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Yesterday's FOMC: Reality Sets in for StocksReality crashed the party with stocks yesterday, as we have been predicting here. The FOMC event was still quite hawkish despite the market's anticipation that we would see some softening in rhetoric. This caused stocks to tank yesterday, with the S&P 500 falling through multiple levels to find support at 3758. European equities have softened which could portend another dump for the NAM session today. Additionally, eyes are on the BoE and we will see if their outlook matches that of the Fed. If we fall further, we could find support in the upper 3600's, with 3645 a likely floor. A rally will have to claw back through multiple levels. We don't see a rally strong enough to break through 3909 any time soon. The Kovach OBV is still very bearish, and it will likely take a few days for the market to price in the Fed's decision.
FX:SPX500Short
by quantguy
Educational Series: Trading with Bollinger Bands (Part 1)Bollinger Bands is a volatility indicator. It indicates how HIGH or LOW prices can move during any period. When the market is volatile, the bands widen; conversely, when the market is less volatile, the bands contract. The standard Bollinger Band indicator comes with a preset calculation of the 2 standard deviations and the 20period moving average. This enables us to use the Bollinger Bands more effectively in the following ways; 1) Bollinger Squeeze 2) Bollinger Reversal (Read about this in Part 2) 3) Bollinger Trend (Read about this in Part 3) What is a Bollinger Squeeze? A Bollinger Squeeze is identified when the bands contract for a medium time, and economic news is to be released on the horizon. It is characterized by a horizontal consolidation of price over a period of time. Typically, the horizontal squeeze can be encompassed within a rectangle (shown on the chart). This indicates the potential for an explosive BIG move as the price breaks out of the consolidation. What do with a Bollinger Squeeze? Because the Bollinger Squeeze occurs before a news event, it would be unwise to pick a side for the potential breakout and gamble on the news result. Therefore, the best way to take advantage of this setup is maximized by deploying pending orders. 1) Place a Buy Stop order slightly above the top of the consolidation area, Stop Loss (SL) should be about 1.5 times the size of the consolidation area, with the Take Profit (TP) at the nearest swing high or 2 times the SL amount. 2) Place a Sell Stop order slightly below the top of the consolidation area, Stop Loss (SL) should be about 1.5 times the size of the consolidation area, with the Take Profit (TP) at the nearest swing high or 2 times the SL amount. Whenever the Buy or Sell trade is activated, you must remember to cancel the other pending order (Or you could try to find a One-Cancel-Other EA) Remember - Breakout of the consolidation should result in a quick and fast price movement. If it breaks and climbs slowly, it could be a false break, and you would want to get out of the trade quickly. - Trend could be ignored briefly (due to the explosive and short term move). But only briefly. - Support and Resistance levels are still crucial and must be respected. - This indicator is effective on Forex, Commodity, Cryptocurrency & Equity markets Use the Bollinger Squeeze only on the M15 or H1 timeframe, and remember, it is a relatively rare occurrence.
Education
by JinDao_Tai
6
Stocks Retrace From HighsStock indexes have pulled back from highs with stronger than expected construction and PMI data putting a damper on the markets' hopes that the Fed will taper their hawkish stance. These hopes were never really justified in the first place, so it was only a matter of time before reality set in. The S&P 500 inched above our level at 3909 and then fell back to support around 3848. We anticipate further support at 3792. The Kovach OBV has slumped so it is possible we may see some ranging here as stocks seek direction. If we can break out the next target is 3963.
FX:SPX500Short
by quantguy
3
Stocks Edge Higher, Looking WeakStocks have crept up, after rejecting highs at 3909. We had a brief retracement yesterday, which quickly found support and the S&P 500 was able to tick up past 3909, making a new relative high albeit barely. Several red triangles on the KRI suggest that we are running into stiff resistance at these levels. The Kovach OBV has slumped, so we will see if we have enough momentum to break out. If so, 3963 is the next target. If not, then 3792 should be considered a floor price.
FX:SPX500Short
by quantguy
1
Stocks Continue to GainThe S&P 500 has edged higher, after a brief retracement from 3887. We seemed to reject this level but found support just above our level at 3758. Dedicated readers will remember that we anticipated support here in previous reports. From there we pivoted nicely and broke through the previous high of 3887 to reach our target of 3909. The Kovach OBV is climbing steadily so we will see if this rally can continue. If we can break through 3909 the next target is 3963. If we retrace, then 3758 should hold as a floor.
FX:SPX500Short
by quantguy
2
S&P 500 RalliesThe S&P 500 has shrugged off Amazon losses, pivoting just above our level at 3758. Amazon has given up $trillion status as weak holiday spending as forecasts project the weakest holiday sales growth quarter ever. We will see if stocks can continue to rally, as a red triangle on the KRI is confirming resistance at current levels. The price action is rounding off and the Kovach OBV has slumped. If we continue to rally, we will face resistance from 3887, and 3909, the latter corresponding to a relative high. If we retrace, anticipate support at 3758 again.
FX:SPX500Short
by quantguy
Stocks Edge Higher Despite Earnings MalaiseStocks have rounded off, but still edge higher despite disappointing Microsoft guidance , Meta malaise, and general tech sector weakness. Goldman Sachs is bullish on a recovery for Microsoft, and it is one of the only AAA rated companies on the planet. These facts have weighed on the indexes, but have not contributed to much of a sell off yet. If earnings continue to come in weak, then it is difficult to image that this rally will continue. Technically, we are very close to our next target of 3909 where we will likely face resistance as it is a relative high. The Kovach OBV is still edging up, but does appear to be showing signs of leveling off. Expect support at 3792 if so. We should see further support at 3758.
FX:SPX500Short
by quantguy
Stocks Rally! Is this Just Exhuberance?The S&P 500 has rallied off increased expecatations of a Fed tapering after housing price data came in negative. Additionally, Coca-Cola and GM posted earnings results yesterday suggesting that there is hope for some companies feared to be hit by inflation. Be careful trading this, as the markets have been fooled before, and we will need to wait for forward guidance from Fed speakers before any rally is confirmed. The Kovach OBV is climbing steadily, and we have reached our target of 3849, with 3909 the next major level and next target. If we reject current levels, 3792 or 3758 could provide support.
FX:SPX500Long
by quantguy
Stocks Attempt Hihger LevelsStocks have continued to edge higher, though they are looking quite weak. We were able to break past 3792, but the very next level at 3810 is providing significant resistance. The price action rounding off, and red triangles on the KRI are confirming resistance. Additionally, the news sentiment remains bearish, so at some point we are likely to face a swift rejection of current levels. However, the Kovach OBV is still strong. If we are able to break out, then 3849 is a reasonable target with 3909 a likely ceiling. We should start to see some support at 3758 if we retrace.
FX:SPX500Short
by quantguy
Stocks Face HeadwindsDespite plenty of negative sentiment in the news and a week packed with data, including the Fed's redbook and housing price indexes on Tuesday, GDP on Thursday and PCE on Friday. We hit a high of 3792. We tweeted on Sunday night that this small rally was likely to be short lived and sure enough we are seeing a pull back. The APAC markets are selling dramatically , as investors are worried about Asia's economic future. This is likely to bleed into the US markets as well. If so, we could see support at 3645 again. We expect resistance at 3792 to hold but if not, 3909 is the next target.
FX:SPX500Short
by quantguy
Major Earnings Weigh Heavy On StocksThe S&P 500 has taken an unfortunate turn as abysmal Snapchat profits have taken a turn for the worse and the stock has plummeted naerly 25%. This took down other social media stocks with it, some of which form a formidable component of the S&P 500. We were seeing support at our level at 3676, but the selling momentum has taking us down to 3645, where we are seeing some support. If the bear momentum continues, we could retrace the entire move back to 3584 or so. If we are able to pivot from here, look for a ceiling at 3758, and a likely intermediary target at 3714.
FX:SPX500Short
by quantguy
Stocks Pull Back After Tesla and FedAs predicted yesterday, stocks have met resistance at 3758. We were fairly certain this would be a top due to lack of momentum and the price action 'rounding off'. Also, the news isn't exactly cheery lately. The Fed's Bullard thinks we won't see inflation ease until next year, and Tesla's earnings have disappointed sending the stock tumbling 5%. The major indices all dipped, and exactly as we predicted, the level 3676 has provided support. If support does not hold, then we could retrace all the back to 3584. We are likely to hold the range between current levels and highs at 3758. If we can somehow break out, we are sure to hit resistance at 3792, which should be considered a ceiling for now.
FX:SPX500Short
by quantguy
The S&P at Pivotal CrossroadsThe S&P 500 has run into resistance at our level at 3758. We have predicted this to be the case yesterday. Recall that we should run into prohibitive resistance here, but if not, the next target is a relative high at 3810, which we anticipate to be a ceiling. Today is a make-or-break for stocks. If they can break out, then we will be able to test higher levels, but if not, the price action is likely to 'round off' and we may retrace the entire range to 3584 or find intermediate support at 3676.
FX:SPX500Short
by quantguy
Can Exhuberance in Stocks Last?Stocks have gained after ' shrugging off ' yet another worse than expected inflation print. Additionally, traders seem hopeful of good earnings prints as banks lead the way , with strong numbers. All major indexes have risen sharply, with the S&P 500 touching our level at 3758, just below highs at 3810. The Kovach OBV has picked up sharply with the momentum, but we will see if this will last. Netflix earnings are today and there are serious questions about subscriber growth. In the event of a strong selloff, we could completely retrace this move, with 3584 likely to provide support yet again. If we are able to break through 3810, the next target is 3825.
FX:SPX500Short
by quantguy
Stocks Retrace GainsThe S&P 500 has found support at 3584 after the CPI dip tested the base of the 3500 handle. We have since solidly recovered the 3500's, with a strong burst of momentum breaking through to 3714, where a red triangle on the KRI confirmed resistance. We then fell back to support at 3584, and are currently seeing an attempt at a pivot. We identified 3617 and 3624 as two levels where we would see resistance and that is exactly what we are seeing. A red triangle on the KRI is confirming resistance at these levels. If we are able to break past them, expect further resistance at 3714. If we retrace, then 3584 should hold, otherwise the base of the 3500 handle should hold as a floor.
FX:SPX500Short
by quantguy
1
Stocks React to CPI and Retail SalesStocks took a sharp dive after yet another hotter than expected CPI print. We tested 3500, then dip-buyers came in and we subsequently pivoted back to recover the 3600's. More momentum followed and we are currently testing our target highs at 3714. Stocks still look strong despite another flaccid data point in retail sales, which came in relatively weak. If we are able to break through highs, then 3810 is the next target. Otherwise, we can expect support at 3624.
FX:SPX500Short
by quantguy