SPX Thursday Pre Fed Meeting

The Fed announcement comes out today at 11:15 Pacific Time and there will likely be some volatile moves up and down until it decides to move in one direction. It will likely be the catalyst for the next weeks general movement. We had a nice rally yesterday and we'll see later today if we can build on it or if it was just the last hurrah before we move down some more.

SPX Thursday AM 15m Chart

Tuesday SPX

On Friday we closed below an SPX upward trendline. On Monday we tried to get back above but closed definatively below. Today we closed below again. Whenever I see trend breaks like this and they can't get back above (look at the topping tail we had today as it attempted to go higher but couldn't hold it) and close lower then the previous day, it makes me very alert to a possible move to the downside. By no means am I saying that it will go lower, but because this is the second upward trend we've broken on the SPX in the last 14 days, it's telling us that the buying is weakening. Keep an eye on 1487 as a support level, and if we break below that our next MA support is at 1467. There's not a lot of horizontal support between 1487 and 1467, so that could be a wild ride down if we fall to those levels. With the Fed meeting on Wednesday and Thursday lets see if the bulls and bears can keep it range bound until the Thursday 2:00 announcement. Note too that the VIX closed at it's high today of 18.89 (a few cents shy of Feb 27th level) -- lots and lots of jitters out there. Be safe.

RUT Monday

Needless to say a very volatile day in the markets. The Russell 2000 continued to hold it's uptrend today despite piercing the line in intraday trading. We'll be watching tomorrows action very closely to see if we can continue to support here. Note too the downtrend (light red dotted lines) that I've drawn as a possible downtrend channel should we break the uptrend. We should find support in the 815 area due to the 100MA and some other horizontal support.

Charts From Thursday Night's Call

Below are a few charts that we talked about on Thursday night's call.

RUT (Russell 2000) 1 Yr / Daily Chart
We've drawn a few channels on this chart to give us an idea of the range we expect this index to move within the short term.
The bold green channel is most likely, but also see that we have drawn a red channel that points down. Price action will show us which one to follow in the upcoming weeks. We would have to break the uptrend in order to participate longer term in the downward channel.



SPX (S&P 500) 3 Month / Daily Chart
Last night we talked about how the SPX found support where the upward trendline intersected with the 50day Moving Average. Understanding these trendlines and moving averages on your charts will help you determine key support and resistance areas. (See highlighted area)

NDX Thursday

Another wild ride on the NDX this morning with a drop down only to be followed up by another huge retracement. The bulls are still in the wings waiting to buy the bargains. As you can see on the chart below, we broke the downtrend on the 15m chart and now we'll watch to see if we can stay above the green uptrend line. A break below the green line would signal weakness.

NDX 15m Chart Thursday 12:25pm EST

Wednesday Afternoon SPX

We'll, we had our first clue this morning when we talked about how the SPX had lost it's uptrend but then jumped up above it right afterwards. Whenever a trendline is broken there is a sign of weakness and in this case it was followed directly by a lower high on the 15m Chart. It then broke down below the uptrendline again (green dotted line) and was never able to make it back above the consolidation of moving averages that it had over head. The rest of the day to just kept dropping. I draw tons and tons of trendlines both upward and downward on all types of timeframes to alert me to big moves like this. It gets really boring during days of consolidation and sideways movement, but when you get a breakdown like today it's all worth while.

SPX 15m Chart

Wednesday Morning SPX

So far another day of choppy consolidation with some moves up and down in the triangle we looked at yesterday. We broke a short term uptrend line that we started forming yesterday afternoon on the 15m chart, but then we broke above again -- lots of indecison again this morning. We'll keep watching the charts to see if the market can decide on a an actual direction...

SPX 15m Chart

The Bottom 3 Triangles on the SPX

Today the SPX spend the day in the bottom 3 triangles formed by the short term downtrend and uptrend of the 15m bars. After our open below the green upward trendline we bounced off support, but notice that we were never able to get back above our green line. Instead, the uptrend acted as resistance all day. Conversely, once we broke above the blue downtrend line it acted as support for the rest of the day. What does this mean? Lots of indicision and another day of consolidation. Technically we spent the day moving up with higher lows, but we were unable to put in a higher high.

On Tap for Wednesday:
Morgan Stanley (MS), Circuit City (CC) and FedEx (FDX) are all reporting earnings before the opening bell tomorrow so we could be in for a volatile open. Crude Inventories are out at 10:30am EST.

SPX 15m Chart

RUT Trying to Break Thru

The Russell 2000 is bumping up against the downward trend on the 15m Chart that started a few days ago. Let's see if the small caps have enough juice to punch through.

RUT 15m Chart

Tuesday Morning Dip on the SPX

The SPX opened lower this morning and broke our 15m uptrend line that we started on June 13th. We then fell down to the support area we talked about yesterday and rebounded off that support. Notice how it found support on the top of the June 14th Bar. We'll now have to see if it has enough strength to break though the downtrend line on the 15m which was started on June 15th. Likely to be a very choppy one today.

Broad Market Consolidation

Monday was very flat as the broad markets traded in a very tight range. Lets keep watching the charts trendlines to see which way the market decides to go. A key support area tomorrow on the SPX will be the bold green trendline and the 38.6% fibonacci level. Notice the box in the chart called "Open Area." This zone from about 1530 to 1525 has no recent horizontal support so if we break below that 1530 area tomorrow there will likely to be a quick move down to the 1525 area for support. The 100MA is also sitting at 5125 which should offer some additional support. If we decide to move up on the open our first target would be to break and hold the 1540 level -- this is also a 261.8% fibonacci level (not pictured) from the June 9th move so we may consolidate at that level for a while before moving up again.

SPX 15m Chart

RUT Levels

So far a day of consolidation after 3 days of straight up. Keep an eye on the wedge-like formation we have on the RUT this morning. A break above or below could signal a bigger move in that direction.

RUT 15m Chart

NDX Hits Resistance on the Monthly Charts

I brought up a 10yr Chart on the NDX and drew an upward channel based on the Monthly Chart. I then went to a Weekly Chart to see a little more price detail. As you can see on the Weekly Chart below, we are at the top of this trend channel that hasn't been violated for the last 2 1/2 years. Could this be the week we break through or will we hold and get a little bounce down?
Remember, the longer the trendline, the better it holds -- we'll see!

NDX Weekly Chart

More Fibonacci Magic on the NDX

Surprise, surprise on the open today, the bulls are back and any news is good news again. Take a look at the NDX chart below to show our open today at the 261.8% retracement level based on the move of June 12th, Notice too how yesterday's close was almost to the penny on the 161.8% line...

NDX 15m Chart

Market Likes the Inflation Numbers

Markets are set to open higher this morning on positive inflation numbers. Lets see if the open holds and we take another leg up this morning.

Indicies Crash Up?

I never used to think that the market can crash in an upward direction, but again I learned from yesterday afternoon and this morning that the market can actually crash up. From the move up at 2:00 yesterday to the peaks today the SPX gained 25 points and the NDX gained 34 points -- this entire move happened in 3 hours of trading. After the move up this morning we consolidated sideways the rest of the day and were pinned near the 1525 level on the SPX and the 1925 level on the NDX.
I won't even try to guess what might happen tomorrow as the market has been full of surprises lately. Typically I'm told that expiry Fridays are boring days, but if I recall last month there was a lot of movement... so be ready for anything!
Below is 20day 15m Chart of the SPX and the NDX showing the Wedge breakouts. This is a great low risk setup and where and entry could have been taken as soon as the first 15m bar printed above the downtrend line (Blue line). The stop would have been a 15m bar close below the top of the body on the signal candle (highlighted). A reasonable target would have been the resistance area of 1515, but the SPX decided to move even higher, so you might have some of your position still open on this one. Keep your eyes out for Wedges like this on both long term and short term charts as they usually make large, fast moves after they break. Work on your entry and exit rules and papertrade a few to see how you do. The longer it takes to form, the bigger the move. On the SPX, a move of 25 points would have been expected as we estimate by measuring the wide points on the Wedge from 1490 to 1515, giving us our 25 points. These are generally continuation patterns which in this case was for the intermediate trend up.

SPX 15m Chart



NDX 15m Chart

Futures Up on Retail Numbers

Futures were up this morning sparked by better then expected Retail numbers, look for lots of volatility as there is likely to be another battle this morning between the bulls and bears, key will be to see if we can break out above the downtrend and moving averages. There is still plenty of resistance above that could provide a bounce down to new lows.

NDX followup

This morning we talked about trendline support on the NDX, but it didn't hold. Probablilites were to head lower, but it reversed and chopped around the trendline for a while before heading higher and finding some support on trendline in the afternoon before spiking higher on the Greenspan comments. The topping tail signaled the end of that rally and we continued to sell off before getting a little bounce at the close. On the daily we formed another topping tail so we'll watch carefully tomorrow to see if we continue the move downward. Don't be surprised if we reverse and head back up just like we did last Thursday after the heavy selling. The intraday price action was volatile, but still showed that there were plenty of buyers willing to step up and buy. Be careful out there tomorrow. I wouldn't be surprised with a strong move in either direction OR another day of both like we had today.

SPX Evening Star

Today's action left us with an bearish Evening Star candle formation. Note that we are also sitting on trendline support. Key for tomorrow is to see if we can hold the trendline support - you can see the price action that followed for the 4 days after be broke the primary trendline.

NDX Trendline to Watch

Keep your eye on this trendline today to see if the NDX can support. Probabilities are high for another leg down if it can't.

NDX 15m Chart

Monday's NDX Roller Coaster

What an exciting ride on the NDX today and why I love trendline breaks. We were nearing a trend break to the upside today, and after some fighting the NDX found some footing and ran up along our green trendline. In the afternoon, there was a knee jerk reaction to some Apple news (Steve Jobs presentaton at a web developers conference) that sent Apple shares down $4.30. Nasdaq took a ride down with Apple. The NDX is now sitting below the 200MA on the 15m Chart and it will be interesting to see what the next few days hold for us. A topping tail candle was formed on the daily chart. The next support level on the NDX should be in the 1895 area. Our target above is still 1920 if we can clear through Monday's action. Highlighted is the afternoon's trendbreak to the downside.

NDX 15m Chart

Monday SPX Overview

Friday showed us once again the short term memory of this market. On Thursday with heavy volume it felt like the sky was falling again as we excerated the move down in the afternoon session - The fear was back and many headed for the exit doors expecting that this might be the beginning of a bigger move down (and it still may be...). On Friday we retraced 60% of Thursday's move which at the onset may seem very bullish, but if we look at the charts it could also be characterized as just a normal short term rally back to the downward trendline of the last few days where a little market weakness could send it back to new lows. A break above that downward trendline tomorrow would certainly be a feather for the bulls and more price action to suggust that we may be headed to test the 1520 area next. If we do move up we'd expect so see some resistance at the 1513 level as well. If we bounce down off the trendline resistance we first look at 1503 for some minor support, but 1500 technically may be more solid since it's a round number and the 23.8% level for the Fibs on the chart below. As of Friday, the 4 day trend is still down. We'll need to break and hold above the blue trendline to reverse this trend. It may require some real strength tomorrow to break to the upside as the trendline is intersecting with the 38.2% fib.

SPX 15m Chart

Friday NDX

Heading into a critcal area on NDX this morning. We put in a lower high on the 15m chart this morning which is bearish. The bulls will now need to hold the 1887 area to put in a higher low in order to hint to a reversal to the upside.

NDX 5m Chart

SPX Charts for Tonights Call

Here are some SPX charts that we'll talk about tonight.

(Click chart to get full screen view)

NDX Wedge Followup

As it turned out, this was an excellent set up and a precursor to the rest of the days price action downward. We pointed out some wedge set ups on May 30th that broke to the upside and also made some aggressive movement in the direction of the break. On May 30th the price action was "up" and today it was "down." The entry for this trade is marked with the GREEN circle, the exit is marked with the RED circle. The trade was exited once the downtrend was broken. This was a conservative exit, a more aggressive exit and you may still be in the trade! Also on the chart is a second entry point where
the uptrend was again broken. (Click on the chart for a full screen view)

NDX Wedge Setup

This morning we had a wedge form on the NDX 5m chart that was trading for a nice move to the downside. Once the black candle peirced the wedge we were looking for the next candle to confirm the break lower which it did. The NDX moved over 10pts very quickly once the wedge was broken. Thanks to Sylvia for spotting this one this morning.

Market Starts to take Bad News as Consideration

Wow, the market is finally starting to "worry" a little bit about bad news now. As the price action suggest for the last few months, none of the previous bad news affected the bullish sentiment. Futures are down again this morning on interest rate concern and some more data to suggest a weakening economy. It will be interesting to see if the gap down this morning holds or if we rebound quickly like we did yesterday. Keep an eye on those fibonacci levels for support, we could very well retrace the additional 50% back to the low of May 30th if we fall hard today.

Fibonacci Magic on the SPX

A nice little pull back today on the SPX and as you can see on the chart we bounced on the 50% retracement line from the bottoming candle we had on May 30th. If we move up tomorrow we'll probably get our first resistance at 1535, but if we can move pass that area our next target would be to hit and hold 1540. On the downside we'd look for support at 1529, and we have some trendline support in the 1525 area. Trend is still up, and if that is all the bears could do today then probabilities are to the upside. (click chart for full size view)

Morning Grind Sideways

The market held nicely this morning, broke the downtrend and has just been chopping on both sides of the short term uptrend line. Very sideways. If we can break and hold 1538.75 it would give the market some open area to move up.

SPX Support Levels

Here's some support levels we'll watch this morning as the market opens lower after a 8.3% drop on the Shanghai Index today.

Choppy Friday

After a gap up on the jobs and inflation reports we spend the morning falling down to fill the gap. Looking to see what the afternoon holds. Market internals are strong but not enough yet to move prices to morning highs. (Notice the Bull Flag pattern on the 15m chart)