Bull market leaders on the edge of support ...

by Kimble Charting Solutions

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The Week Ahead: Can Doom and Gloom Save the Market?

by Tom Aspray

As often happens, strong bearish sentiment helped boost the market all week, but it’s best to wait to buy until a pullback occurs, which could come as early as mid-week, writes MoneyShow.com senior editor Tom Aspray.

The stock market got very close to the key levels in the major stock ETFs Monday, and then spent the rest of the week rebounding. This was in spite of very little in the way of positive news, either on the US economy or the Euro debt crisis.

As this sampling of financial headlines reflects, there was little to cheer about:

• Europe Lending Woes Deepen
• Economy Clips Factories
• Greek yields off the scale as 3-year bond hits 172%
• Number of Americans in poverty at highest in 50 years

Some of the Euro pain was lessened last Thursday, after the world’s central bankers moved to offer unlimited dollar funding through the end of the year. This helped the hard-hit European banks, especially those in France, to rebound.

The news on our economy was not a big help. Retail sales were flat and Best Buy (BBY) reported 30% drop in income for the second quarter. Retail sales were hurt by the several days lost because of Hurricane Irene.

A recent survey of economists by The Wall Street Journal sees a 1 in 3 chance the US will slip into a recession. They also put even odds that the euro would breakup.

The Conference Board was even more negative on the economy, as they see a 45% chance that there will be a recession.

Click to Enlarge

The Michigan Consumer Sentiment Index, released last Friday, shows a slight pickup from August’s dismal numbers. This chart from the Business Insider shows that consumer sentiment is already at levels seen in past recessions.

By the time this index drops below 60, GDP has already turned negative. While almost all economists are still downgrading their GDP forecasts to the 2% to 2.5% range, few are negative.

In light of all this, most were surprised that the Spyder Trust (SPY) was up 4.8% for the week, while the tech heavy PowerShares QQQ Trust (QQQ) led the way with a 6.4% gain.

Clearly, sentiment has shifted—the Investors Intelligence survey of newsletter writers shows that only 35.5% are bullish, compared with over 57% in early April. Also, 40.9% who are bearish, which is not far from the 47.2% level that was recorded near the March 2009 lows.

Another reading of sentiment comes from the option activity. Option expert Larry McMillan reports that put/call ratios have turned positive, as too many are buying puts in expectations of another sharp market decline.

Therefore, stock investors will be helped by an increased feeling of pessimism about the stock market and the economy. As I discuss further below, there has been some technical improvement.

The IMF meeting may set the tone for Monday’s opening. Tuesday, we get the housing starts as well as the start of the FOMC meeting. Wednesday’s existing-home sales numbers are likely to have much less impact than the FOMC announcement in the afternoon.

A clear majority of economists expect the Fed to do something. The prevailing choice is what is being referred to as “Operation Twist,” where the Fed exchanges shorter-dated Treasuries for bonds in an effort to drive down long-term rates.

However, the dramatic rally in the US bond market suggests this already may be priced in.

WHAT TO WATCH

One of last week’s casualties was the euro. Watch it closely this week, because a further break could exacerbate the Eurozone problems. Gold had another sharp setback last week, but finished the week strong and well off the lows.

The stock-market rally last week clearly improved the technical outlook, as many of the major averages came very close to key support on last Monday’s opening. Further strength is needed this week to signal a rally above the prior highs, which would likely stop out a few of the short positions.

After the current rally runs its course, the following pullback will be important. It will give us a better idea of whether a test of the August lows lies ahead.

Click to Enlarge

S&P 500
 

The Spyder Trust (SPY) made it up to $121.97 on Friday, which was just below the prior closing high. Traders likely have stops now above $123.51.

The upper boundary of the flag formation (line a) and the 61.8% Fibonacci retracement resistance is at $126.85. A daily close above this level will suggest that the August lows will hold.

Monday’s low at $114.05 briefly violated the lower support from the flag formation (line b) at $114.38. There is short-term support now at $119, with stronger levels in the $116 to $116.60 area.

The number of advancing issues was strong last week, as the S&P 500 A/D line has moved slightly above its downtrend (line c). It needs to rally higher to suggest that a short-term uptrend is in place.

It is important that key support (line d) holds on any correction.

Dow Industrials
 

The Spyder Diamonds Trust (DIA) dropped below support at $109.18 on Monday, down to a low of $108.15, before reversing to the upside. The next level of resistance to watch is between $115.30 and $117.03, which was the high of the previous rebound.

The 50% retracement resistance stands at $117.78, with the trendline resistance (line 3) at $118.60.
 

First support for DIA is now at $113, with stronger levels in the $109.90 to $112 area.

The Dow Industrials A/D closed for one day below the long-term uptrend (line h) before reversing. It closed Friday just barely above the near-term resistance. A move well above the prior peak will improve the technical outlook.

Click to Enlarge

Nasdaq-100
 

The strength in the PowerShares QQQ Trust (QQQ) got the market’s attention last week, as it gained 6.4%. QQQ was able to close above the 61.8% retracement resistance at $56.07 last Thursday.

In Friday’s article, I took a close look at not only the PowerShares QQQ Trust (QQQ), but also the Select Sector SPDR Technology (XLK), Semiconductor HOLDRs Trust (SMH), and Apple (AAPL). The particularly bullish action in AAPL, a market leader, is a positive for the overall market.

Friday’s high was very close to the start of the next resistance at $56.80 to $57 (line a), with the 78.6% retracement resistance next at $57.71.

There is initial support at $55.20, with stronger support sitting at $54 to $54.50. A close below Monday’s lows of $52.57 would suggest the rally is over.

The Nasdaq-100 A/D line is acting the strongest, as it has convincingly broken its downtrend (line c) and has moved above the prior peak. This is consistent with a bottom formation. This was the only A/D line to hold above the 2011 support.

Russell 2000
 

The iShares Russell 2000 Index Fund (IWM) was up almost as much as the QQQ, but the chart still looks weaker. If we have begun a sustainable new rally, then the small- and mid-caps should eventually start to outperform.

There is next resistance at $72.50 to $73.84, with the major 50% retracement resistance at $74.82. Support now sits at $66.37 to $65.93, which if broken will signal a drop to the major 50% support at $60.54.

The Russell 2000 A/D line continues to look quite weak, as it dropped to new lows before last week’s rebound. It is still well below the previous highs.

Sector Focus
 

All of the major sectors were higher last week, but only technology was able to overcome the previous highs. The Select Sector SPDR Utilities (XLU) was a bit lower Friday, but it still looks like one of the strongest sectors.

For a healthy market, we need more than just these two sectors to push prices higher. It is possible that the Select Sector SPDR Consumer Staples (XLP) and Select Sector SPDR Health Care (XLH) will be able to breakout above the previous highs.

Oil
 

November crude oil held up well last week, and has reached the apex of its triangle formation. Therefore, an upside breakout above the resistance at $90.52 would be suspect.

The daily chart shows an apparent flag formation, which is likely just a pause in the downtrend. There is initial support now at $85, which is almost $3 below Friday’s close. A daily close below the $83.20 level would be more negative.

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The Week Ahead: This Is No Vacation for Investors

by Tom Aspray

This is going to be a long weekend as we wait for the markets to reopen on Tuesday, but there are some bright spots, writes MoneyShow.com senior editor Tom Aspray.

Last week, the hopes that the economy was not really that bad were supported by some of the economic data (such as auto sales) turning out better than expected.

The tone changed Thursday, as stocks opened weak, then rebounded sharply as the ISM Purchasing manager’s report came in stronger than expected.

The rebound was short-lived. New concerns over Bank or America (BAC) and Goldman Sachs (GS) helped stocks to reverse to the downside. The very weak close suggested that the rebound from the August lows was likely over.

Then the dismal monthly jobs report hit stocks hard Friday, as stocks opened sharply lower and the major averages closed near the lows.

The rally was classic in technical terms, as the Spyder Trust (SPY) came very close to retracing 50% of the decline from the July highs. Most of the major averages traced out flag formations, which are normally seen as interruptions in the downward weekly trend. I will share some more specifics below.

Click to Enlarge

The key question is whether the support zones derived from the recent rally will hold. If they do, we could see the formation of a short-term double bottom that would set the stage for a better rally.

The other alternative is that we will crash below the August lows and head to stronger support, but well below current levels.

There are some conflicting seasonal and historical trends that may give us some insight. The chart above, from The New York Times, shows that the third year of a presidential cycle is normally the best for stocks, showing a median gain of 18% since 1946—and 94% of the time, stocks rose in the third year.

To give you some perspective, the S&P 500 closed 2010 at 1,257.64, and is currently about 6.2% below this level.

Click to Enlarge

This clearly casts a positive historical light on the last quarter of the year…but first we have to survive September.

As this second chart reveals, over the past 40 years September has been the worst month of the year by a significant margin. February was the only other consistently lower month.

The sharply lower close in the US is likely to set the stage for further weakness after the holiday. It is thus likely that the global markets may be hit Monday, so this could carry over to Tuesday’s opening in the US.

Of course, we may try to stabilize by mid-week, as the nation gets ready for President Obama’s Thursday night speech.

With the negative trend in the economic reports over the past month, the market may not be ready for the ISM Non-Manufacturing Report due out on Tuesday. The rest of the week is pretty light, with the ICSC-Goldman store sales and the Beige Book out on Wednesday.

On Thursday, we get the weekly unemployment claims and data on international trade. Ben Bernanke is also scheduled to speak in the afternoon, with Obama on tap that night.

WHAT TO WATCH

Click to Enlarge

As I discussed early last week, many of the major commodity indices and the broad-based commodity ETFs and ETNs appear to have completed their corrections.

This may have important implications for some of the emerging markets, as many have charts that are much more constructive than those of the US or European market averages. One of the best continues to be Indonesia; the chart of the Market Vectors Indonesian Market Index (IDX) shows that the early August drop just took it back to its long-term uptrend (line a)
.
The weekly RS analysis is in a strong uptrend, as IDX continues to outperform the S&P 500. The weekly OBV is acting much stronger than prices, and it made a new high this week even though IDX is almost 10% below the July high of $34.99. This makes a new high in IDX very likely.

Stocks are likely to decline into the middle of the week. If stocks can then rally sharply, the technical outlook will improve.

The Spyder Trust (SPY) gapped lower Friday and closed near the lows. There is further support in the $116 to $117 area, with the uptrend (line d) in the $114.70 area.

A close below this support will suggest a decline to at least $112.40, if not the August lows at $110.27.
 

The rally reached the upper boundary of the flag formation (line c) and came within 20 cents of the 50% Fibonacci retracement resistance.

The McClellan oscillator, which hit a low of -446 in early August, rebounded all the way to +266 last Wednesday before turning lower Thursday. It closed Friday in the +60 area, and has broken its uptrend (line e).

Russell 2000

The small cap iShares Russell 2000 Index Fund (IWM) also peaked Wednesday, and followed Thursday’s weak close with a gap to the downside. There is minor support now at $66.50 to $67.50, with the lower boundary of its flag formation at $65.43.

The downside target from the flag formation is in the $56 area. There is a band of strong resistance now in the $71.40 to $74 area.

The Russell 2000 A/D line has just rebounded to resistance, and have now turned lower. It is acting weaker than prices, as it is closer to the August lows.

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Seeing double in thr Russell 2000?

by Kimble Charting Solutions

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Russell 2000 inverted ...

by Kimble Charting Solutions

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Repeating pattern ...

by Kimble Charting Solutions

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Russell 2000 updated

by Kimble Charting Solutions

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Breadth Divergence Between Large and Small Caps Continues to Widen

by Bespoke Investment Group

Whenever the major market indices have a big move in either direction, it often helps to look at the breadth of their underlying components in order to gauge the health of the rally or the decline. In early May when the small cap Russell 2000 hit a new high, we noted that cumulative breadth in the index had yet to hit a new high, thus not confirming the rally to new highs. Unlike the Russell 2000, breadth in the S&P 500 did hit new highs as the index itself also rallied to new highs.

In the chart below, we have updated the cumulative breadth for both the S&P 500 and Russell 2000. As shown, breadth for both indices is off of its peak levels. However, the downtrend in breadth that is forming for the Russell 2000 is considerably more well-defined than the S&P 500. Whether or not the S&P 500 follows the lead of small caps is unknown, but until the pattern for small caps changes, investors would be best served staying away.

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Recent Trades Of Ninja Trading Systems

Dopo gli ottimi risultati dei giorni scorsi il nostro Ninja Trading Systems ieri ha chiuso con una piccola perdita i trades su eMini Russell e T-Bond e sostanzialmente in pareggio su eMini S&P. Qui sotto i relativi screenshot. I risultati storici di Ninja System sono disponibili ai seguenti link: http://www.box.net/shared/static/oam4a02b4m.xls, http://www.box.net/shared/c22rgem896. I risultati di alcuni altri nostri trading systems sono a disposizione al seguente link: http://www.box.net/shared/5vajnzc4cp

After the excellent results of recent days our Ninja Trading Systems yesterday closed with small loss the trades on eMini Russell and T-Bond and substantially in balance on the eMini S&P. Below the screenshots. Historical results of Ninja System are available at the following links: http://www.box.net/shared/static/oam4a02b4m.xls, http://www.box.net/shared/c22rgem896. Historical results of our some other trading systems are available at the following link: http://www.box.net/shared/5vajnzc4cp


Material in this post does not constitute investment advice or a recommendation and do not constitute solicitation to public savings. Operate with any financial instrument is safe, even higher if working on derivatives. Be sure to operate only with capital that you can lose. Past performance of the methods described on this blog do not constitute any guarantee for future earnings. The reader should be held responsible for the risks of their investments and for making use of the information contained in the pages of this blog. Trading Weeks should not be considered in any way responsible for any financial losses suffered by the user of the information contained on this blog.

Survivor Trading System - Trades of 3 March

I trades di Survivor System del 3 Marzo. I risultati storici di Survivor System small version sono disponibili ai seguenti link: http://www.box.net/shared/static/giq7mp90fq.xls, http://www.box.net/shared/6koqmtmnsb I risultati storici e MTM di alcuni altri nostri trading systems e portfolio systems sono a disposizione al seguente link: http://www.box.net/shared/5vajnzc4cp

Trades of Survivor System on 3 March. Historical results of Survivor System small version are available at the following links: http://www.box.net/shared/static/giq7mp90fq.xls,, http://www.box.net/shared/6koqmtmnsb. Historical and MTM results of our some other trading systems and portfolio systems are available at the following link: http://www.box.net/shared/5vajnzc4cp


Material in this post does not constitute investment advice or a recommendation and do not constitute solicitation to public savings. Operate with any financial instrument is safe, even higher if working on derivatives. Be sure to operate only with capital that you can lose. Past performance of the methods described on this blog do not constitute any guarantee for future earnings. The reader should be held responsible for the risks of their investments and for making use of the information contained in the pages of this blog. Trading Weeks should not be considered in any way responsible for any financial losses suffered by the user of the information contained on this blog.

New Big Gains On eMini Russell With Our Ninja Trading System

Il nostro Ninja Trading System anche oggi ha chiuso un ottimo trade su eMini Russell, realizzando in poco più di un giorno di trading $ 1200 per contratto. Qui sotto abbiamo inserito il relativo screenshot. I risultati storici di Ninja System sono disponibili ai seguenti link: http://www.box.net/shared/static/oam4a02b4m.xls, http://www.box.net/shared/c22rgem896. I risultati di alcuni altri nostri trading systems sono a disposizione al seguente link: http://www.box.net/shared/5vajnzc4cp

Our Ninja Trading System also today closed a good trade on eMini Russell, achieving in just over a day of trading $ 1200 per contract. See the screenshot below. Historical results of Ninja System are available at the following links: http://www.box.net/shared/static/oam4a02b4m.xls, http://www.box.net/shared/c22rgem896. Historical results of our some other trading systems are available at the following link: http://www.box.net/shared/5vajnzc4cp


Material in this post does not constitute investment advice or a recommendation and do not constitute solicitation to public savings. Operate with any financial instrument is safe, even higher if working on derivatives. Be sure to operate only with capital that you can lose. Past performance of the methods described on this blog do not constitute any guarantee for future earnings. The reader should be held responsible for the risks of their investments and for making use of the information contained in the pages of this blog. Trading Weeks should not be considered in any way responsible for any financial losses suffered by the user of the information contained on this blog.

Big Gains On eMini Russell and Gold With Our Ninja Trading System

Il nostro Ninja Trading System ieri ha chiuso un ottimo trade su eMini Russell, inoltre sta gestendo una posizione aperta a rialzo sul Gold che sta realizzando $ 5000 c.a. per contratto. Qui sotto abbiamo inserito gli screenshot dei trades chiusi recentemente su eMini Russell e eMini S&P e quello in corso sul Gold. I risultati storici di Ninja System sono disponibili ai seguenti link: http://www.box.net/shared/static/oam4a02b4m.xls, http://www.box.net/shared/c22rgem896. I risultati di alcuni altri nostri trading systems sono a disposizione al seguente link: http://www.box.net/shared/5vajnzc4cp

Our Ninja Trading System yesterday closed a good trade on eMini Russell, also is managing a Long trade on Gold who earning $ 5000 c.a. per contract. Below we have included screenshots of recently closed trades on eMini Russell, eMini S&P and the current trade on Gold. Historical results of Ninja System are available at the following links: http://www.box.net/shared/static/oam4a02b4m.xls, http://www.box.net/shared/c22rgem896. Historical results of our some other trading systems are available at the following link: http://www.box.net/shared/5vajnzc4cp


Material in this post does not constitute investment advice or a recommendation and do not constitute solicitation to public savings. Operate with any financial instrument is safe, even higher if working on derivatives. Be sure to operate only with capital that you can lose. Past performance of the methods described on this blog do not constitute any guarantee for future earnings. The reader should be held responsible for the risks of their investments and for making use of the information contained in the pages of this blog. Trading Weeks should not be considered in any way responsible for any financial losses suffered by the user of the information contained on this blog.

Our Ninja System Take Good Profit On eMini Russell

Dopo qualche piccola perdita, il nostro Ninja System ha preso profitto su un buon trade a rialzo su eMini Russell, chiudendo la posizione sugli attuali massimi di giornata. Ninja System sta guadagnando molto bene anche sugli altri trades attualmente aperti a rialzo su eMini S&P, Gold e Crude Oil. I risultati storici di Ninja e di alcuni altri nostri trading systems sono a disposizione al seguente link: http://www.box.net/shared/5vajnzc4cp

After some small loss our Ninja Systems has taken a good profit on buy trade on eMini Russell, closing position on the current high of the day. Ninja System is gaining very well also on other long trades that are currently open on eMini S&P, Gold and Crude Oil. Historical results of Ninja and our some other trading systemsare available at the following link: http://www.box.net/shared/5vajnzc4cp


Material in this post does not constitute investment advice or a recommendation and do not constitute solicitation to public savings. Operate with any financial instrument is safe, even higher if working on derivatives. Be sure to operate only with capital that you can lose. Past performance of the methods described on this blog do not constitute any guarantee for future earnings. The reader should be held responsible for the risks of their investments and for making use of the information contained in the pages of this blog. Trading Weeks should not be considered in any way responsible for any financial losses suffered by the user of the information contained on this blog.

Survivor Trading System Results - Trades of 17 February

I trades di Survivor System del 17 Febrraio. I risultati storici di Survivor e di alcuni altri nostri trading systems sono disponibili al seguente link: http://www.box.net/shared/5vajnzc4cp

Trades of Survivor System on 17 February. Historical results of Survivor and our some other trading systems are available at the following link: http://www.box.net/shared/5vajnzc4cp

Material in this post does not constitute investment advice or a recommendation and do not constitute solicitation to public savings. Operate with any financial instrument is safe, even higher if working on derivatives. Be sure to operate only with capital that you can lose. Past performance of the methods described on this blog do not constitute any guarantee for future earnings. The reader should be held responsible for the risks of their investments and for making use of the information contained in the pages of this blog. Trading Weeks should not be considered in any way responsible for any financial losses suffered by the user of the information contained on this blog.

Ninja Trading System– Recent Closed Trades

I trades di Ninja System del 15 Febrraio. I risultati real-time di Ninja e di alcuni altri nostri trading systems sono a disposizione al seguente link: http://www.box.net/shared/5vajnzc4cp

Trades of Ninja System on 11 February. Real-time results of Ninja and our some other trading systemsare available at the following link: http://www.box.net/shared/5vajnzc4cp


Material in this post does not constitute investment advice or a recommendation and do not constitute solicitation to public savings. Operate with any financial instrument is safe, even higher if working on derivatives. Be sure to operate only with capital that you can lose. Past performance of the methods described on this blog do not constitute any guarantee for future earnings. The reader should be held responsible for the risks of their investments and for making use of the information contained in the pages of this blog. Trading Weeks should not be considered in any way responsible for any financial losses suffered by the user of the information contained on this blog.

Survivor Trading System - Trades of 11 February

I trades di Survivor System del 11 Febrraio. I risultati real-time di Survivor e di alcuni altri nostri trading systems sono a disposizione al seguente link: http://www.box.net/shared/5vajnzc4cp

Trades of Survivor System on 11 February. Real-time results of Survivor and our some other trading systemsare available at the following link: http://www.box.net/shared/5vajnzc4cp

Survivor Trading System - Trades of 10 February

I trades di Survivor System del 10 Febrraio. I risultati real-time di Survivor e di alcuni altri nostri trading systems sono a disposizione al seguente link: http://www.box.net/shared/5vajnzc4cp

Trades of Survivor System on 10 February. Real-time results of Survivor and our some other trading systemsare available at the following link: http://www.box.net/shared/5vajnzc4cp

Survivor Trading System - Trades of 3 February

I trades di Survivor System del 3 February. I risultati real-time sono a disposizione al seguente link: http://www.box.net/shared/5vajnzc4cp

Trades of Survivor System on 3 February. Real-time results are available at the following link: http://www.box.net/shared/5vajnzc4cp

Survivor Trading System - Trades of 1 February

I trades di Survivor System del 1 February. I risultati real-time sono a disposizione al seguente link: http://www.box.net/shared/5vajnzc4cp  


Trades of Survivor System on 1 February. Real-time results are available at the following link: http://www.box.net/shared/5vajnzc4cp