Breakout

Click on chart at left to enlarge.

The market finally broke out of the bull flag with conviction on XMAS eve. Next stop is probably 1150 - 1160.

Note the inverted head and shoulders pattern on the stochastics. Both fast and slow stochastic lines are above 80 and the bullish cross is confirmed by the MACD. Additionally, the stochastics never reached below 20. SPX, DJX, COMP, and RUT closed at the highs of the week. We are going higher. Our site is http://www.tradingparadise.com/ we do free premarket, trading

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Zone of Support Holds

Click on the chart at the left to enlarge.

After closing at yesterday's lows, today, the market pushed down into the zone of support where it hit the ascending trendline passing through the July and November lows. Additionally, the low of the day fell to less than 13% above the 200 day simple period moving average. This level above the 200 day SMA has been an area where bulls have came in all Fall. Scroll through my previous blogs to see a great chart on this.

The stochastics and the MACD remain bearish, but today's candle is bullish. We are still in a non-trending market. The weekly chart is bullish.

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Trending Bearish Day

Click on chart at left to enlarge.

We filled the December 9th gap as the bears were in control throughout the day. We are about to enter a critical zone of support, which is highlighted by the yellow box on the chart. The technicals turned decidely bearish and we have validated yesterday's potential reversal candle.

The last 3 times we closed at the lows of the day are as follows:

1. 10/28: the next day's trade was bullish engulfing

2. 10/21: the next day's trade was a bullish hammer

3. 10/1: the next day's trade was a hammer off the 50 day SMA

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No Change

No change from yesterday.

Lost power today....bummer.

Technicals still not Confirming

After closing higher 4 days in a row, the market got the needed rest today. The low of the day was support from the 8 day EMA. Bulls still need a positive MACD cross to confirm the latest stochastic cross. Additionally, the bulls are welcoming the rising 50 day SMA and expect it to come into play in the next 2 to 5 days. The bears are hoping for several selling days o see if the market can successfully retest the 11/27 low.

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Like I said last night, we are going higher

Click on the chart at left to enlarge.

The Dow Industrials, Transports, NASDAQ, and the SPX all closed at rally highs. Although the SPX has not confirmed this move with its MACD, the NASDAQ and Transports have confirmed. We are going higher and I think 1155 is the next target. Take note that the SPX has closed higher the last four trading days. I think the Russell make take the lead tomorrow.

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Bullish Stochastic Cross

Click on the Chart at left to enlarge. This one is very informative!

We had the bullish stochastic cross today. Although the MACD histogram is not yet at previous reversal levels, the fast and slow lines are coming together.

If we retest the 11/27 (day after Thanksgiving) lows successfully, we will be in that 12%-13% area above the 200 day simple moving average that has previously propelled us to new highs. We could go as high as 1150 and still be 20% above today's 200 day simple moving average. This is significant because throughout this Fall, the market has been content with a rising market as long as it doesn't get more than 20% above the 200 day simple moving average.

We nailed AA and several other Dow breakouts this week. AA Dec 15 calls paid over 850% today! If that's the kind of action you are looking for, consider joining our team.

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Moving Averages bullish, Technicals bearish

Click on chart at left to enlarge.

No change from yesterday. Yesterday's and today's candles are opposing hammers which represents indecisiveness. We are 15% abov the 200 day SMA.

But our room kicked it...we had great plays on AMZN, ICE, GS and others.

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Potential Reversal Candle

Not much of a change from yesterday because we did not hit either a key support or resistance level. We did put in a potential reversal candle.

Tracking how high we remain above the 200 day simple moving average. Click on chart at left to enlarge.

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Expecting a Narrowing the gap with the 200 day sma

We finally got that close below 1092. If we push down to 1083.74 we may get a small bounce. A break of this level will take us to 1074.77.

Stochastics reamin bearish and MACD histogram is not yet at recent oversold levels.

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We are not Trending

Moving averages are bullish. Technicals are bearish. I do not expect anything big to happen unless we close above 1112.28 or below 1096.52.

Bear still have hopes for a gap fill at 1070 from November 6, 2009

Cannot close above 1,110

Click on the chart at the left to enlarge. I have a few important levels noted. The technical are getting soft. We did not validate last weeks potential reversal candle on a weekly chart (not shown). The biggest problem is that we are still trading at over 16% above the 200 day simple moving average and until this gap closes, I find it hard to believe we can just power higher.

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Close at top of Tuesday's Gap

No one wanted to hold any positions going into tomorrow's unemployment report. We closed at the top of the gap formed on Tuesday. The flag pattern is still intact but we have validated yesterday's doji as a reversal candle. On the weekly chart, last week's low has not been breached.

Just Waiting for the MACD Cross

We should push higher as the daily stochastics gave us the bullish cross. The only thing left in doubt is the interaction between the fast and slow lines of the MACD.

The 8 day EMA will act as support.

Top of the Flag again

Click on the chart to enlarge.

We have been trading within a box for nearly three weeks. The box has formed a flag off of the run up from the 11/2 low.

Tomorrow look for the MACD fast line to hit the MACD slow line and watch for fast and slow stochastic lines to come together.

A push above the box will give an initial target of 1120. A break below thebox will find support at the 50 day simple moving average.

Technicals continue to Weaken

Click on chart at left to enlarge.

I have boxed in the double top along with its neckline. It is currently a bullish flag as long as we trade inside the box. If we fail to break above the box, we will trend towards a retest of the 50 day simple moving average. The stochastics and the MACD suggest future weakness.

Bullish Support from Resistance

The bulls showed up this morning with a gap up open and for awhile threatened last Monday's high. Resistance is at the 11/16/high of 1113.69 and support is at today's low of 1094.86. The early October highs acted as support.

The moving averages are ascending, the stochastics are still bullish, and the MACD fast line turned to the north.

The weekly stochastics have turned decidedly bullish.

Need to retest support

Click the chart at left to enlarge.


I think the market needs to test support and a 38% fibo at 1080 - 1081 before going higher. The fast schochastic line is pulling down yet above 80 which is inconclusive. More importantly the fast MACD line is moving south from a lower high.

The weekly candle (weekly chart not shown) is a potential bearish reversal candle.

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Uptrend needed a breather

Click on the chart at the left to see details.

The market is not ready to thrush up to the top of the channel. The fast line on the MACD is closing in on the slow line. As long as the fast line is descending we will pull back.

Flagging

Two day range has been between 1102 and 1111. The pattern is a flag and we have closed near the top of the range the last two days. Moving averages are beginning to catch up with the price action and the stochastics are embedded above 80.

Support and resistance are noted on the chart...click to enlarge.

We Are Going Higher

The 1101.97 area worked as support today...meaning old resistance is acting as new support. We closed above yesterday's close and appear to be flagging at the 1110 level. This is now an ascending channel trade with the top of the channel acting as the next resistance level.

The candle is bullish and the technicals support futher upside.

New Rally High and Rally High Close

Click chart at the left to enlarge.

The Cup and Handle off of the 8 day EMA worked giving us a solid break above the 1,100 area. Stochastics remain embedded above 80 and weekly stochastics (not shown) take a sharp move to the bullish 80 area.

Even the mega-bear, Merrideth Whitney, could do little more than cause a pullback to R-2 for 30 minutes.

Target to the upside is the top of the drawn channel or 1,120; whichever comes first. Support is at 1,105 followed by 1,101.

The candle represents normal buying and is bullish.

Bull Case Bear Case laid out

Bear Case:

Double top at a round number, 1100. Currently trading too far above the 200 day simple moving average. I discuss this in more detail on the market wrap video for 11/13/09 on my home page, www.tradingparadise.com . Additionally the NASDAQ is putting in a text book Head and Shoulders Pattern.


Bull Case:

The market is putting in higher highs and higher lows; the definition of an uptrend. The market is trading above all moving averages and they are ascending. The market has key support levels under it at 1066 - 1080.

Market sees a double top

Click on the image at left to enlarge.

A few things are working against the bulls.

1. 1100 is a round number and many traders will take profits at round numbers.

2. Although we briefly put in a new high, the overall appearance is a double top.

3. Yesterday's candle was a spinning top and was validated as a reversal candle by today's trading.

The market is reluctant to push higher any further from its 200 day simple moving average. I expect a pull back short term to the 1076 - 1080 area. We could even go as low as 1040 and still be bullish as it would be a higher low.

New Rally High

Bulls put in a new rally high and closing high today. I think we need to go a couple points higher to avoid the appearance of a double top.

The stochastics on the daily got above 80 and they are "kissing" at 73 on the weekly.

The day's candle was a spinning top which could be a reversal candle if validated by tomorrow's trading.

Tomorrow's economic data is jobless claims and I have felt this will have the biggest impact on the markets this week. Walmart releases earnings before the open and Disney reeases after the close tomorrow.

Indecision Day

The maket pushed up to some old daily candle highs and then pulled back. While we did not reach 1,100 the market seemed bullish in light of the big recent push up from 1,029.

On chop days I prefer to take profits faster with larger positions.

Wednesday may be a chop day also as the market awaits Thurday's initial and continuing jobless claims numbers.

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Bulls want another shot at the title

The bulls eliminated the potential head and shoulders pattern by trading above 1081 with conviction. The SPY's gapped up at the open and continued higher all day, closing near R-4.

The bears will have to hope for a double top but cannot be too encouraged because the Dow pushed well above the double top area and closed at new rally highs. The QQQQ's and IWM's may hit a roadblock at triple top areas. If this coincdes with the S&P 500 hitting the double top area, the bulls may be forced to take a rest.

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Very close to serious Resistance

Click on the chart at the left to enlarge.

The bulls are back in control but are very close to serious resistance. Several fibonacci's converge at the 1073 area.

If we cannot clear the 1073 - 1081 area, then we will have a head and shoulders pattern forming. If we can get above 1081 but not move on up to new rally highs, then the pattern will be a double top.

Daily stochastics are moving up while weekly stochastics are moving down. Next week should be very telling.

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Time for candle addition

Click on the chart at the left to enlarge. Add together all of this weeks candles and we have bullish engulfing next to Friday's monster red candle.

The unemployment report comes out tomorrow pre-market; glad I am in cash going into that. I think the reason we did not bust out of the ascending triangle intraday today was trader reluctance to load up on long positions before this report. If we can clear 1066.50 (last Thursday's high) next resistance is 1072. Support is at 1030.

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Bears back in control

What a day! A gap up open, an intraday double top, and a crash that filled the gap. What more could a trader want?

The day's high was rejected at the 21 day exponential moving average, which is bearish. The daily candle was a gravestone doji, which is bearish. Friday's monster red candle has not been invalidated. A new descending trendline has been established. Click on the chart at the left to see this in detail. I think we re-test the 1030 area again and still hold to my target of 1012 - 1020. I can see 985 further out as a longer term downside target.

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Friday's Low Holds

Click on Chart to Enlarge.

The SPX traded above both Friday's low and Monday's low. The trading action was choppy as traders look to tomorrow's FOMC rate decision. Today"s trading was engulfed by Monday's candle.

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Indecisive Spinning Top

The daily candle had a 2.25% range but ended in an indecisive spinning top. The high of the day was rejected at the 50 day simple moving average; which is bearish. The low of the day traded below Friday's low; which is also bearish.

I still have to stick with downside target area of 1012 - 1020.

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Bears back in Control

Yesterday's potential bullish reversal candle was not validated since today's trading was below yesterday's high. We closed at new lows at a level pointed out as potential support several days ago.

If the mid 1033-1037 level does not hold, we could pull back into 1012-1020. However, if the mid 1030 level holds, then we could push as high as the descending trendline shown in the chart.

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October 29, 2009

The SPX put in a bullish reversal candle today. It was the markets best up move since July 23rd. I see the market will push up to the 1071 - 1080 area. I'll posted my SPX chart above this blog. My daily video is posted at: http://www.youtube.com/watch?v=H_sQDEWlx8k

The stocks I like with further upside are: EWZ, ICE, HAL, and FCX.

Take a look at the UUP which tracks the US dollar. Move the settings to weekly and throw in an 8 week exponential moving average and you will see this is stone wall resistance for the UUP.

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S&P500

Market overview

The market has been crushed in the last 7 days. As the dollar strengthens, the market collapses. I use UUP to chart the dollar. I see minor resistance for UUP at 22.74 and major resistance at 22.92.

Minor support for the S&P 500 (SPX) is at 1039.47. Major support is at 1019.95 and 1013.14. I prefer 1013.14 because it is a 38% (fibonacci) pullback of the move up starting on 07/08/2009 and ending on 10/21/09.

Starting November 1, 2009, I will be on the air doing pre-market shows, trading hours shows, and nightly shows. Go to my website to get the password to my interactive audio/video trading chat room.

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