New Evidence

The S&P 500- Daily Chart

The S&P Daily Chart

The U.S. Dollar Index- Daily Chart

The S&P Hourly Chart

The S&P Hourly Chart

Fake out!

S&P Hourly Chart

The U.S. Dollar- Daily Chart

The S&P -Daily Chart

S&P Daily Chart

The Weekly Charts

The S&P Weekly Chart

The S&P Weekly Chart

 

The S&P Weekly Chart

The VIX- Weekly Chart

The S&P Weekly Chart

The S&P Monthly Chart

The S&P Hourly Chart

My next post

I will try to have the weekend post either tonight or tomorrow morning. Just so you know, there are now weekly reversal signals on several of the indices, and even the VIX. Both Sentiment and the internals of the market are screaming overbought, plus diverging. I find it ridiculous that there are people out there who actually believe the market is poised to rocket higher to new highs. Folks, the printing effect of operation twist has generated a powerful rally, and probably the most powerful bear market rally seen to date. This is merely a snap back rally (from the July sell-off ) that allow for prices to regress to their mean. Bear market rallies are to convince the public that it's okay to buy stocks again. They suck you in and spit you back out. The stock market is in a downtrend! We still have a series of lower highs and lower lows dating back to the Head and Shoulders Topping pattern. Neither you nor I have seen a sell-off in the market, but when it comes, I think many people will be very surprised.  It is at this point that people will begin to re-evaluate their analysis. Dont be fooled by what others tell you- the charts don't lie.

Bernanke said the other day that QE was considered, but "economic conditions at this time do not warrant" such a policy. Now think about it. The fact that Bernanke has even considered such a possibility of a QE style emergency back-up plan is quite telling. Hearing that, would you consider this market to be a healthy bull market? Do you experience growing economic problems that overshadow strong uptrending markets? The reality is, no one will tell you the market will go into free fall mode, nor will anyone speak of the downside risk.

Preparing you!

The U.S. Dollar Index- Daily Chart

The S&P 500- Daily Chart

The VIX- Daily Chart

S&P 500 Cash Index- Weekly Chart

S&P Hourly Chart

The Turning Point

S&P Weekly Chart

This tool gives an accurate forcast for turns in the market, wouldn't you say?

The U.S. Dollar Index- Daily Chart

This is a normal correction, not a reversal. People seem to think that today was a game changer- not the case.

The VIX- Daily Chart

We are at extreme levels of complacency. Would you be buying stocks at this point? No way!

S&P- 4 hour chart

The target zone = 1328-1335.

Stocks are coiling

S&P 500- Coiling Pattern

Coiling patterns are tricky. This particular pattern initally produces a false breakout that quickly reverses in the opposite direction. In this case, a final short squeeze rally could allow such a senario to play out. Also, this pattern seems more fitting when considering the elliot wave count. 

S&P Elliot Wave Count

Although it is still possible we have not quite completed the corrective pattern of wave 4,  the final wave 5 is imminent and should push stocks into the 1328-1334 target area. Tomorrow, if Bernanke dissapoints investors with no QE3, which he will, a sell-off into the close may produce the long awaited reversal in stocks. This scenario is based on the expectation that we surge tomorrow morning, but give back all the gains after the announcement.

The U.S. Dollar Index- 4 hour chart

The final rally in stocks could allow for the dollar to head lower and fill its gap.

The U.S. Dollar Index- Daily Chart

Confluence of support lies at the declining trendline and gap support.

This spells Trouble

The U.S. Dollar- Daily Chart

 It is not an uncommon occurence for most daily cycles to break their cycle trendline when seeking out a cycle low. Monday's candlestick managed to break the daily cycle trendline which gives more reason to believe a cycle low is imminent.  It might also be important to mention that the dollar is now on day 22 of its current daily cycle and extremely oversold which are two conditions that suggest we are ripe for a reversal. I am looking for an early sell-off in the morning followed by a strong finish at the close, possibly tomorrow. This type of intra-day action would produce a long bottoming wick candlestick that almost always marks a cycle low. That's my best guess, but technically speaking, the dollar still has anywhere between 1-5 more days before the cycle is complete.

The U.S. Dollar v. S&P 500

The S&P Daily Chart

We all know of the inverse correlation that exists between the U.S. Dollar and the Market Averages (SPX, Dow Jones,etc.), but the recent price action may be clueing us in to something more telling. I have highlighted the past 4 sessions in both charts above to illustrate the short-term correlation between stocks and the U.S. Dollar. I find it very interesting that the significant sell-off in the dollar index has been unable to boost stocks, and the metals for that matter. If all asset classes of the market are now somewhat unphased by a cheaper dollar, just imagine what will happen when the dollar explodes out of its next cycle low.

Weekend Charts

S&P Daily Chart

The Larger Rising Wedge pattern should be complete with a break of the lower trendline.

S&P Weekly Chart

The cycle research suggests a sell-off of some sort. It remains to be seen whether the October lows will hold, but it is my expectation that they will be tested.

The Dollar Index- Daily Chart

The dollar finds its daily cycle low anywhere between 18-28 days. We are currently in the timing band for a cycle low.

Elliot Wave Count

Just a few more wiggles higher and we're done. This assumes the pattern should complete itself early next week.

Long-term Elliot Wave Count

Scenario 1

The more bearish outlook.

Long-term Elliot Wave Count

Scenario 2

This scenario assumes that a global QE has been implemmented.

The Works

Just charts tonight,
Darah



The U.S. Dollar Index

The S&P Daily Chart

S&P 5min. chart (Elliot Wave Count)

S&P Bollinger Bands

The Transports

Your personality defined

Crowd interest is the collection of different interest among buyers and sellers, but its largely important for determining the market price of any asset class. This particular interest that convinces a buyer to purchase a stock may be for a reason discernably different from your own, but you both agree on the current price. For example, Darah buys a stock for $4 and sells it for $9. Logan buys the same stock for $9 because he thinks the stock is worth $18. Logan has in mind of a potential 100% return on his money and expects that to play out in 2 months. Three months later, the stock crumbles and he must sell for a loss. The point is we both found it to be a bargain, but bought the stock to sell it at a different price and time. It is is nearly impossible for you and another individual trader/investor to come to the exact reasoning for purchasing a stock. The way you perceive information defines this particular interest only you can develop when seeking out bargains in the stock market. Your decision making in the market is heavily influenced by your personality, not your IQ, or level of education. So what is your personality type? The personalities that exist in the investment world are classified as being either  "buy the finest" or  "bargain hunter." The two types of personalities think very opposite. In other words, you either have the investor personality or you don't. Remember, 75 % of investors will take a loss in the stock market over their lifetime, and only 1% of investors make half of the money made on wallstreet. Many of those "buy the finest" buy at the tippy top and sell at the very bottom.  If you have a "bargain hunter" personality, consider it a gift, but also consider sharing those ideas with people who aren't so fortunate in this game.

S&P Daily Chart

S&P Hourly Chart

S&P 1 min. chart

The U.S. Dollar

 

I just wanted to point out that on all intra-day (5min., 15min, 30min, 1hour) time frames the dollar has formed bullish divergence. A reversal is imminent and would correspond with pressure in the equities market.

S&P with MACD indicator

The selling has begun

 The retail investor that finds himself buying a stock will do so when sentiment in the market is extremely optimistic. It is at this time that the media outlets selectively disclose positive new releases to make the ambience of the marketplace seem euphoric. If and when negative news is outsourced during this time, investors overlook its importance because of a larger headline event that becomes the central theme for the marketplace. In order to exchange shares to the public a powerful media influence is needed to convince enough buyers to participate in the marketplace. This displacement of shares allow for large institutions to quitely unload their core positions to the hands of the public especially when the market is nearing a significant top. Almost always are the institutions in the know and cannot liquidate their current positions all at once, so this effort is done by scaling out of large positions in portions. Each bundle that goes to the market for sale is bought and suckered in by the retailer who thinks he has a bargain. When sentiment in the market is at extremely bullish levels, the public is overly eager to buy stocks, and quite the opposite, afraid to buy stocks that are so beaten down. TRADERS SHOULD EMBRACE FEAR in an uptrending market, but be short in a downtrend.

The S&P Mini

The S&P hourly chart

The S&P Daily Chart 

The U.S. Dollar Index