Wednesday, January 28, 2015

S&P 500 Futures close right on the 150 dma

This 150 dma level has been a huge level of support for the market over the last 3 years. Unfortunately for the bulls, the head and shoulders pattern I warned about last week has taken shape.

If  / when we fail here, the next level of support is the 200 dma (yellow line @ 1968).

Earnings season always guarantees some volatility and we're right smack dab in the middle of it.  AAPL and Boeing both had great earnings reports and the market still gave up all its gains and went negative on the FOMC's comments.

Friday, January 23, 2015

S & P 500 Futures...some perspective

After holding the 200 dma (yellow line @ 1966) and December's low (1961.50), the market has bounced back to levels where we may want to start trimming some long exposure.

We survived the bank numbers, but earnings are starting to pour in and volatility is guaranteed.

2 levels to trade around:

2062 was the high from January 9th.  I expect the machines to do some selling there, but support lies at the 50 dma (red line @ 2042.65).

2079, from December 5th of last year, represents the peak of the left shoulder of this still forming pattern.  A fail there sets up a classic head and shoulders.

Thursday, January 15, 2015

Volatility could be a sign of an inflection point

Whenever futures trade up and down 40 points in air pockets on little or no news, something is brewing under the surface.  It's the kind of action that happens at inflection points.

There has also been a series of lower highs (red trend line) on the  S & P Futures.  The 150 dma (pink line @ 1986) looks like its poised to be tested yet again:

The 150 dma has been a great buying opportunity for trades, but each time a level of support is tested, it gets weaker.

I'm not sure how many times we can go to the bank on this level.  I wouldn't bet on it holding next time, so I'm using the 200 dma (yellow line @ 1961) as my next target.

That level also coincides with December's low, a number that a lot of traders are targeting.

Tuesday, January 13, 2015

Outside day today...lower levels on their way.

From Investopedia:


A price chart pattern in which a security's high and low prices for the day exceed those of the previous trading session. The outside reversal pattern is called by candlestick chartists and analysts a "bearish engulfing" pattern if the second bar is a down candlestick, and a "bullish engulfing" pattern if the second bar is an up candlestick.


An outside reversal is a price pattern used by technical analysts to help identify potential bearish or bullish price movement in a particular market. It occurs where a price bar falls "outside" of the previous price bar, where its high is greater than the previous bar's high and where its low is lower than the previous bar's low. In general, if the outside reversal occurs at a resistance level, it is viewed as a bearish signal; if it occurs at the support level, it is viewed as a bullish signal.

I would expect support at the 150 dma (pink line @ 1985) to be tested soon.
The 200 dma (yellow line @ 1959) is additional support.
Resistance lies above at the 9 dma (grey line @ 2029) and the 50 dma (red line @ 2042).
Bank stocks are reporting and judging by my friend Dave Nelson's preview, the fundamentals aren't going to be able to compensate for the technical risk this market faces.

Tuesday, January 6, 2015

S&P 500 Futures bouncing off the 150 dma @ 1983.

We highlighted the 150 dma Friday as a level of support.  Well, we're there.  Today's low of the day = 1984.25 (pink line above in chart).  The RSI got to an oversold level of 35 as well.

Nothing has really changed from a news flow standpoint.  There have been no external catalysts besides tax selling and the oil disruption.  In other words, no new "uncertainties".

So we buy 'em here.  If by chance we pierce the 150 dma, the algos should kick in and initiate their buy programs and close us above that level.

2012 seems like a decent first target.

The 50 dma is resistance @ 2036 (red line).

The 200 dma is further support @ 1955 (yellow).

Friday, January 2, 2015

S&P 500 Futures approaching temporary support @ the 50 dma (2034)

After failing at the top end of a well defined range, futures have slipped and are close to testing support at the 50 dma @ 2034 (red line above).  I'd use a pause / bounce there to add to shorts and lighten up on longs.

A lot of people have been waiting for the clock to turn to 2015 to take profits and delay paying the tax man, so we're probably not going to be done with this pull back in the near future.

I'd like to see the RSI touch the yellow line in the bottom of the graph (30 level) before thinking about longs.  A move to the all important 150 dma @ 1981 (pink line) would get us there.