Joined Nov 29, 2008
329 Blog Posts

Today will be Boring as Hell. Go Shopping Instead.

It’s going to be really quiet today. We have a half day today, which means that we close at 1:00PM.  We have several economic reports coming out in the morning (not that they even matter these days): Durable Goods (8:30AM), Personal Income/Outlays (8:30AM), Jobless Claims (8:30AM), and don’t forget that we have the EIA Petro report (10:35AM) and the EIA Nat Gas report (12:00PM) coming out on the same day. Could be volatile for you oil/gas folks.

The markets have been very quiet, just drifting down in an orderly fashion. We did break the November low trend line but before I go crazy on the short positions, I’ll need comfort knowing that we’re going to breakdown below 850 on the SPX (see SPX 35-day). We could be trading in a range, however a breakdown will kill the chance for neutral bound trading. This confirmation should come either today or Friday.

Glancing at individual sectors, I’d have to say that materials, industrials, financials, technology, and consumer discretionary look weak as hell. Utilities, energy, consumer staples appears to be neutral (going on to becoming weak). Healthcare is still doing the best (not breaking out or anything, but consolidating). In addition, sub sectors such as retailers and home builders look like they’re about to fall off (ex. BZH, HOV, JNY & LIZ – already off).

Here’s the problem with the rally: it’s taking too long and the set up is breaking down. Obviously, the market is running out of steam and it doesn’t matter if it’s a holiday week. Many traders have withdrawn from the markets, including the big money, and there’s simply a lack of interest in the market as evidenced by multi-week trading on lower and lower volume.

Likewise, the VIX reversed, even if it was 1%. Yesterday’s action created a 4th tail and suggests more room to the upside if the VIX penetrates above the 100-day MA. Watch the VIX carefully, even though it’s kinda busted. Watch the 45-46 level.

Let’s see what happens. If I were you, I’d spend all of tomorrow going shopping for those 50-80% discounts. All-niters are not just for desperate students anymore. It’s typically not worth trading on Christmas Eve.

SPX 1-day

SPX 3-day

SPX 5-day

SPX 10-day

SPX 35-day

SPX 5-month

NASDAQ 5-month

DJIA 5-month

VIX 5-month

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Intraday SPX UPDATED (3:04PM)


This is a confirmed intraday breakdown. Looks like we may very well test yesterday’s low.

50-day MA: 890
30-day MA: 864

20-day MA: 876

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WTF!!! WTF!!! WTF!!!

I’m sick of these last half-hour shenanigans, but this time it was different. I actually expected this one, because the market was at it’s lower range during 12/12 – 12/16 when the market formed a double bottom. This is an example of how charts can provide some value in anticipating pullbacks and throwbacks and possibly, the dreaded “WTF pattern”.

WTF Pattern (noun): A technical pattern that usually occurs during the last hour or last half-hour or even the last 5-mins of any trading day. It doesn’t care if you’re a bull or bear. It is non-biased and only causes extreme agony and stress for the overnight holder. Toward the end of the day, traders sit at their trading desks bewildered and confused as to what just happened prior to the closing bell. This creates a nationally coordinated, highly audible response to the unusual action which begins with a “WTF!!!” and may continue with creative vulgarity to express uncontrollable anger and dismay (see SPX 1-day).

Besides the WTF pattern that occurred around 3:40PM today, we had a series of bear flags that actually did what they were supposed to do — breakdown, making today a very easy day to trade. The 880 breakdown was a key shorting level because the market declined below the 12/18 V-bottom and 12/16’s pre-Fed flag level. After that, the market didn’t have much short-term support.

In addition, I stated that the VIX was forming tails at the 100-day MA and it may reverse. The VIX fell as low as 42.75, went positive to 46.69, but backed off in the last 20 minutes (WTF). This is the 3rd tail on the VIX.

Right now, it looks like we are closer to forming a bearish wedge than an ascending triangle. It appears that both sellers and buyers are exhausting themselves (notice extremely low volume today). Many sellers sold a while ago and buyers don’t really have the buying power (they can’t even buy Christmas presents), therefore, we’re stuck in this slow and boring tape which I’m sure is driving some people mad. The market will stay rather quiet this entire week as more people look forward to their Christmas festivities rather than risk losing more money. For most people, they’ll be glad that 2008 is finally OVER.

Look at 10-day & 45-day charts of the SPX for support/resistance levels and actually write them down. It’s easy to forget about them while you’re on the battlefield. Knowing these key levels helps prevent panic selling or impulse buying. You’ll also be aware of why and where bounces occur so you’re not caught off guard. This is true, unless you get hit by the WTF pattern in which case you’ll only have seconds to react to the idiotic program trading and/or manipulation.

I just realized that the ProFunds Group, parent of ProShares, is only 19 blocks away from where I am. Many people seem to be dissatisfied with their 2x ETFs. After I sell my holdings, if you’d like me to drive by and throw Molotov cocktails at the building, let me know.

Anyway, we’re at the 12/12 – 12/16 lower range, but we’re also sitting on top of the 30-day MA. The market could continue this rally for a short period of time until it hits 875 (20-day MA), 880, and maybe even 890 (50-day MA). After a bounce, if the SPX drops below 860, we would have formed a lower high which will confirm a bearish wedge pattern. For the market to burst through 920, it will probably require a catalyst greater than the Fed’s rate cut, or maybe Santa coming to town would just do. In any case, the market is running out of time and it will soon make a decision with or without you.

SPX 1-day

SPX 3-day

SPX 5-day

SPX 10-day

SPX 45-day

SPX 3-month

DJIA 3-month

NASDAQ 3-month

Russell 2K 3-month

VIX 6-month

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Intraday SPX Update

20-day MA @ 875 SPX
30-day MA @ 865 SPX

If the market stays at/around these levels, the lower trend line that Wood was concerned about will stay broken. In addition, the December trend line also broke. We have re-entered the 12/11-12/16 congestion zone.

The NASDAQ and SPX are the weakest, the DJIA is the ‘strongest’, and the RUT broke down from the 50-day MA. The decline started with oil, but moved to other materials/industrials, some financials, tech, and consumer services. Healthcare is doing the best.

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This Week’s Preview (A Shitload of Charts)

UPDATE: I nominate SEC Chairman Cox for Asshat of the Year:


There is nothing new except that we are close to bursting out either up or down. I am guessing that some movement will occur ahead of Tuesday’s 8:30AM GDP report. The consensus is -0.5% with a range of -0.8 to -0.5. The previous reading was -0.5%. I don’t know how the consensus could remain the same as Q3, but whatever, everyone expects negative growth.

We also have Consumer Sentiment, Existing and New Home Sales (all three @ 10AM). The U. of Michigan sentiment index is expect to come in at 58.6 with a range of 53.6 to 60.2. The previous reading was 59.1. Existing home sales are expected to come in at 4.9M with a range of 4.750M to 5.04M. The previous reading was 4.98M. New home sales are expected to come in at 420K with a range of 360K to 490K. The previous reading was 433K.

Back to the charts. If we breakout then we formed an ascending triangle. If we breakdown, it’s a bearish wedge. Looking at the 45-day intraday charts, a major move is most likely going to happen before Christmas given the lack breathing room at the end of the triangle/wedge.

The Dow appears to be the weakest. The Russell 2K is the strongest while the S&P and Naz remain ‘neutral’. As for the moving averages, the Russell 2K is above, the Naz is sitting right on top, and the S&P and Dow are both below it. All four indices are bound by the 20-day and 30-day MA’s in some way.

Looking at the VIX, we formed a ‘hammer’ candle, which is usually a reversal, but confirmation is needed. Upon layering it, the VIX is sitting right at the 100-day MA. The VIX tested the 100-day MA on Thursday and on Friday, the VIX managed to recoup most of its losses (notice the tails on both days). We “may” see an upside reversal on the VIX on Monday.

As for sectors, healthcare is the strongest. Utilities remains neutral. All the other sectors have to move up quickly because they are a hair away from breaking through their respective lower trendlines. The financial sector may be forming a head and shoulders. The industrial and technology sectors are forming lower highs (the tech sector technically broke down).

This entire month has been riddled with headache and a lack of reliable direction. I’m sure there was a lot of impulse trading going on. Once we break out or down, it will be easier to determine direction. Until then, traders have to either daytrade (very quickly) or sit tight and be patient (remain hedged), or remain in cash. Use the MA’s and support/resistance as your guides.

For the 45-day intraday charts:
-the BLUE line is the 50-day MA (325p.)
-the GREEN line is the 30-day MA (195p.)
-the PINK line is the 20-day MA (130p.)

SPX 1-day

SPX 3-day

SPX 5-day

SPX 10-day

SPX 45-day

DJIA 45-day

NASDAQ 45-day

RUSSELL 2K 45-day

VIX 6-month

SPDR Select Sectors

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