US Equities Show Decent Pullback PotentialIf we see some follow-through selling this week to break the first red dash support level it will spark the first high volume wave of selling and vix spike.
DIA
Reversal candles on the daily chart point to drop 19-21stReversal candles on the daily chart point to drop 19-21st could have followed through selling next week. Next three sessions are going to be critical...
US MAJORS COMBINED INDEX PAINT CLEAR PICTUREPrevious significant market top that formed a mini double top and drop looks to be happening again.
Monday we should see another gap down and continued follow-through selling, or at least next week which should create a spike in the vix as shown here: www.thetechnicaltraders.com
Market at critical support- likely to breakdown over time here.Yesterday the Russell 2K IWM broke down and tends to lead the broad market. Now let's see if the other indexes breakdown.
Topping pattern/candles starting to form as expected...SPY Stock market showing signs of reversing but still needs several more days to form top. But who will lead the decline and next rally? DOW or NASDAQ?
Here is an article talking about it.
SP:SPX AMEX:SPXS AMEX:SPXU NASDAQ:QQQ SQQQ AMEX:DIA SDOW UDOW
SP500 Should Stall out here for a quick correction OnlyThe big question is if the index can break and hold above this key pivot level. I feel it may test it more with pops and drops but a quick 3-5 day correction to shake traders out will unfold before the next real rally. Volume has been declining which means fewer traders/investors are willing to pay these higher prices. Once the momentum slows enough we should get this pullback and set us up for another long position.
The concept of “failure to fail” or “failure to succeed” continues to baffle many traders, investors, and researchers. If you break it down into the simplest terms, it means “you are absolutely correct” or “you are dead wrong”. The question then becomes, “do you have a plan of action for both of these potential outcomes?”. Keep this in mind as I continue posting future charts and I do talk more about it on my blog . AMEX:SPY DIA IWM QQQ
The Most Important Stock in U.S. Equity Markets - BoeingThe market's are being influenced by a single stock. How? Well there are linkages and arbitrage opportunities between the big Indices --> SPY, DIA, QQQ
What does this mean? This means that if you can make the Dow go up, you can make the S&P go up. If you can make the S&P go up, you can make the Q's go up and vice versa. Can you give me an example? Sure, the fact that there are high frequency shops that capitalize on this is enough for me, but I'll do better; How about the fact that you never see a day where the S&P is up 1% and the QQQ or Dow is down 1%?
Next: Structure of how the Dow is priced.
It's different than the S&P and QQQ, these are both market-cap weighted. DIA is Price weighted. Boeing is a monstrosity inside of the Dow.
It's a $425 stock. The next biggest is UNH @$267, MMM @$209, GS @$196
It's all about Boeing.
Why Boeing?
(I have to give credit to DataTrek for coming up with this research and all of the tremendous data they come out with:)
- Boeing is up 31% YTD and 45% from it's lows. It's low in December was 58 days ago. 45% in 58 Days
- Boeing is 11% of the Dow
- Boeing is 2.4x more influential than AAPL and 3.9x that of MSFT, AMZN and GOOG aren't even close
> Point: Move Boeing and you can move the entire marketplace
- Boeing's 10.9% weight has contributed 776 points to the Dow in 2019
- That contribution is more than the next 4 names combined - GS (225 points), IBM (177 points), UTX (157 points), HD (133 points) = 692 points
- These 5 names are responsible for 56% of the Dow's gains YTD.
> Point: Boeing is directly responsible for 30% of the Dow's gains YTD.
> Bigger Point: BA is the most influential stock in the marketplace. If you can move the Dow you can move the S&P's.
SPY is up 8% YTD.
It's up 19.11% from it's low on Dec 24th @ $234.34 + $44.8 (in 58 days)
Why does this concern me? Well there's net outflows in the SPY YTD. I think smart money is potentially selling into this move and covering it up by driving order flow into one stock.
ETF Fund Flows;
www.etf.com
My max upside on Boeing is $454.
Have a wonderful weekend everyone and best of luck to ya next week gentlemen
- RH
DJIA on Wave 3 in Broadening PatternWhile studying the charts, I noticed that a 2.618 Fibonacci extension nicely coincides with the top trend-line of a potential broadening pattern. Do I believe this will play out? No. Is it possible? Definitely. I doubted we'd see 26,000 without a wave down, so at this point, what's another 1000 points up. No big deal in this crazy market. Please see my other chart for a bearish outlook that predicts the formation of a symmetrical triangle.
Tips are appreciated if this plays out and helps you get ahead of the market in the coming months:
ETH: 0x13cd45d7d282ee0ee4635645cce2e2a566d9bed8
This Week's Gravity Points & Expected Move ($35) & Trend SDNo call this week. The Breadth readings on the indicators I follow are all still rising. The Sentiment indicators I follow are all beneath an extreme reading. The Technical indicators I follow are all showing resilience despite their overbought levels which only confirms the trend. The Economic indicators I follow are quite mixed, some are turning from bearish to bullish (ex: Baltic Dry Index) and some are turning from bullish to bearish (ex: Retail Sales/Unemployment).
I'm adding a new condition to help assess calls on a week-by-week basis and that's the Trend. I have the trend channels here which show +/- 1, 2, and 3 Standard Deviation difference from the equilibrium. I'm just going to test this out for the next several weeks to see if it helps me, and hopefully if it helps anybody else. Anyone that's been away from Stats 101 for a while, remember that 68% of the time price should remain within 1 SD. 95% of the time price should remain inside 2 SD. Migrating more than 50% of the way or breaking the 3rd SD will signal/confirm a trend change as it only occurs 0.03% of the time.
Last week we had a significant breach to the upside of the Expected Move. This is a new shift from the previous several weeks where price had stayed inside of the Expected Moves. To me, this says that the options marketplace 1. Got it wrong, and 2. That this next week is less reliable. There's several targets that I find noteworthy to the upside - The Gravity Point at $2,811 coincides with this week's Expected Move. This also may run into the +1 SD.
Please Comment on posts if you have something to say. I'm very open to different perspectives or general comments and it actually helps me quite a bit in determining the value I'm bringing to the community. Liking the post also gives me feedback if you don't have anything to say. Right now I'm averaging about 2 Comments a week and about 5 Likes. I want watching my technical analysis to be like watching Lionel Messi play soccer. I seldom expect any sort of attention and that's not my goal here either, rather I'd like to add another individual or two to my team.
This move is reminiscent of early January 2018. A relentless move to the upside. However, in this move in 2019 has been even more of a relentless move. We're looking at a marketplace that has rallied from $2,350 to $2,750 in about a month and a half. About +15%. People get into the party late. This party has already happened.
If you're already invested / still invested - There's no reason to get out. Be on guard.
If you're looking to get in this long - You missed the party. You're going to get burned
If you're looking to get in this short - You're fighting the weight of the evidence. You're going to get burned
Goodluck next week Gentlemen
- RH
Last Week's Post
Elliott Count of DIA - Bear Move May Start Next WeekElliott Wave Count: Flat Correction (3-3-5)
- Waves A and B of the Flat have completed.
- Wave C is an Ending Diagonal (*A very small percentage of diagonals appear in the C-wave position* | sequence 3-3-3-3-3)
Current Predictions
1)
Targeted "Top" of Wave C of Ending Diagonal Wave 4 of the Flat Correction near the .618 Fib @ $242.84
2)
Beginning of descending Wave 5 of Ending Diagonal Wave C (of the Flat Correction) estimated to begin next week: January 16/17th
3)
If the current trend surpasses $248 , everything here is wrong/the Ending Diagonal Count is INVALID.
DIA Vertical RecoveryEveryone says the market can't go straight up. Well, it happened last year, so why not again?
Sure looks like there should be a pullback here sooner or later, but the Feds don't meet again until March. We'll be at ATH by that point, lol.
Just an idea for the medium term...I've been unable to convince myself of either the bullish or bearish cases for the medium term. There are valid arguments for both sides. I could very well see us zig zagging sideways for several months in a symmetrical triangle before setting a new ath or breaking the December low. The outer diagonal green lines are part of the long term channel formed after the 08 low. The middle green diagonal line is an upper bound of a secondary channel drawn with the bottom diagonal. It's important to remember that this idea is just speculation, and the pattern won't exist until there is a lower high and higher low, forming the triangle.
Tips are appreciated if this plays out and helps you get ahead of the market in the coming months:
ETH: 0x13cd45d7d282ee0ee4635645cce2e2a566d9bed8
DIA protective stop $247.89After the run the DIA has been on, it is now time to profit the profits with a sell stop at $247.89
Next Week's Expected Move ($47) + Gravity Points + Economic DataNext week will be perhaps the most important week of the year. Given the number and size of companies reporting, I can't emphasize enough to keep your seatbelts on. Thursday is the biggest earnings day.
Important Economic Events that happened last week:
1. The Economic Forum in Davos was downright pessimistic. Maybe a little bit overdone, but still these are CEO's, hedge fund managers, ect. all gathering in one lump sum all coming out with one idea, and that was that 2019 has got a lot of pessimism to it.
2. The week began with the International Monetary Fund (IMF), and for those of you who don't know the IMF came out and downgraded 2019 Global Growth. This is the 2nd time they've came out and downgraded global growth.
3. The largest semiconductor company - INTC - came out with bad Earnings. Semiconductor's are a leading indicator of the Technology sector. And it shouldn't be anything new when I say that the Technology sector leads the broader stock market. It's really not just Intel. I can't really remember any other time in my career where so many CEO's are displaying so much uncertainty in their projections moving forward.
4. China is pumping serious liquidity into their system. They're out there with a firehose just spraying massive massive liquidity all over the place like there's no tomorrow. As a trader, this makes me nervous. When China is spraying liquidity like that, that means they're seeing major major headwinds.
Take it for what you will, this is all just my interpretation. All I know is that when you start hearing a week or two of discussions on the mainstream news about the market heading for new all time highs, it's probably time to put your seatbelt back on.
Goodluck out there next week gentlemen,
RH
Last Week's Post: Beautiful example of why I use this on a week-to-week basis.
$DIA Make or BreakMajor test pending for $DIA of upper downward channel.
Each leg down was followed by a .786 FIB retracement- the latest leg being no different.
.50 Channel FIB acted as prior support and is a good first target for shorts.
Just how much we overshot to the downside in DEC, we've likely now overshot to the upside.
Stochastics started to diverge a week ago.
Sitting at BRN (Big Round Number) / Psych Resistance of 25K.
$SPX & $QQQ both hovering at D1 200EMA.
$XLF & $XRT failed to breakout of range.
$XLY & $XLY brokeout with very weak strength.
Have to imagine we see profit-taking either into the weekend or next week.
Feeling like this week is going to end with a sideways-drift, possible lower and folks are going to re-balance beginning in FEB.
WelpIt looks like instead of a breakdown that I foretasted, we are going to complete a 5th wave. we are getting some resistance from the trend line that I drew from the lower highs since the October selloff. We should be able to get past that. Obviously we have a big PUT underneath us, but I will spare talking about that because that's not TA
TUP Becoming Buyout Candidate...?After an abysmal earnings report and subsequent drop of over 25% today, shares of TUP are becoming a potential takeover target.
Who might buy? It could make sense for several companies: P&G (PG) could expand its portfolio of product offerings, as could Colgate-Palmolive (CL), but it could also make sense for Amazon (AMZN), as their endeavor in to fresh foods could benefit.
Five years ago, shares of TUP were nearly $100, but today at just about $28, they're down over 70%, which for shareholders, is catastrophic.
Clearly TUP management isn't cutting it, so there's going to have to be a shakeup there, or more preferably, an outright sell of the company to more capable enterprises like those I've listed. It wouldn't be hard to get funding by any of those aforementioned giants.
I'm not suggesting jumping in today, but give it time to settle and look to pick up some shares for a long-term view or if you're like me, some long-dated calls to minimize capital outlays.
