:: actio-et-reactio ::
amg's market charts and blather
Call me a curmudgeon, but "nice" is a word that doesn't work for me for the markets. However, it was liberally applied to the action across the board, particularly pre-lunch.
As for the NDX, it was "technical" trading at its best. Yesterday's "chubbs", or "Fat Boys" as madrone, who introduced me to equivolume, calls them, were a great harbinger of the rally, and carried over into today's move. See the updated chart just a bit lower on this page. Note too that there is yet another "chubb" sitting right at the 15m Median Line support.
Today's rally hit geometric supports of the 1316:1228 rally all the way up, covering quite a bit more ground than anticipated, but not the whole enchilada, which meets resistance at 1304-- perhaps a morsel left over for tomorrow sometime. The 60m chart is just now suggesting limited upside.
It was also a day when price snapped into the Median Lines quite "nicely". Here is a shrunk version of the 5m chart, which pretty much records the various lines that came into play as the day wore on. The end-of-day chart does not reflect this wire-mesh of history being that it tomorrows road map. Right-click to open in a separate window.
Small caps pulled back to just shy of the 61.8% fib on the 60m chart and closed with a bounce. That it didn't crack fib/prior low support is encouraging. Next target is to crack the upper red ML and see whether the blue or green MLs act as resistance.
Looks like Miss Cleo got it right. She had opined a back-kiss of the trend line off the lows followed by a decline.
The NDX low of 1228 is also a minor geometric support, but did produce some hefty volume and the day closed at 1246. How much more of a bounce will unfold in due time.
Price on the daily chart has not fully reached the upper ML before, which indicates general weakness (duh-gg, as if you haven't noticed). This decline off 1734, which itself was a 59% rally off the September lows, is quite near finished. Having hit 1228, 78% of those gains have been unwound and the NDX is left just 12.7% off the 1089 low.
I've also added an "experimental" NDX monthly chart, which uses ML drawn parallel to a very long term ML, originating at 287, the April 1992 low, which itself is on the ML from the 1990 low of 252. Don't know fully what to make of this, so it is curiosity value only for now.
Finally, today's action had a bully feel to it at the end. There are hints for at least a short term reversal in the 5m and 60m Andrews, as well as the chubby Equivolume bars on the QQQ 10m chart. Unfortunately, I can't do EV on the NDX itself, but interest in the QQQ should be reasonably reflective.
Full Seed Moon, 26 April 2002 at 8h. 1m. evening (Souths: 12:28am Sets: 6:09am Rises: 7:57pm)
Moon in Via Combusta, In the 37th� of the Constellation Virgo, the Virgin; & in the 0th� of the Signe Scorpio, the Scorpion. [Data from lunabar]
For short term moves, which include short term position trades, some folks use a window of the last 20 days. I've been using 30 days on the 60 minute chart as it shows the transition from a slightly "older" set of lines to the fresher set being made.
Why bring this up? Well, when day 31 rolls around, quite often prior pivot highs and lows fall off the chart. From a charting perspective, this means one of two things: either reconstruct the old lines (which I sometimes do, indicating them with dashed lines), or construct entirely new ones.
From a price point of view, it suggests that the old highs/lows may have "lost" their influence (on that time frame). A good reminder of one reason why a triple-screen method (ie, three time frames, the shorter and longer bracketing your preferred) is a good method.
This set me to thinking... Have you checked out turn-over rates in big funds? It has skyrocketed. No doubt the casino mentality took hold during the Big Bull Bubble and hasn't let go. High turn over rates mean shorter hold times, which would reflect itself in short time frames. On indication is that "old" lines die off to be replaced by new ones and so, a shorter trading day window is appropriate.
As always, just my opinion. [click on chart below for full size in new window]
"Sell in May and Go Away". It's now been said & written publically by a number of TV and print pundits. Is it going to be that easy? LOL-- too often when I have asked that question, usually in disbelief, it really has been that easy.
So much bullish sentiment from that gap up turned out to be just another OE headfake. Today's gap down was a thumper. Price has just been sliding down the Median Lines on the 15m, 60m.
While a steady continuation down is possible, there is the 61.8% at 1335 to put the brakes on, possibly followed by a (failed) return to the gap. The high volatility is back, which seems to return mostly with the bear moves.
Added a number of S&P Small Cap Index ($SML) charts to the mix. This index trades as IJR, with its Value components trading as IJS and the Growth components as IJT. I featured these in a study last December, when topping action was indicating a correction. They did pull back 7.11% in January and February and got a second wind Feb 22, since when they have gained 36.4%.
The daily chart shows price approaching the heavy blue Upper Median Line. That Andrews derives from the 1/95 inception point of 92.44 (which you can see on the weekly chart). Also on the Daily chart is a light grey Andrews using recent hi/lo pivots, which is much more aggressively bullish. Finally, I indicate the 1.38 and 1.5 Fibonacci extensions of the Sept/Jan rally, at 261.86 and 268.99 respectively.
Just recording observations at this point as it is a bit too early to tell if 258.23 is a High or a high on the way to more highs.
I'm baffled as to a plan for tomorrow-- price is mostly in a no-man's land. Best to watch support/resistance and see what happens. BTW, seasonality suggests a correction is at hand, perhaps after a brief rally, or perhaps after more consolidation. Small caps are IMO *way* over extended and due to pull back. I doubt that creates a rotation into the big caps. At any rate, this being OE week, not the best time to make much of what happens tomorrow.
There are some nuts and berries for the bears: a negative RSI/price divergence on the 15m (suggesting a pullback) and daily price bumping the underbelly of the 9/11 trendline.
The bulls partied hardy with the strong gap creating a measured gap situation, the target of 1415 having been essentially reached today. A perhaps overly ambitious second target is 1442, but I anticipate strong resistance at 1425 if 1415 is breached. Nevertheless, the daily does allow for a move to 1442 if price creeps up along the underside of that trendline where it will challenge the red downtrending Andrews, which is currently at 1442.
Unfortunately, since this rally is still countertrend, at worst, the NDX may create a mini-island should this turn out to be a trap for bulls.
The "Gotta Have it, NOW" index is at it again. Plowed right through first resistance 1371, into 1399, and looks to be wanting 1411 where on the daily there is resistance (62% fib and prior trendline). Otherwise, not much has changed, ie, no new Andrews Lines, just a shift in focus away from the lower targets to the higher targets.
Don't lose sight of the weekly, which is still down. Positive moves are still counter trend. Note too the daily, which while short term positive, has not built a base (ha ha ha, as if the NDX has ever built a base in the past few years).
This one is a keeper. On this morning's Fox "Cashin' In" show, in response to the question "How is Middle East Oil going to affect the stock market?"
Sometimes investing is like working for the mob: You shouldn't ask too many questions. -Jonathan HoenigFor those that don't know, Hoenig is first and foremost a technician. One of his tenets is that the stock price (TA) tells the story, so "news" should always take the back seat.
A short anatomy of how I use the Andrews. Best to right click this 60m chart link and open it in a separate window to follow the comments.
Three uses of Andrews here:
-- The Red "conventional" using peaks/troughs as pivots
-- A Green "Schiff" using the midpoint of the prior move, with the peak of the rally as the time start; and
-- A Purple "Gap" Andrews (ie, drawn using a prior gap as a pivot)
Each sheds insight into rally possibilities:
-- All three allow for failure of the move, giving low bounce targets of 1341/1299 (red); 1330 (green/Feb low); 1319 (purple)
-- Resistances on this 60m chart are 1365 & 1419 (purple) and 1390 (Green & Red)
Finally, the daily must be considered: 1335/1411 fib supt/resist.
In summary, the odds continue to stack in favor of high volatility consolidation between 1299 and 1399 (or 1350 +/- 50).
NDX closed *right* on 1351 support. Also as anticipated, the NDX gapped open, sold, and gained to close positive on the day, however negative on the week.
Velocity of today's move was not so fevered, to its benefit. Next resistance is 1371, which if overcome suggests a move at least to 1399, where on the 60m there is a confluence of the bullish and bearish Andrews; or 1411 at best where on the daily there is resistance (62% fib and prior trendline). Next supports are 1341, 1330, 1319.
Do or die time (still!). Looking to make an short term low and then rebound. There is IMO a small chance of a gap up open, which if it happens, might well be sold. Either way, The 15m and 60m Andrews suggest a bit more down with a rebound imminent, be it tomorrow or Monday.
As to longer term, my generally bearish bias remains unchanged, although it is shaken daily with the volatility swings whose emotional content suggests a desire to go higher.
The weekly chart shows 11 of the past 14 weeks have been unrelentingly negative. The first quarter of 2001 had a similar pattern, 11 of 14 weeks negative, with the late March reversal heralding the much touted "Spring Rally".
Who knows, perhaps another in the works? This price area is a good one for a short consoliation and rally, which could work out to be "The Sell" into Autumn.
I am distracted as
Right, gapped down 30+, exuberant reversal, only to be slapped down ~40 points.
Recall that 1356 is the 2nd V of the February VV (the first being 1329). So, while on a 30m or 60m chart an optimist might be seing a double bottom put in, which may in the end be good for a day trade, it's not registering much bullishness on a daily chart. Remember the parade of faux double-bottoms in the April rally?
Dunno if anyone has noticed recently, but the 1329-1399 range is a major pivot level of The Big Rally from 1990 to 2000. Using that rally hi/lo,
It's a new day! Looking for the bounce to continue, albeit perhaps to form another triangle on the 15m chart as both the daily and the weekly now indicate strong resistance below prior support.
Never, never, never underestimate the power of exuberance, never. Another straight up day. And while early this morning CNBC were hand-wringing over the idea that the market tanked on "Mid East worries" - HA. So, those worries get instantly resolved after a latte or two? Not. The fact is, "Mid East worries" have, and have had, nothing to do with the market. Near term that is. Longer term, large societal forces do, IMO, drive markets, which is why long wave study is so fascinating and so often off by a few years (gg).
At any rate, while I did think a bounce was likely, I certainly did not anticipate it would happen all in one day, and not in one day to the upper reaches of the larger Andrews on the 15m and 60m charts. more in a bit
Power supply on the laptop burned out! All my email is on that machine. big sigh... it's always something. And in this case, something expensive (again). I don't like this condition of trading just to keep tech replace/"upgrade" consumption high.
OK, that 30+ point gap down no doubt fluttered a few hearts here and there. Having breezed through the intermediate support of 1364, a quick look at the daily shows geometric support at 1335, which is where the red Median Line on the daily meets Fibonacci retrace. At this point, should price get to 1335, it may bounce, perhaps to 1364 as it oscillates between the blue and red forks.
Keep in mind that the last significant low was 1330, so 1330-1335 is testing that low. Should a double bottom be what is working, the "best" one is a lower low with a higher RSI. People will be looking for a "double bottom", which of course is quite obvious at this point (perhaps too obvious?). 8:50am: Note too that 1335 is the top of the 9/11 gap.
At any rate, whether price continues to trace its correcting motion or if this move was an overshoot of the more optimistic "blue" fork remains to be seen. Apart from the usual bounces, I'm biased to further correction at this point with the next significant low being 1249 with a consolidation at 1279 (ie, the range low 1249-1279).
8:15am pst: One last comment: Note that with today's drop, the weekly shows a break of the very long term Andrews, giving more credence to the "unconventional" Andrews connecting prior lows.
(See the third graph down below, right click and select "open link in new window", or select the "Customize" option box in the right menu bar.)
Summarized below are thumbnail views looking at 15m, 60m, Daily, and Weekly time frames. To see the full size graph, right click the graph and select "Open Link in New Window". I won't discuss price targets specifically, but each chart shows "horizontal line" indicators, which are my working support/resistance targets. Remember to study the Median Lines for a glimpse of time as well as price.
Very near term (15m), once again, in a tight consolidation.
Wednesday's after hour activity was so bullish, it looked like a gap-up opening might be possible. NOT. However, price did move to the 1411 target, after which it pulled back into an anemic consolidation, as shown by this new 15m Median Line.
Here's another short term view which supports the idea of a bit more rally before the next, possibly more sizeable correction. That price managed to climb into the next higher fan puts somewhat of a brake on the decline. Alas, the move is nearly fully overbot plus the cluser of MedianLines (chart from afternoon comments) may put a damper on the move at 1406-1411. A better long entry is just around the corner, suggesting that this mini-top should be sold.
I used to work with some very talented engineers, many deservedly "top of the class" in their field. Their intelligence, however, did very little for their impatience. You'd think with all that experience, I'd recognize the emotional pattern. "Things" don't work that way in real life.
All that to say that the Nasdaq is like those engineers, which in some ways is not at all unusual, both being high tech oriented. Whether it is a bull trend or a bear trend, this index has to do it all in one swoop. Didn't even give me time to publish the next lower short term targets, the ones beyond 1399. Sheesh!
Seems the fushia pitchfork got lost this morning. Will resurrect it; in the meantime, added 1386.
The swing up Monday was completely balanced (ha ha, more like destroyed) by the swing back down today, leaving the NDX at the 1410 support (off by just a few sheckels). However, this is "dark side" support as it is in the shadow of 1452, the most critical pivot of the 1089:1734 rally being unwound. Next support: 1399 (which is also the 123.6% retrace of the short rally, shown in the 15m NDX chart below). BTW, 1411 is somewhat of a minor support and is itself midway between 1399 and 1421, so I anticipate a deadcat bounce, perhaps as high as 1437 (which is somewhat near the fushia Median Line on the 15m chart).
|
moon phases |
At last, over the rim
of the waiting earth
the moon lifted with
slow majesty
till it swung clear of the horizon and rode off,
free of moorings
- Kenneth Grahame,
The Wind in the Willows
blather: nonsensical talk.
At times my analysis log, at times sharing what I've learned. Always my own work and views.
Content: amg
Basis: glish & bluerobot
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