Sunday, August 31, 2014

Market Dashboard - sideways consolidation

 Market conditions continue to lend favorability to the Bulls.  The sideways movement of the SPY is giving most oscillators time to reset without a significant reduction in overall price.  Even though my short term outlook is bullish, as well as medium term, I encourage readers to visit the blog "The Elliot Wave Lives On."  Click here.  This is a daily read for me and this weekend's update is particularly interesting.  The bottom line is that they think we are close to a longer term top and are projecting it may materialize within the next month or so.  As such, it is probably wise to begin formulating a gameplan for a bearish medium term market.

Thursday, August 28, 2014

Market Dashboard - Cooling signals

Today's pullback was long needed, so I was relieved to see it.  I was also pleased to see the market rally off the lows of the day to end only marginally down.  What interests me on the SPY chart below is that we are seeing an increase in volume at current price levels.  I think the 2000 level on the S&P 500 is an important psychological level.  If we can get above it again I think another leg of the rally could take hold.  However, this is a potential inflection point so investors should be positioned to protect themselves in the event of continued declines.

Tuesday, August 26, 2014

Market Dashboard - little change

 Another move higher for the day on the markets.  Interestingly, the SPY only moved up .06% while the small caps climbed .9%.  Really, not much change to speak of.  If I were to draw an analogy of the market to a spring, it would be a spring that has become fully extended, and maybe a bit beyond that.  For that reason, investors would be wise to position themselves so that profits could be taken if individual investing targets are met.  One technique would be to add a trailing stop to index ETFs so that profits could continue to grow and downside protection is maintained.

More info on Elliot Wave Theory.. Elvis, click here.

Monday, August 25, 2014

Market Dashboard - Hot Indicators..again

Today brought another high for the market and returned my indicators into the red zones.  I'm still hoping for a higher high, but we really need a little break here.  Below I've outlined a couple levels of support if the market does start to pull back some.

Sunday, August 24, 2014

Market Dashboard - Hot Indicators cooled a bit

The hot indicators from Thursday got a day to cool off on Friday.  I still think we are headed for higher highs in the days to come, but if we do see a pause early in the week there are some very interesting Fibonacci retracement levels in play.  (Click here to read about Fibonacci.) Below, on the SPY chart, I have overlaid the Fib retracement levels.  The two that I have highlighted in yellow are particularly interesting because they are associated with volume spikes at those prices.  For a technical analyst, those two correlating factors are very fascinating!  If we were to see the market pull back we should expect those to be levels of support.

Thursday, August 21, 2014

Market Update - New All Time Highs

New all time highs were reached on the S&P today!  Pretty exciting as we had correctly analyzed the beginning of this wave.  My indicators are all pretty hot and the LDI turned negative.  This does not necessarily mean the rally is done, rather it simply means we have moved upward quickly and the market needs to have some sort of mean reversion to continue healthy growth.  Stops should be set at personal comfort levels.  Those happy with gains can set them higher; those that are still aggressive can set them lower to remain on the wave longer.  I definitely think there is still more upside to come, but as I've stated all week, investors should not be surprised by a brief snap-back.  

Wednesday, August 20, 2014

Market Update - Hot Indicators

Today's market action was another strong day for the Bulls.  Primary Indicators 1 and 2 as well as the Very Short Term Indicator are all in the red zone and the numbers behind the Leading Directional Indicator showed a hint of a slowdown today.  With that said, I do think the market wants to make some new highs here.  Investors should carefully consider their desired profit taking points if using a trailing stop.  

The SPY chart below shows the price action reaching the "tail" of the price node (turquoise horizontal bars.)  This indicates that there are not many participants at this price level.  As such, I would expect a lower volume day tomorrow as investors watch to see whether or not the market continues to new highs or retreats back toward the areas of larger volume.  The Fib retracement lines (purple) are the same ones I drew yesterday.  If the market does pull back, a probable pattern would be some sort of A-B-C Elliot Wave correction to the yellow dashed line which was our last area of resistance (which would now be support.)  That would approximately correlate to a 38.2% Fib retracement line.

Tuesday, August 19, 2014

Market Dashboard - Maturing Wave

Another strong showing for the Bulls today as markets continued to rally.  I had expected a decline in the second half of the day, but that did not materialize.  Nevertheless, a good impulse higher as we continue to ride this wave.  Primary Indicator #1 is entering the red zone, joining Primary Indicator #2 and the VSTI.  The Leading Directional Indicator is still quite strong, but the exact numerical value of the indicator (I only display it as a binary bullish or bearish signal) is reaching elevated levels, worthy of keeping an eye on in the near future.  Below is a capture of the SPY with Fib retracement lines from the top of this particular price node.  

Monday, August 18, 2014

Market Dashboard - Solidly Positive; point of resistance

The bulls made a strong statement today with a big rally.  Indicators are still positive, however the Very Short Term Indicator is literally pegged at its max level.  The SPY chart below shows some increased price volume action at about the 197.30 level.. precisely where we are at now.  Given this level of resistance, the VSTI condition, and the appearance of 5 defined Elliot Waves from the bottom I'd say a mild pullback is in order.  Somewhere in the realm of a 38.2% to 50% Fibonacci retracement would seem like a reasonable solution.  Below is a (very busy) snip of he SPY.

Saturday, August 16, 2014

Market Dashboard - VSTI cooled off

Friday's intraday sell-off was just what the Very Short Term Indicator (VSTI) needed.  Primary Indicator #1 still has upside potential and the Leading Directional Indicator is still bullish.  I'm keeping an eye on Primary Indicator #2 because it is in the red zone and the two needles are moving closer together.  The reason this concerns me is that when the needles on Primary #2 flip in the red zone it can be a signal of weakness for bulls.

Below, on the SPY, we can see that the price action found resistance at the yellow dashed line we drew on the chart Thursday.  The question is, was the retreat from that level enough to let the bulls consolidate strength and re-assume the charge on Monday.. I think it probably was.

The IWM (small cap) chart below looks relatively similar in structure to the SPY.  Price has retreated to the 20 period simple moving average which could be a good level of support for bulls.  

Thursday, August 14, 2014

Market Dashboard - several needles in the red

Market action today was interesting because the SPY (large caps) and the IWM (small caps) showed two different stories after they had been moving close to lock step.  The SPY was up 0.47% while the IWM was only up 0.15%.  Regular readers will note that I pay close attention to differences in large caps and small caps because I believe investors are quicker to sell the little guys when they become overbought.  This information, coupled with Primary Indicator #2 crossing into the red and the Very Short Term Indicator still pegged in the red make me think that another small pullback is need before we continue the push higher.  I think the medium term is still bullish because Primary Indicator #1 still has plenty of upside potential.

The SPY chart below is approaching a price point of resistance (shown in yellow dash) which could be the level it bounces off of to the low side.

Wednesday, August 13, 2014

Market Dashboard - Uptrend Underway

The uptrend is underway, but the Very Short Term Indicator is very much in the red after today's bullish action.  A brief pause or pullback is in order, then we should continue up the hill.

Tuesday, August 12, 2014

Market Dashboard - Continued Consolidation?

Today's flat market action was about right for the consolidation I was expecting.  We could see the consolidation / minor decline continue a little more tomorrow before the market resumes the bullish wave. The S&P 500 chart (below) is relatively unremarkable.  We can see a little pullback from the most recent push higher although price is approaching a level of moving average support.  The 192 price point on the SPY also looks like it could provide additional support.  It has previously served as a point of support and a point of resistance with a correlating increase in volume. The next impulse up will likely be strong and should take hold before the end of the week (as soon as tomorrow, Wednesday.)

Monday, August 11, 2014

Indicators are pointing toward a continued bullish wave.  The very short term indicator is pretty high, so I would not surprised to see a brief consolidation before continuing higher.

Sunday, August 10, 2014

Market Dashboard - Bullish reversal

Friday we observed a very nice bullish reversal.  All RUM Wave analysis indicators support continued bullish action.

Below, we can see the S&P 500 chart displaying some good technical support, particularly in the turquoise price volume bars.

Thursday, August 7, 2014

Market Dashboard - Bullish signs present

Wednesday's market action was satisfactory to create the "C" wave I had discussed in the last post.  Now the RUM Wave indicators are appropriately bullish enough to suggest that the minor correction we experienced has likely ended.

Below is a Daily chart of the SPY.  A bullish move would be supported here by the following technical factors:
1) SPY has corrected to the bottom of it's price channel (red lines on top graph)
2) SPY has reached the bottom of a price point node (horizontal turquoise volume bars on top graph)
3) SPY price has reached the bottom of a 2 standard deviation Bollinger band (BollingerPercentB subgraph)

Tuesday, August 5, 2014

Market Dashboard - bullish signs showing

Today was another rough day for the bulls.  I just happened to be watching the market at 1330 EST when the drop off really took hold.  Interestingly, there was no apparent breaking news event that sparked the whole thing.. just a big whoosh that left commentators scrambling to fill the story.   I was comfortable with the knowledge that it was probably some fashion of the Elliot Wave "C" wave.  I posted the picture below a few days ago when we were at the A-B transition.  The B wave took shape, and now I believe we are somewhere in the C wave.  Question is, when will it end?  There are lots of advanced formations that the C wave could take on, but ultimately I'm reliant on RUM wave analysis to determine the next entry point.  Today we see Primary Indicator #2 reversing course with the black needle leading the grey needle.  This is moderately bullish.  My concern is that the Leading Directional Indicator is still bearish.  Also, the C leg often approximates the size of the A leg.  The target for this would be in the neighborhood of 1875 to 1880 on the SPX.  The time geometry of it (if it turns out to be parallel to the A wave) would have us rebounding midday on 6 Aug.

The bottom line is that I think we are in store for a little more of the C leg before rebounding to new highs.

Monday, August 4, 2014

Market Dashboard - waiting for reversal signal

Today's rebound was in line with expectations from an Elliot Wave perspective.  However I have not observed any reversals in RUM wave signals.  This suggests that today's move was likely a "B" wave to be followed by another "C" leg down.

Sunday, August 3, 2014

Market Dashboard - Corrective Wave

The last week gave a false entry signal into the corrective wave.  Those are extremely rare for RUM Wave analysis which was cause for significant concern.  However, after additional analysis it appears that we experienced a whipsaw entry.  Since 2008, whipsaw entries occurred approximately 75% of the time.  For this reason, protective stops are a good way to clear out of trades that whipsaw.

Regular readers will know that I also like to review Elliot Wave (EW) analysis; not as a predictive measure, but as an assessment of possible current states.  Below, I have greatly simplified current S&P 500 EW count.  Most of the EW analysts I follow suggest that we are at a medium term corrective point.  The problem with EW is that it (usually) can't make predictive assessments.  This is where RUM Wave is helpful in finding a market bottom.  My favorite EW blog can be followed here.

The daily chart of the SPY (below) shows price approaching a point of low volume, which could be the exhaustion point for bears.  That would correlate with EW analysis and will probably create another RUM Wave entry point.