly Comments (6/26/09)

Review and Preview

Last week’s new moon in opposition to Pluto was filled with classical issues related to the principles of Mundane and Financial Astrology. In these studies, Pluto pertains to debt, financial crisis, scandals, death, and the threat of removal. The new moon was conjunct the USA Venus (loved ones), and with transiting Pluto in opposition, the country grieves over the death of two of its most famous entertainers of the past 30 years: Michael Jackson and Farrah Fawcett. In politics, South Carolina Governor - and former 2012 GOP Presidential hopeful – Mark Stanford disappeared for several days, only to reemerge with a confession of an affair with a woman from Argentina. And the financial world experienced a jolt when the House Committee on Oversight and Government Reform (how’s that for a Plutonian title?) took the venerable Federal Reserve Board chair to task for his alleged cover-up and abuse of power in the handling of the financial crisis where Bank of America “took over” Merrill Lynch, supposedly against BofA’s will (but because of the strong arm tactics of Ben Bernanke and then Treasury Secretary Hank Paulsen).

Yet all of these profound and disturbing events did little to roil the equity markets of the world as they continued to behave as if relaxing in a floatation tank, gently gliding up and down in the soft breeze of the Jupiter-Neptune conjunction. “What me worry?” Most of these markets fell to new two-three week lows last Tuesday or Wednesday, which was well within three trading days of the June 19 three-star geocosmic critical reversal date. But these declines were not steep enough to fulfill the usual price targets for primary cycle lows. By the end of the week, most indices were near their weekly highs. Crude Oil and precious metals followed the same course, bottoming early in the week, and then rallying modestly into the end of that same week. It is classical Jupiter-Neptune: “big fog,” wondering when the landscape will become clear. Talk about “climate control.” Two more weeks, as the second passage will be completed on July 10.

The big question is what the social, financial, and political landscape will really look like after that fogs lifts. The realization is sinking in that this is not the same world we once knew, for better or worse. We are already realizing that the “green shoots” of economic recovery don’t seem to be continuing. Was it all a mirage and “wishful thinking?” Jupiter and Neptune.

Short-Term Geocosmics
The peak of the Jupiter-Neptune experience may be most evident in the next two weeks – not that anything involving Neptune is ever too evident. Well, let me correct that. The feeling of “love” may be evident. But it is not likely to be real, except insomuch as one “feels” it. Neptune rules infatuation, not necessarily the “real deal.” And with Jupiter involved, infatuation with something may be way over the top, for these two in combination is not considered a dynamic of good judgment. For this week, we find Venus making a waxing square to the Jupiter-Neptune conjunction on July 1, followed Mars doing the same on July 6. The second Jupiter-Neptune conjunction itself takes place on July 10. So the first ten days of July are a lot of Jupiter and Neptune, or exaggeration of dreams and tears. There are going to be at least two high profile funerals. And with Uranus changing directions in Pisces also on July 1, there may be another sudden shock to the world during this period. Uranus rules high winds, tornadoes, and earthquakes. But taken within the context of Jupiter and Neptune, the symbolism is more like a tsunami. It may be way off from land as it starts. People may not be aware of the power that is about to be unleashed. But by the time it ends (say the second half of the month, or even second half of this year), the force of a tidal wave may be too great to ignore. For now, we can only observe the decisions being made and hope that they are well-thought out and wise.

Longer-Term Thoughts
“I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.” - Thomas Jefferson, 1802 (per email from M. Tamoroff of Tamoroff Dodge/Chrysler dealership). Last week’s new moon was in opposition to Pluto. It was on the natal Venus in the U.S.A. chart (July 2, 1776) and natal Pluto of the Federal Reserve Board (December 23, 1913). As stated in last week’s column, “The theme of this new moon, therefore, will be the transformation of the role and power – and even survival – of the entity (Federal Reserve Board) itself.”

So what happened last week? The headlines of Friday’s Wall Street Journal blared out: “Bernanke Blasted in House: Political Heat Mounts on Fed as Grilling over BofA Shows Ire at Its Interventions.” On Thursday, FED Chairman Ben Bernanke was interrogated intensely by Congressmen who were highly critical of his role in the handling the of financial crisis last September and the subsequent reshaping of the banking system, which attempts to grant the Federal Reserve (and Bernanke) more powers. This development is not a surprise to readers of this column or those familiar with the Forecast 2008 and 2009 books, or even the recent webcast given on May 2 about this very issue. Pluto is crossing the Federal Reserve Board’s Sun now – at 1 degree of Capricorn, and opposite its own natal Pluto at 0 degrees of Cancer. This past week’s new moon at 1 Cancer touched off this configuration. Venus in the USA chart rules its currency and net worth.

FED Chairman Ben Bernanke was born December 13, 1953, Augusta, GA, time unknown. As stated in the Forecast 2008 (written November 2007, one year before the crisis began) - and repeated in the 2009 - book, “In 2008-2009, the Saturn-Uranus opposition will make a Grand Square to Mr. Bernanke’s natal Sun-Jupiter opposition (possibly involving his natal Moon too). In any event, such a planetary configuration implies a period in his life where everything may seem to come apart. With Uranus, things do not go as planned. With Jupiter too, things can spin wildly out of control…. With Uranus and Saturn T-squaring it, his status suddenly comes under questioning. This can become a very troubling time, leading to impulsive decisions and actions that end up affecting his position…. Whatever the case, it seems that the Federal Reserve Board, and in fact the entire banking system of the United States (and possibly the world) are in store for a crisis in late 2008 through early 2011.” The Saturn-Uranus opposition forming a grand square to Bernanke’s own Sun-Jupiter opposition (21 degrees of mutable signs) is probably peaking within a few months in September 2009.

Will Bernanke and FED survive this? No one knows for sure, but the planetary configurations strongly suggest a major shake-up in the powers of the FED. We already know that one side wants to expand his powers and that of the FED, whereas another side want to kill the FED altogether. The USA has been through this once before, in 1834, when President Andrew Jackson abolished the nation’s central bank. It happened at a time when the Federal Government finally attained a budget surplus for the first time in the country’s history. Saturn was in opposition to Pluto at the time, a point in the cycle that tends to coincide with peaks in economic activity from whence things then fall apart. Within eight years, as Saturn formed its waning square to Pluto, the USA was mired in its worst Depression ever up until that point. From the surplus of 1834, it proceeded to acquired its highest debt ever by 1842, to the point that it could not pay its treasury bond obligations (yes, the USA defaulted at the time).

So here is the similarity this time. As Saturn made its last opposition to Pluto in 2001, the USA government also had a budget surplus for the first time in many years. But now, as we enter the waning square in 2009-2010 eight years later, we have our worst deficit in history (again). Back in 1834, at the height of prosperity, the central bank of the USA was abolished. Now we are in the midst of a financial crisis, and once again the existence of the central bank is being called into question (House Resolution 1207, the Federal Reserve Transparency Act, sponsored by Congressman Ron Paul). It is like the economic circumstances are reversed this time as the central bank’s survival is being debated. For investors, the only thing that seems certain is this: if the uncertainty of the existence of the central bank (FED) grows, it will probably lead to a sharp sell off in equity markets around the world, and probably the U.S. dollar as well.

In the meantime, we watch as the USA banking system is entering a very critical juncture. We watch as history is being made, as the chairman of the Federal Reserve is being accused of a cover up and abuse of power, two powerful themes associated with the transit of Pluto over the FED’s natal Sun, opposite its natal Pluto. We watch as the FED tries to explain what it did and why it did it, and where trillions of dollars have disappeared. We watch as the FED – the central bank of the United States and arguably the most powerful bank in the world - may be audited. But by whom? Who can really audit the FED? It’s independent. At least for now.

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Note to my readers: I notice that Raymond Merriman in his preview comments today copied in a quote famously, but somewhat incorrectly, attributed to Thomas Jefferson. Apparently the actual statement Jefferson made was in a letter to John Taylor in 1816: "And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale." (See http://wiki.monticello.org/mediawiki/index.php/Private_Banks_(Quotation).) Sounds like the actual quote is still on point!

ChartsEdge (U.S. equities) map for 6/26

Market Map for Jun 26

Posted: June 26th, 2009
Author: Mike Korell
Filed under: One-Day Market Map Comments to Chartsedge »

Levels to look for in the S&P 500 today and near-term based on technical analysis, Elliott Wave, cycles and Fibonacci

What a difference a day makes, eh folks? Or ... does it? From an Elliott Wave perspective, we've seen that the most likely count down from two weeks ago, should be labeled as a wave 1 and its wave 2 either completed or yet to complete. I showed that in a post here yesterday (and had mentioned it as a possibility in the morning on the basis of how that ChartsEdge daily map looked). If you've read Tony Caldaro's Thursday update (at his site or using his site's feed, both of which are shown with links at the right side of the page here), you know what levels he's referring to in connection with a further move up today - not just his 925 pivot but also 927 as the prior fourth wave level (a classic Elliott Wave objective for a pullback like this), and 935 as another pivot/resistance level he's been referring to. Subscribers to Andre Gratian's analytics also have his information on cycles, trend and turning points and projections. Speaking of cycles, I also study up on those on my own, although not my specialty, and it's my understanding that a cycle low would have bottomed but it's now a question whether the move up out of that will be sufficient to carry equities to higher levels for the rally up. Sounds consistent with what we're looking at, and also with the general idea that many are seeing which is a "head and shoulders" formation with a neckline that would be triggered at the recent lows (actually yesterday's lows for the Dow Jones Industrial Average, which "looks heavier", and different levels for SPX and Nasdaq - and definitely triggered under the lows of the month of May). Speaking of the May lows, if the indices were to go under those before the end of June, that would look like a bearish engulfing bar on the monthly chart. Not a prospect that bulls would like to see. Given that we're still considering this time window to be a low (even on the ol' Bradley) and there's window dressing to be considered next week for the end of month, it will be interesting to see how this all plays out with attempts to hold up the market countering the headwinds the market's facing now.

Below I marked onto the hourly SPX chart many of the ideas I've been referring to, along with target levels associated with most of them.



Based partly on Elliott Wave and partly on the rally high having occurred almost right on a Fibonacci/Gann 90 days from the March lows, as well as the P&F (default) projections to Dow 8000 and SPX 850, I'm inclined to think that this is indeed only a wave 2 pullback up that will roll over again. But of course, we won't have verification of a trigger day down unless and until the markets move under yesterday's low - or assuming we poke a new high today (such as to 925 or 927 or higher), then it would have to be the next trading day going under today's low.

The indicators definitely improved, but from a swing trading perspective not enough to place equities into a bullish posture. For example, I checked the McClellan charts last night and while the Oscillator moved up, it did not break my downtrend line I've marked onto it, nor did it touch up to the zero line. (The Summation Index did not move up although one could say its slope leveled somewhat.)

Good luck out there, be careful as always - remember it's Friday so get into position where you can enjoy your Friday evening! - and happy market navigating!

Perspectives differ for swing trading versus day trading; and Elliott Wave counting in the S&P 500

By contrast with yesterday, today there was tension between what the ChartsEdge daily map was showing and the probable Elliott Wave count we were working with that called for the gap down this morning to be part of a third wave to point equities lower. Instead, equities took a reversal right from the opening and from then on looked very consistent with the ChartsEdge map for today - part of the reason I've revisited with Elliott Wave count (chart at right). Price also went above standard Fibonacci levels for the hypothetical wave count, with price finally flagging about the 200-hour moving average (as you can see in the chart). It's possible that today marked a wave 2 pullback if the entire movement down into Tuesday's low was the wave 1. In the chart at right I've marked this, using the numbers 1,2,3,4,5 to total wave (1), and the letters "a,b,c" to total wave (2). Since the waves marked as "a" and "c" are almost exactly the same length, the symmetry can be right and the potential price channel has good symmetry. The main caution is that, with the strong push up right at and into the close, it's too early to say "this is it."

It's possible that after-hours price movement may start to indicate whether or not this wave counting will prove correct. As I noted on the chart, I'm not really feeling certain about the wave 3 as marked - the look of its internal subwaves 2 and 4 don't look quite right to me. But it does meet the technical rules of Elliott Wave counting.

I've used my default Elliott Wave label for this post, which refers to Tony Caldaro, but I do not know yet whether - and if so, how - he may be revisiting the Elliott Wave labeling for these price movements. [**UPDATE at 5:10 pm - Looks like Tony is seeing essentially the same - don't know if he calls the wave 2 complete but then again as I also pointed out it would be too early to do so, cannot be certain until we see what the next move is. I'm adding Tony's hourly charts, at the bottom of this post, from his Elliott Wave Lives On - Objective Elliott Wave public charts at http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987.]

As my title for this post indicates, this really is of more concern to daytraders than to swing traders, because of the short-term nature of these moves. Sure, we care for swing trading positions ... but once price fell under the price channels and wedges that were leading into what looks like the top of the rally a couple of weeks ago, we turned net short from a swing trading perspective and today's movement up - while very nice for a one-day move and terrific for daytrading positions even from the open - is not at all enough to alter the swing trading perspective. I posted earlier this afternoon how the daily SPX chart is looking, and today's close didn't do anything to change that.

What about the Bradley model? Well it's certainly interesting to factor in, especially since tomorrow is marked as a turn date in that model, but I don't consider it a "set it and forget it" approach (you can compare how it looks (use the "Bradley" label to see it in prior posts here) to the price equities already traced this year and see why). What I do keep in mind is that the 26th day of the month is traditionally a weak time for equities, and that window dressing is not uncommon into the end of June ... so I'll be watching to see how that squares up with the Elliott Wave counting. Of course we should also be looking back at the ChartsEdge weekly cycle forecast - and I know that Andre Gratian in his weekly update posted here (also his intraday updates to subscribers of course) has also been referring to the cycles that he tracks.

I was watching currencies today to see if they would make any definitive movements but didn't really see any I'd consider defining - but it was obvious that bonds made a good movement up and that's looking consistent with our view of bonds that we've been showing for quite a while. Not only with the probability that US bonds have made a low but possibly a trend reversal pattern that's really working out now for the long side. What TLT will have to contend with next is potential moving average resistance - I'm adding that chart below so you can see it too. I'm also posting a variety of other charts (CPCE, breadth technicals, and how the dollar, gold, oil, etc. are looking) at my UBTNB3 blogspot (link at right).


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Thanks Tony! Folks - I don't know that Tony has called the wave 2 as complete but evident he's seeing the same general framework for the move down. (Only difference, if you are following his counts, he's got the different counts on SPX versus DJIA for what the rally high 2 weeks ago topped off - either the whole rally, or just first major part of it).