Get started

Equity

Softer Fed Outlook Fuels Stock RallyStocks have rallied, breaking through to higher levels. The markets seem to interpret recent economic data in a manner that suggests that the Fed is going to cool down their hawkish stance. Right now, a 50bps rate hike is expected for September (potentially the last one), whereas 75bps was not off the table before Wednesday's CPI. This was further supported by Producer Prices. Markets are considering this a green light to rally again. We have broken past 4245, but have fallen just short of our target of 4272. Resistance is confirmed by red triangles on the KRI. The Kovach OBV has picked up with the rally, but it does appear that momentum is stalling. We are due for a bit of a retracement, with 4188 a reasonable area to expect support. If the rally can continue then 4272 is the next target with 4293 and 4306 in line after that.
FX:SPX500Long
by quantguy
Forecast is for rain (market top)Chart shows SPY (2D) and the percentage of stocks above their 20DMA(aqua) and 200DMA (yellow). Each series is the mean percentage of 7 index's which, in turn, aggregate several thousand underlying stocks. The 7 indexes: S&P, Dow, Nasdaq, Russell, TSX, NYSE, AMEX The peaks of the index coincide with market tops (as shown in the chart). Based on this pattern it's reasonable to forecast a top. Like the weather forecast, the timing is uncertain, the underlying averages lag, and their are plenty of false positives**. Current forecast is for rain. ** Why do we listen to a weather forecast that we know is somewhat inaccurate? Because it's useful in answering questions like: "should i take an umbrella with me today?" ** All models (and indicators) are meant as useful approximations of reality.
AMEX:SPY
by gb50k
2
How Yesterday's CPI will Impact Stocks and the FedStocks got a pump from CPI data yesterday. The figure came in at 8.5%, one of the highest in history, however the estimate was 8.7%, so it technically fell short of expectations, even though this figure is still well higher than normal. After this reading, the implied probability of a Fed hike of 75bps fell 30%, which gave the markets a green light to rally. Stocks broke above highs at 4188, and are holding in the 4200's, currently testing our level at 4228. The Kovach OBV has leveled off but is still strong. If we retrace, we should have support at our former high of 4188, but if we retrace the range, then 4122 will provide further support. If the rally can continue, then 4172 is the next target.
FX:SPX500Long
by quantguy
Nasdaq 5x Overvalued, Irrational?The Nasdaq is worth about 10x of what it was in 1990, in real terms, if you take away all the money printing. The support structure from the 1990s that decayed in 2008 has now been resistance for a *decade*, and now that we're at a historical zone of sky high valuations and overboughtness, it wouldn't surprise me if it dropped 75% from here. What if there is more money printing, you say? Wouldn't that just make everyone rich? Well, the dollar loses about 5% of its spending power per year historically, so if you had simply held since 2000, you'd have lost roughly about 80-90% of that spending power. It's important to not repeat the same fallacy as people did in the 80s and 90s. It blew up in people's faces even back when the economy was supported by stronger fundamentals and there was a greater widespread success of passive wealth accumulation. Traders are delusional, and perhaps maybe not temporarily on a short-term or medium-term timeframe where prices are highly random, but especially on a long-term one. The Federal Reserve has been trying to float this long-term sentiment for a while now, in the face of terrible fundamentals, and now they don't really have any ammo left. Just look how the price tries to trace the white trendline but continues to lag and has remained below. This tells you all you need to know without even getting into monetary policy. But even if you look at monetary policy, look at the ammo they are using: they are jawboning claims that the job market is strong because job openings are high, which is a trailing indicator. So chances are in 3 or 6 months, job openings will contract and they will no longer have any poor excuses to linger in their knob turning, hand waving, and making 180 degree pivots in their decision making process. Not to mention, job openings are contracting at a pace only seen since, you guessed it, 2020! Even if they stop jawboning, what padding do they have? 1.5T of reverse repo? That pales in comparison to the 9T that was printed to prop up prices in 2020. Also, just look at some of the companies on the list: JD.com (Chinese company) Baidu (Chinese company) Starbucks Blizzard Do you really think that this hodgepodge of companies are fundamentally strong? Why would anyone put their future in the hands of an index with distorted, contrasting interests and motivations, and foreign ownership? Is that not literally the definition of irrational? irrational; adjective (1) Not endowed with reason. (2) Affected by loss of usual or normal mental clarity; incoherent, as from shock. (3) Marked by a lack of accord with reason or sound judgment. If that doesn't describe the situation perfectly, I don't know what does. Eventually, this thing goes down. With or without money printing. I hope you enjoyed this idea. Let me know what you think, thanks for taking a look, and don't forget to hedge your bets!
TVC:NDQShort
by fringe_chartist
9
Stocks Range Ahead of CPIStocks have established highs, then immediately rejected them, and are continuing the sideways correction. We mentioned that 4178 and 4188 will be very hard to break, as they correspond to relative highs from a previous range held in June. We are seeing support from 4122, but we are on the precipice of a vacuum zone below to 4068. There is another vacuum zone below that to 4009. The Kovach OBV has leveled off so if nothing signficant happens, then we should maintain the current range. All eyes are on CPI today, which will provide a reading on the massive inflation we have been seeing as of late. This will give us more insight as to the Fed's plan to raise rates, potentially by 50bps at the September FOMC. Don't expect much action in stocks until at least 8:30AM EST, when the data is released.
FX:SPX500
by quantguy
SPX Momentum Fading?Semi-monthly returns are the highest since March 31. Upward momentum has been strong, but it's looking like it could fade and the price could possibly retest 4000 where either support or resistance will be established. Sentiment is so mixed at the moment that I am fairly certain this will play out. Just look around at the severe contrast in sentiment. People are betting their portfolio on this hinge and it's not clear who is correct, or if anyone is correct. Lately, one could trade either direction and they would have a chance to take profit within the next few weeks or month. The question is, will bearish sentiment linger on or will we get a huge fakeout to the upside? It's a hard question to answer, but if we monitor DXY and commodities we will be able to see some hints in the next week or two. Good luck and don't forget to hedge your bets!
CME_MINI:ES1!
by fringe_chartist
8
Bull Wedge In Stocks?Stocks are tending toward the upper bound of the value area, forming what appears to be a bull wedge. We have been flirting with higher levels in the 4000's established from a value area formed back in June. We seem to have a hard upper bound at 4178, but the Kovach OBV is still strong, suggesting that we have a bull divergence. If we break out, then 4188 will provide resistance. If we can break through that, then 4214 is the next target. We should have support from 4122, then there is a vacuum zone to 4068. If that does not hold, we should have strong support at 4009.
FX:SPX500Long
by quantguy
2
SPY in a downtrend? Where's Top? THE ANSWERS!Chart: SPY 2 week TF. The answers are both in the chart and below. SPOILER: If SPY rallies to $800, the downtrend is still valid. Interesting: A downtrend is defined as LOWER lows (LL) and LOWER highs (LH). Uptrend? as HL's and HH's. ** A single HIGHER high (HH) invalidates a downtrend trend in that TF. Trend is relative to TF and can be valid in one TF but invalid in another. A HH is established when the previous HH is superseded by a new candle's _____________ (fill in the blank). Answer: It's the new candles **close** that takes out a previous high, **not** its own high. Once that condition has been met the new High is promoted to the status of HH. Important: SPY's 1 week down trend was invalidated when the HH of $393.16 established on the 28th of June, 2022 was taken out by the close of $395.09 on Friday, July 18th, 2022. Chart: 2 week downtrend is still valid and the current 2W candle closes in 5 days. (8/12/22) The trend remains valid if that close is below the previous HH of $417.44 established on June 2nd 2022. Very important: *** The high of (this) week is not relevant to the 2W downtrend. Only the candle Close on Friday (8/12/22). Implication (not opinion): If SPY rallies to $420, the downtrend is still valid. If SPY rallies to $500, the downtrend is still valid. If SPY rallies to $600, the downtrend is still valid. If SPY rallies to $800, the downtrend is still valid. ... *as long as* price falls back to $417.44 by EOW. The point: ... idk. Ask me in 2 weeks. Where is "top"?: It's the price where the last bear goes long (aka covers). In other words when there is not a single buyer left. ** Starting with Homma Munehisa, (1755) The Fountain of Gold—The Three Monkey Record of Money. to the more contemporary: Al Brooks, (2009) "Trading Price Action Trends" .. and everyone in between.
AMEX:SPY
by gb50k
1
The S&P 500 Edges HigherThe S&P 500 has broken higher, barely edging past 4144, our previous high. We are curently just below the next level at 4178. We are starting to run into resistance here from previous highs in mid June, confirmed by red triangles on the KRI. If we can break out further, we must get past 4188 before we can consider the next level at 4214. The breakout looks labored and the KRI is relatively flat, so there is a high probability of a retracement, unless we see strong momentum at open. If so, watch for 4068 to provide support, but beware of the vacuum zone below to 4009.
FX:SPX500Short
by quantguy
Sideways Correction in StocksThe S&P 500 has retraced slightly from highs at 4144, testing support at 4068, as we anticipated yesterday. We are seeing good support from 4068. We appear to be forming a sideways corrective pattern, a technical corrective phase after a rally from the 3K's brought us back to highs not seen since June. It is likely we will hold this range until stocks can muster another breakout. If that is the case then we must break through 4144 before we can attempt highs from June's range at 4188. If we retrace further, watch the vacuum zone to 4009.
FX:SPX500
by quantguy
VXX (VIX ETN) hints yet again of increasing volatilityRushing this out before market opens... The VIX index is rather special (to me) and it is not feasible to use usual technical analysis on that chart IMHO. So, I use the VXX (VIX ETN) for a better idea when volatility spikes might occur. Am observing one just now with an apparent alignment of weekly adn daily factors in the charts. On the weekly chart, noted that there was previously a bullish divergence where the VXX kept going lower whilst the MACD (left lowest bottom panel) crept up. Noted that when we had the MACD crossover, the following week(s) come with volatility spikes. There is an early indication that we might see a MACD crossover this or next week, suggesting that August would be volatile. The candlestick formed last week gapped up, attempted to close the gap, but closed at the high. This is a rather bullish candlestick, and an identified wedge breakout just might happen this week. The daily chart uncannily bears (pun not intended) a similar pattern, but with more details, as the last day of last week closed in a similar looking candlestick, along with a gap up (that attempted to close and reopened), as well as a MACD crossover. These MACD crossovers in 2022 have been marked, last posted about this on 12 Feb 2022, which saw a period of higher volatility. Then formed the identified wedge, and bouncing off the wdge support twice, this time, it suggests that volatility is about to spike, and would probably breakout of the wedge. Taken together, this uncanny alignment forewarns of clear and present volatility for the weeks to follow... Having said that, I suspect that this is might be a short and sharp spike that could end the bearish status for a couple of months until we get into 2023. That's another discussion altogether. Meanwhile, hold on to your pants, be ready for the volatility storms!
CBOE:VXX
by Auguraltrader
1
Stocks Retrace After Hitting Our TargetStocks have hit our target of 4144, but ran into resistance here. The price action swiftly rounded off, forming a top at this level. We have since retraced back into the vacuum zone between 4122 and 4168. We should have further support at 4068, but if we retrace further then there is a vacuum zone below to 4009. The Kovach OBV has ticked downward with the retracement. We will need more momentum to punch through 4122 and 4144 before we can consider higher levels at 4178 and 4188, which are the next targets.
FX:SPX500Short
by quantguy
1
Can Stocks Continue Their Rally??Stocks have broken out and hit our next level of 4122. We are meeting steep resistance here confirmed by red triangles on the KRI. The Kovach OBV has lifted, and its clear that momentum has returned at least for now. It is likely that the markets think that the Fed may adopt an easier policy now that we are formally in a recession. If momentum continues, 4144 is the next target, then 4178 and 4188. If we retrace, then we have a vacuum zone below to 4068 then 4009.
FX:SPX500Short
by quantguy
SPX ~6000 if this time is not differentThe SPX chart has 2 goals and one constraint: Demonstrate the VIX / VVIX ratio as an inverse momentum indicator for SPX. The VIX is risk adjusted" by VVIX and the ratio is more useful than VIX alone. "Useful" is similar to 'Statistical Power' and means less data required to identify smaller changes amidst higher volatility. Suggest that an ATH of SPX 6000 is "not unreasonable" considering the pattern and magnitude of prior large moves (corrections, bear markets, and very large dips) . . . Unless this time is different.
TVC:VIX
by gb50k
2
Can The S&P 500 Break Out??The S&P 500 has broken out to the upper bound of the range, at 4009. After the uncertainty from the Fed was lifted, and we received our 75bps rate hike, stocks were clear to rally. However, as we anticipated, there was little action yesterday, and they are still respecting the range we identified. We made a brief attempt to rally into the vacuum zone above, but momentum quickly faded and we retreated to support around 4009. The Kovach OBV has picked up, so if stocks can break out further, there is a vacuum zone above to 4068. Watch for momentum at open. If it does not come through then we are likely to retrace deeper into the value area between 3909 and 4009, with 3909 an anticipated floor for now.
FX:SPX500
by quantguy