Stock market analysis and commentary from a trader's perspective

Wednesday, April 23, 2014

Taking Some Time Off

As if a healthy reminder of the unexpected during this week's Cardinal Grand Cross, my trading computer had to go in for service due to what (I'm hoping) are software issues rather than hardware ones. It will take at least a few days if not a week to diagnose and fix, and just in case, I have ordered another replacement which won't be here until the first week of May. Whoa.

As celestial events can be opportunities for transformation, I'm seeing the bright side as best I can. Rather than be upset that my work is disrupted, I will instead use the opportunity to explore a little and visit some places (& friends) I rarely to get to see because of my day-to-day schedule.

Also, one of the only things I miss from having an office job is going out for a leisurely lunch. So I think I'll hit some good spots.

Regarding the markets, after yesterday's rally, the odds have lessened that the fractal down to 1760-1780 will play out. I'm not ruling it out, but am already trying to zero-in on higher targets. These will depend on the angle of trajectory should the S&P get above 1897.28.

1903 and from 1930 up to 2035 were areas of confluence that I had noted on my charts a while ago. Still thinking a wedge shape because of the move from the Feb. 5th lows still looks like a three-wave structure to me, and therefore fits "wave 1" of the diagram below that I found on the web. We could have just completed, or may have nearly completed "wave A" of "3" if it's the correct interpretation.

Two points emerge: higher prices then sharply lower ones. This could take a few weeks, I hope, during which time I will be slacking off and getting ready to hit it hard when I return.

1737.92 remains the hard stop for this scenario.

Tuesday, April 22, 2014

Quick Levels

Awaiting West Coast technical support for the trading computer this morning, so without charts for exact levels. But it feels like 1872.53 should be exceeded today. My indicators were also saying that a pullback is near, even if the level is exceeded. Basically I'm sticking with the scenario put forth yesterday, that a three-wave pullback to the 1760-1780 level could occur.

Europe is up strongly today. So there could be follow through here. Without a pullback, the S&P could instead target the 1897.28 high.

Monday, April 21, 2014

In The Crosshairs Of The Grand Cross

We are now in the window of the Cardinal Grand Cross, April 20-24. Anything can happen, including nothing. At times like these it is best to just be aware, but not to be in fear. Just because something big is occurring in the heavens doesn't mean it has to be bad.

If an event does turn out "badly," it does so according to our perception. It does not mean we must take on its negativity. We must guard our vibe and try to maintain an even keel. Easier said than done at times, but it pays to try.

Friday there may have been a fractal in the S&P 1 minute chart that might have been a tip off to what could occur if indeed 1872.53 gets exceeded. Yes, I still think it would mean new all-time highs eventually, but there could be some turbulence along the way.

This is what occurred at around 2:30 pm EDT Friday: price got above "b" and then fell way past "A."

Here is how it could look on the daily chart if the same thing were to happen fractally with price getting above 1872.53. The same pattern could yield a target of 1760-1780.

In that this has been an exceedingly difficult market to forecast lately (I was still looking for another low while the S&P was ripping higher last Tuesday), this may be the one unexpected thing the market may have up its sleeve. Otherwise, new all-time highs could come sooner rather than later.

Elsewhere, the socionomic backdrop continues to serve up mixed social mood which suggests a growing complexity as society tries to cope with monetary distortion.

The WSJ noted that the miniskirt has made yet another comeback (probably as social mood coils).

The Miniskirt Makes A Comeback

A few quotes:

It started as a spring drizzle, then runways with clothes for fall became flooded with them. Miniskirts in all styles—mod, flirty, kicky, sporty and even formal—signaled that hemlines are emerging shorter than they've been in years...

When high-fashion hemlines dropped to the shin several years ago, some people attributed the shift to conservative feelings engendered by the financial crash and ensuing recession...

The pendulum began to swing the other way about a year ago when Mr. Slimane put miniskirts and short baby doll dresses on Saint Laurent's runway in March 2013.

Socionomics would flip the causality, and say that conservative feelings engendered the financial crash and the ensuing recession.  But whatevs.

Then, if you have time, take a look at what's happening in the LA punk scene. It's bigger than ever.

Punk appeared late in the '70s bear market and, socionomically, was a signal that social mood about as bad as it was going to get. Therefore it was a signal to start getting long.

Now, however, Punk's return along with the frank anger expressed by several of the kids in the above documentary is a worrisome sign for a market hovering at all-time record highs.

Thursday, April 17, 2014

Beats And Misses And The Most Important Level

As the market prepares for an early option expiration ahead of the Good Friday holiday, an unsettling mix of events awaits digestion.

Google missed. GE missed. Goldman missed. Chipotle beat. And consumer spending jumped . . . on Obamacare.

Not a good mix. The last two are the worst: when you've got people spending more on forced healthcare insurance, it's gotta come from somewhere. And so it appears that when people desire to go out to eat, they are downshifting to fast food.

This is not how vibrant economies are built.

No one cares. Futures are right back to yesterday's close, which is perfect. It appears as a double top.

If a move down is to come today, I would speculate that it would occur around 10am. Sometimes I've noticed that it can get stretched to around 11am which I don't like because that is during the time that I don't trade, the hour of the European close.

Europe by the way is all green today. Asia was slightly mixed, with China the notable red. Oh, the irony.

The most important number today remains 1872.53. Above that, and new highs are more than possible eventually. But keeping below that could cause a sharp reversal.

Wednesday, April 16, 2014

Noise And Jitters Or Worldwide Stimulus

One of the best narratives of the last 36 hours was found on Zero Hedge this morning.

Futures Soar 40 Points In Hours On Hopes Of Futher Economic Weakness

Could it be that the out-of-nowhere short covering rallies of Monday and Tuesday afternoon were brought on by speculation or rumors of new worldwide stimulus efforts by Japan, China, and the ECB?

I myself had thought it was due to a Yellen-Fed rumor. The idea of another worldwide stimulus is far more intriguing.

Here's the bottom line for me: until the S&P gets above 1872.53, it's noise and jitters. I see a falling wedge in play (what is it with wedges lately) that targets lower prices.

After those lower prices, however, I will be a buyer. Let's hope we get the same intensity of buying then.

I'm beginning to target the 1763-1777 area for a final low. There is a confluence of Fib targets there along with the all-important 200-day moving average at the lower end. 1737.92 remains a hard stop for this scenario.

1763-1777 could be quite interesting from a time perspective, too. Getting there could put us in the April 20-24 window of the Cardinal Grand Cross. Now that the full lunar eclipse/full moon has shown us short covering rather than a crash, perhaps the Grand Cross could show us a lasting bottom for several months.

Tuesday, April 15, 2014

Little By Little

Little by little the market is hinting that it's not ready to break. It may have lower levels in store, but perhaps not the Big Break or The Correction we've all been waiting for.

What this may eventually mean is that the 10% correction or whatever Wall Street thinks is normal or always happens (as if the market is some sort of machine) may not be so cut and dry. Going five years without a normal correction could mean a much worse event, such as a 10% correction for each year we didn't have one.

Until the signs appear though, the market may still have higher targets.

Yesterday's out-of-nowhere late day bounce felt like a Fed-related short covering rally. Perhaps Janet is already feeling the heat and will make some dovish announcement in the coming hours. Maybe she won't and the markets will feel let down.

Whatever the case, there are valid targets higher and lower. Yesterday's low does not seem to be the low, but that could change by getting above 1872.53.

The higher targets for today are 1849-1852. The lower targets are the 1812.74 1:1 Fib projection, the 1800 area, 1775.79, and the 200dma at roughly 1762.

1737.92 remains the hard stop for the new high scenario. Below that would suggest something else is going on that might take us all by surprise.

Monday, April 14, 2014

Note To Bears

Futures are ripping higher, right where they shouldn't if the market was ready to break down. So again, the rising wedge scenario gets dusted off.

Getting above 1835.07 today on the cash S&P index would close off the "official" bearish wave count which I keep an eye on (though increasingly I'm wondering why). Friday should have been a very scary day and the carnage should have behind a very scary, bearish set of waves, yet it's nearly impossible to count an impulse from it. The action in the futures thus far is more icing on the cake. Getting above Friday's high might well be the last nail in the bear's coffin for the time being.

Could another low occur even if 1835.07 gets exceeded? Of course. But as long as the February low (1737.92) holds, the market can retain a wedge structure and continue to new highs.

Note to Elliott wave bears: try not to be so bearish that you only see a bearish scenario day in-day out without an alternate count if you're wrong. This post is wrong below 1737.92.