CountDown to BlastOff - Page 7

Few charts and commentary tonight.

Treasury Bonds continue to remain stable with Yield slowly eroding in comparison.

Comments from the FED igniting a flurry of sell the news and stop hunting whipsaw action.

I was expecting more downward pressure for a clean bounce off Inverted HS neckline (1335/40).

Perhaps another run for the 1340 area before a bounce, based on declining Yields.

I am becoming more bullish on Treasuries/US Dollar safe haven assets and bearish on Yield.

I am seeing a more subdued reaction to stocks verses Dollar strength.

However I do think another bounce in stocks as Yield approaches 2.5% just as before.

I think with the "QE" carrot dangling, Market likely to speculate that bad news means FED intervention chances will increase.

Good news will mean the opposite but not as bad, IMO.

I think a long period above the 200 day SMA, after dipping below is direction of pendulum.

I think another cycle of that slow low volume tight channel flat base period is approaching.

I was messing around with the Daily/Hourly Rising Wedge, as submitted a few posts back.

I drew in some projection dashes off support/resistances last night, figured what the heck, go ahead and post them.

And today's.

Markets flat reaction has a positive feel as if perhaps some uncertainty has decreased.

Got some charts analysis and commentary, A 'la  Marcos for this evening.

I call this chart The Battle of the Head and Shoulders

Looking at this as a sign-wave I would give it bullish bias.

I'm favoring each others throw-back areas as near term channel.

Also my bias goes to the bigger of the two challengers.

It should not surprise to find Head and Shoulders every-where. Like cockroaches, there everywhere.

Of course not surprising to find them at all as they all follow the broader markets.

Noting some unusual volume activity in the Euro.

Rising Wedge Update.

Like I said before "Bulls will stampede above the 200 day SMA."

I'm buying below that and smiling above. Thanks.

I think this chart is pretty interesting.

I had the idea to figure out how to do semi transparent overlay with my gimp image editor.

I lined up Jan. S&P with Jan. on the adjusted S&P normalized to the US Dollar index (DXY).(spreadsheet)

I see a few things to note.

1) The true S&P reaches far higher than it's "normalized" counterpart in Jan. through mid. May.

2) Not only was today's percentage difference between the S&P and DXY was at almost exact parity,

(Meaning the S&P moved in exact proportional inverse to the DXY).

But the true S&P is at parity with the normalized S&P at this moment.

3)True S&P has never been below normalized version in this time frame.

I can see several subjective theories to explain much of the aforementioned notations that I will keep to myself

until I can get a better understanding in my own mind.

Other thoughts today about the crazy EOD turnaround right at the vertex of the two battling Daily Head and Shoulders necklines.

I think the bigger one is winning

Another thing I noticed that the US Treasury ETF TLT was a up a quarter of a percent the entire day.

The whole time the S&P dumped at it's lowest levels, Treasuries almost no reaction to the knee jerk flush in stocks.

The two closed EOD near inverse parity to each other at about a quarter of a percent.

Chart for tonight.

Tonights chart. Daily Symmetrical Triangle.

Original version, from my log.

Looks more symmetrical redrawn from recent highs.

Nightly Update ala Marcos!

S&P Daily Symmetrical Triangle still in play.

Channel (yellow lines) still intact.

I've been watching this Round Bottom for awhile.

Started to break out from left lip and then broke down to a kind of handle.

Today leaves it slightly broken down from handle and one of my less favorable charts but figured I'd share it anyway.

I'm almost expecting the bounce to coincide with Treasury Bond Yield,

but not ruling out even lower yields than 2.5% on the 30yr.

However I think there is a point at which risk aversion safe haven liquidity will

look at equities for higher yielding assets. Probably be a slow push and pull process.

To think TLT was a bargain at 110$ makes me.

I also think the divergence from S&P and DXY/US Treasuries safe haven asset inverse correlation is becoming more obvious.

I'm still looking for dollar strength to have limited impact while dollar weakness to have a bit more effect.

The dollar value aspect, I think will have less impact than the change in sentiment will be for a stronger dollar.

I think in the long run a stronger dollar will reflect a more positive economic sentiment.

This is a reflection of stocks verses it's normalized counterpart, with the dollar value change factored in.

(from Sunday's log)

This is the current adjusted S&P normalized the the US Dollar index DXY.

https://docs.google.com/spreadsheet/ccc?key=0AjcECxXNIPcKdGJBV2pCdFdObms5OXBPR3dOb1ZfeVE

This is reflective that stocks are showing resilient strength despite a stronger dollar.

I'm not trying to debate the present economic situation and whether you or I philosophically believe the

economy is in the dumps, improving, not improving. That and whether you or I believe

the market is way oversold or way overbought is also irrelevant to me. 

I'm just saying even if the S&P takes another run at the rising 200 day SMA., I think it'll bounce and

mid term (monthly/weekly charts) bullish trend remain intact.JMO.

S&P Daily Symmetrical Triangle getting a lot of mileage. Can that support hold?

On another front. The adjusted S&P Normalized to the DXY continues to fascinate me.

Works been slow this week so time to work on my Gimp overlay skills.....

Did this last night experimenting with "scale image" on the graph to get the right height.

Too late here on PST for anyone to actually see it. That is if anyone besides me is actually interested.***end digression***

After trying several different combinations of scaling both the graph and the S&P chart,

I've settled on this. Now that I have these saved, I can spit these semi-transparent overlays out no prob.

Today's action has S&P up slightly. My theory is that these two lines will attract each other.

Will 30yr US Treasury Bond Yields hold 2.5%?

I think based on today's reaction to "NO QE" that it was anticipated or priced in already.

I think critically low bond yields will play an important role.
Also based on the dollar up and market flat, I see that as stocks closed slightly up today.
I think that without QE as an excuse that the market can now move (up or down) on it's own merit, 

perception based on "is this a good company stock to invest in?".
My bias is up based on the longer term monthly/weekly up trending channel and rising 200 day SMA.
I feel very good as a mid-term bull from todays muted reaction to FED minutes.
To conclude, I say all systems go, Houston we are ready for take-off.

Thanks to Rock's SPY Hourly Inverted Head and Shoulders on the main discussion thread,

I took at better look at the hourly charts and see several patters.

Couldn't resist saving measurements in TOS drawing sets.

As always I use a multiplier to get a conservative target.(see log)

This is the current SPX Daily Head and Shoulders saved TOS drawing set, that I logged Sunday.

Just saved this in TOS after Rock's post.

This is the SPX hourly Pennant.

As a mid-term bull I am feeling pretty good that market is holding onto Fridays gains.

Market showing resilient strength in spite of recent dollar strength.

1351 has to hold, 1367 next key pivot. IMO.

I was looking at the current adjusted S&P normalized to DXY, figure I may as well throw this in too.

Now that's interesting, 1367 level kept popping up in my Sunday log.

Now I see it's also the Pennant target,

as well as tomorrows Symmetrical Triangle Resistance.

That false breakdown is just another confirmation on my bullishness.

When this coiled spring decides to break, whatever direction it's gonna be a biggie.

Also potential for this 1378 target to play out.

Updated! Adjusted S&P Normalized to the DXY.

Very Bullish sentiment mid week, breaking new highs on the S&P counterpart.

I'll be waiting for a break of these lower supports to watch what happens to the S&P.

Last time a support was broken the S&P went on to make April highs, about a week to 10days later.

My bell weather theory has long yet to come to anything conclusive, however I am pleased so far with initial results.

Current overlay.

This is the last day the screen will fit with current candle size in TOS.

I will have to decide to reduce the size or start off mid. Jan., rather that beginning of Jan, like it is now.

On another front, ... me.

Looking to lighten the UPRO load soon.

I set some orders up that I doubt will trigger anytime soon.

I may adjust before work, as I would like to take some off the table this week,

although I may wait longer depending on what happens the rest of the week.

Playing it by ear.

I always like to use odd numbers just below the key psychological 85$, 90$ respectively.

These are the two lots set for the chopping block.

After recent strength the market may want to take a breather.

That 1367 triangle resistance/pivot, should now serve as near term support.

Otherwise, the upside this week I see a likely break of 80$.

I also noted these previous gaps on the way down are conspicuously surrounding the psychological even numbers.

As I am fairly confident of a break of 80 so I made my first order 85$.

Like I said I may change that lower.

That's all I got for tonight, wanted to share this with anyone that's interested, and have something ready to compile for my log, Sunday

Edit, decided to add this to the SPX weekly drawing set.

Added a few more drawing sets. The Round bottoms are growing on me.

Starting with the weekly, confirmation break of cup handle and current progress.

On the daily, I was not too fond of the first cup.

I did this last night.

What's growing on me is the "bump" on these round bottoms and u-shaped volume

give them a textbook look.(sorry no volume on this chart)

However, they could be not as deep and a bit more stretched out would be better.

Also not surprising on the /E7 (EURO).

Also from last night.

Little tid-bit from the bullpen. 

If my theory is sound on Gold, I think a little downside tomorrow to possibly 1377,

before a bounce from bottom of hourly flag maybe another pop Thursday and Friday.

I'll be interested to see if gold continues to foreshadow.

Mid Week Chart Formation Update!

But first a look at my trusty Adjusted S&P Normalized to the DXY Chart.

S&P up on this graph because of it's resilience to dollar strength.

https://docs.google.com/spreadsheet/ccc?key=0AjcECxXNIPcKdGJBV2pCdFdObms5OXBPR3dOb1ZfeVE

Last nights hourly flag getting long in the tooth.

Looks like it's breaking down, may be looking for the downside target.

However, the tail of time wagging the dog? Often patterns flow backwards, bleeding in time to the longer term charts of the past.

Looking now at the SPX Daily Bull Continuation Flag.

Will the longer term daily chart formation assert itself stronger or follow the hourly?

SPX Daily Round Bottom became a Double Bottom.

Near term support atop double bottom peaks.

As well as support atop Symmetrical Triangle.

Still haven't given up on gold foreshadowing, even though pretty much in tandem I think today.

I think holding the gains that the S&P has so far, in such an uncertain environment, is the best news for the bulls ATM, IMO.

Also TLT down with the dollar up has me .

Mid-Week Update! Charts and Analysis A' la Marco's.

Nice bullish week so far.

Some signs pointing to a near term pull back.

Looking at the Rising Wedge on both SPX weekly and daily charts.

Trouble at the top of resistance as the air thins out.

I can't see this thing continuing much farther without a healthy pull back.

I would think some more stop running, as in the recent Rising Three Methods, has to come about sometime soon.

That is if resistance holds, otherwise new upper trading range in a nice comfortable position and all bets are off, look out 1420.

Past 3 years modus operandi of low volume melt up does seem to be the case. However,

I think a pull back to SPX hourly Head and Shoulders target 1395 area at least.

Also would not surprise me to see a right shoulder develop here on TLT daily chart.

The gap on the neckline just stands out as obvious, and so far the market loves to follow through

on the obvious.

As I've mentioned before a healthy bounce on Treasuries will mean lower stocks, although

I think the effect will be minimal in comparison to if Treasuries drop.

I think the market reaction will be much stronger reaction to a weaker Dollar/Treasuries.

To conclude, A look at my Adjusted S&P Normalized to the DXY chart

showing same type wedge tightening up for a move.

I could be wrong but it seems like a test of supports before new yearly highs.

Mid Week Analysis Update, Update!

Second guessing my earlier 1395 pull back theory. Still a good possibility.

However these dang tight channel Flat Base patterns pop up and bring back

memories of grueling low volume, small up down days, eroding away at my UPRO.

On the pull back argument I still have the possible right shoulder developing on TLT.

That would mean a likely down day Friday and Monday.

Never underestimate the power of the Flat Base.

Recently these patterns were following a 1,2,3,4 day then pop on the fifth.

I know crazy, but if we pop Tuesday, I won't think it's completely left field crazy.

Looking to the hourly, finding evidence supporting the Flat Base "stair stepping" idea.

This Adjusted S&P Normalized to the DXY chart showing complete and

utter disregard for Dollar/Treasury safe haven assets.

Again breaking resistance, moving in an almost parabolic trajectory.

Finally and on a personal note. Both S&P and UPRO broke Symmetrical Triangle confirmation

and still have possible upward target in sight. 92$ on UPRO and 1465 on the S&P.

Haven't changed these orders and remain stand pact on my price.

MY first sell order at top of channel (yellow line) at 84.77.

That's all I got for tonight, part of me expecting a small retrace to 1395, the other biased side of me

would love to off at least one lot of UPRO this week.

Just have to take it as it comes.

Today's action makes sense. Mr Market never likes to make things easy to get over on em.
Day-traders, swing makes no difference. Same whipsaw fake em out tactics, different day.
From this stand point, to indicate double top with lower highs, get bears excited and bulls nervous.
Certainly not the last of the tree shaking on the way up, maybe revisit down to 1395 area, but I think 1400 likely to hold.

I also notice things like the market reversing from the HOD as the 30 yr Yield above 2.8% area.... has risk going "hmmm, wait hold on a sec".

Should of known as much with markets taking cues from gold, 1/2% down early on.

Can't fool me tho, with the SPX Daily Inverted Head and Shoulders,

a Pennant and

 a flat base in the background, this thing wants to go higher, IMO.

Also, I think it's good to point out the Adjusted S&P Normalized to the DXY chart reflecting an "up" day.

And now for something completely different.

And for my own personal bullish propaganda pleasure. I submit this not to be taken seriously

past Dec.-March Flat Base stair-stepping overlay, superimposed on current flat base.

This is a no work today so I'm going to do some charts and analysis update!

Good morning HSM, good afternoon and good evening to those not in my PST time zone.

The theme this week, as those here who follow my log and stuff know, is the Flat Base pattern.

To start things off, this is from the intraday thread yesterday.

Further elaboration on my expectations.

Hourly /ES

I worked on these last night but after 10pm here didn't seem a good time to post so late.

I was going to say something like....

and probably sticking my neck out with expectations that many know the market can very easily make a liar out of you.

However yellow lines on the daily SPX is an approximation of where I see the candle body spreads, with red lines for the wicks.

Same lines zoomed in on the hourly SPX.

And the /ES from last night.

One of the most market influencing is the US Treasury Bond (/ZB 30yr),

and it's respective Yield.

Given the fragility of the current economy and as US Treasury 30yr. Bond Yields (TYX) approach 3%,
is certainly going to attract investors and temporarily hinder any near term rallies.

Dollar still coiling up tighter and tighter into the triangle vertex.

Ok so what's with all this day old regurgitated crud?

Absolutely right. Let's look at the current SPX daily.

Inverted hammer ATM body residing within yellow lines with long wick testing new highs.

***In the recent series of Flat Base patterns there has never been less than a 4 day base.***

Hourly /ES and volume pulling back as price moves into previous range just as I'm typing.

***Nice round bottom after popping out of channel***

Current Adjusted S&P Normalized to the DXY chart.

Normalized S&P counterpart drawing closer to the real S&P (red) on current dollar weakness.

The important thing to get out of this is that a flat/down S&P to a .7% lower DXY is reflecting a bearish market.

Mid Week Pondering and Analysis.

Still looking at the daily Flat Base as the stronger of the chart patterns.

Next candle should be a confirmation (Bullish/Bearish), unless of course another doji.

Nice bounce off pivot support.

Also some unusual volume activity. I think price not moving down with amount of effort,

may indicate no institutional interest in lower price thereby strength in the background.

Still looking for Pennant target and added flag with very short flagpole.

SPX Daily Broadening formation.

And just so the bears don't feel left out, a break in the daily Rising Wedge.

However I don't put too much faith in this formation, known as one of the worst performing

of the chart patterns.

Completely unexpected the flat market with dollar drop.

I'm looking at the Adjusted S&P Normalized to the DXY chart

to help understand the possibilities in the liquidity flow.

I've mentioned before I think these two lines are like rubber bands,

and will attract each other the farther out they get.

I think that's what's happening with the dollar verses the market is over-extended

to the bullish side of dollar value/risk affecting stocks.

Perhaps this divergence is temporarily letting off steam from the recent push up in stocks.

Critical support circled on the normalized white line.

/ZB Daily 30yr. US Treasury futures.

Contemplations:

The problem I have with the rise in US Treasuries is I'm thinking to scale into them (hedge)

as I scale out of UPRO and the rising market.

I'm hoping they will continue their decline but not expecting too much.
Looks like I'm not the only one thinking TLT would be a good thing in the portfolio.

I think risk is trying to have it both ways. They may just be able to eat their cake and get away with it.

QE has both bull/bear implications. Temporary fix maybe short lived in a forward looking market.
I think they may just cancel each other out.

In order of importance?
Bull:
1) Flat Basing and holding gains.
2) Liquidity holding stocks up along with higher US Treasuries (hedge).
3) Sub 3% Yield is still very low for investment interest.
4) More bullish pattern/formations than bearish.
5) QE (short term)

Bear:
1) Little market reaction from dollar weakness.
2) Took yield sub 2.5% before last turnaround.
3) Break of the daily Rising Wedge.
4) QE (diluting the dollar)
 

Edit: Adding this Candle Blended Rising 3 Methods from looking at that short pole flag a bit more.

Edit #2: Adding this, Flag maybe forming on the /ES hourly, to the list.

Mid-Week Chart Patterns and Analysis a'la Marco's.

With two trading days left in the month and week, my first submission is the SPX Weekly.

Looking at a Bull Pennant and an even better looking Descending Triangle.

Do they cancel each other out. Not exactly. A Pennant is considered longer term than

the smaller wedge.

Additionally and most important, the Descending Triangle technically is considered bearish pattern

but actually has a higher rate of upward breakouts than most other formations.

*Hey! That's new, I did not have to click the "I agree to terms...". Now that's progress, gotta love that.*

***End Digression***

Next up and least favorite the Right Angled and Descending Broadening chart and measurements.

Next least favorite is the Daily SPX Symmetrical Triangle.

These patterns were meant more as a longer term formation,

I think performance suffers the shorter the time frame.

In any case price unbiased, dead even with vertex.

Flags and Pennants do not have the greatest rate of price meeting target.

However their strength as a continuation pattern makes up for it,

making this one not too bad in judging direction.

The most significant, fore-shadowing and by far the strongest of the chart patterns is the Flat Base. IMO.

I still have not given up on this as a tell. I contend that a stair step up and a half step down

will ultimately lead to another step upward as price is stomping a "base" or foothold.

I have two hourlies for the shorter term traders, the first is off of the aforementioned daily flag,

I have redrawn and recalculated measurements for the hourly.

Interesting double bottom bounce off the Inverted Head and Shoulders throw-back area.

And now for some real subjective prognostication, and my favorite kind of analysis.

I call this the "This is not a confirmed pattern yet" kinda of craziness.

However I'll leave just how crazy up to you.

From my Sunday weekly log.

How do I get such things in my head?

Volume. Best way to predict patterns and gage which patterns will perform the best is to look at the volume.

To illustrate this I went back in my preferred /ES futures to analise volume.

I found a nice textbook example not far back.

Notice the dome in volume corresponds to the cup formation.

This proposed Round Bottom may or may not turn out to be a Cup and Handle.

If the handle is going to form it will be closer to the cup lip.

The "bump" is something else I will be looking for in both price and volume.

To conclude,

it wouldn't be complete without the Adjusted S&P Normalized to the DXY chart.

Ok that's it. I just want to close with a get out and vote in the monthly and weekly polls.

Plz. Oh and post your vote, trust me it will be fun to look back at our performance.