The fact that the Q’s rallied hard today does not impress me. I have traded QLD for years and have been trading TQQQ since in came out, but I’m not messing around with the Q’s here. All that has to happen is for another AAPL bad hair day and any and all gains that may have been made will just evaporate. I still think AAPL has a long way to go before it bottoms and it’s very possible that I’m totally wrong about this but for now I’m just going to avoid Big Tech in favor of small caps and $SPX.
Next, I see nothing in breadth indicators that shows the market to be overbought here. Even the RSI 14 for QQQ, IWM, SPY, & DIA in the 60min time frame backed off from the 70 area going into the close so none of these ETF’s is really showing overbought. But that doesn’t change the fact that today’s candle on the $SPX is very similar to other topping candles that have formed over the last several months. I’ve highlighted all that appear in up moves and you can see that, with one exception, these candle types have marked turning points in the market of one type or another, either pull backs or consolidations.
This is a large chart and apparently it’s too large for WordPress. If you click on it, it will open in a new window but even then it’s not that easy to read.
I don’t know why the market rallied today. Not a clue. If it was because of the Fed meeting, then what’s newsworthy about that? Everyone already knows what the Fed is going to do: buy more bonds. What’s going to happen tomorrow when this is announced? Rally like it’s 1999? Well, I guess we’ll have to wait and see.
GL & be careful.
Today’s 19cent gain in the Q’ was not enough to push the 13EMA up through the 34EMA on the 60min chart so Q’s remain on the ‘Avoid’ list for now.
Tough day for $SPX but it did manage to close above the 50MA for the first time since September, partly because the 50MA has been falling since then. I think it’s important now for $SPX to close above the swing high from last week of 1423.73 as that would send a clear signal that the index can go higher. But that is certainly going to be easier said than done as today’s 2.1billion shares suggests that new money may be taking a wait and see approach to the market now, for obvious and various reasons.
Daily chart of $SPX which for me does not inspire much confidence. Even though $SPX closed today at a new high for this move, it is certainly not moving with much conviction and is not giving me any reason to add to my current long positions. I’m just waiting for some kind of decisive break, one way or the other, before I do anything else.
GL & be careful.
Intra-day breadth continues to be a problem, but it’s not a perfect world and there are always problems. If the current situation does not morph soon, then the Summation Index/$NYSI will start giving negative readings. Since peaking with a reading of +57 on Thursday, November 29th, the daily readings of $NYSI have dropped steadily with this past Friday’s reading coming in at +22. The Summation Index is always early in warning of underlying weakness and often times the weakness turns to strength without the markets or anyone else being the wiser. There is no ‘sell’ signal on the $NYSI chart that I use and though I’m watching this closely I see no reason for anything other than concern for now. I have been and remain long UPRO & TNA and I’m not about to bail on these here, subject to change at any time without notice.
Well, AAPL continues to put Big Tech under pressure, and I don’t think we’re anywhere near the end of AAPL’s decline. For all I know, AAPL could drop another $200 to $300 dollars from current levels before it finds equilibrium. If not for the $SOX index being up 1.37% on the week, the Q’s and $COMPQ would have been down a lot more than they were and so as long as the $SOX keeps rallying then the decline in the Q’s and $COMPQ is just going to grind lower giving little comfort to shorts, IMHO, of course.
60Min chart of the Q’s showing them moving below the 13/34 EMA’s. Also note that 200EMA has flattened out and if the Q’s don’t rally early next week then the 200EMA will roll over. I’m going to keep the upper falling trend line in place unless the Q’s take out 64.53, the low swing point from last week. If the Q’s fall below 64.53, then it will show that it can and probably will go lower so then I’ll move the upper trend line to show a much larger falling price channel. You could argue that the Q’s have broken out of the Bull Flag pattern but it’s a pretty weak argument.
Click on the charts to open them in a new window.
Daily chart of $SPX showing it moving up, though without much conviction. Proof that $SPX wants to and can go higher will come with a close above 1423 and then 1434. On the other hand, should $SPX break below the trend line and then close below 1409.28 then that would be a sign that $SPX can go lower and may want to go even lower.
Even though I’m concerned about intra-day breadth, I expect we’ll see new highs before we see new lows next week, or famous last words. And if there is any kind of positive news out of Washington over the weekend, then obviously we’ll rocket higher for at least one day. After that, who knows?
GL in the week ahead.
Added at 8:00pm ET:
I’m sure this is pretty obvious to everyone, but the market is struggling. It’s Thursday and $SPX is still down 2pts on the week. Two green days have not brought us back to where we were last week. The last two green days have come on very weak intra-day breadth. On Wednesday we had 1579 advancers vs 1442 decliners and today we rallied with 1605 advancers vs 1429 decliners. On Wednesday almost twice as much volume went into advancing issues but today advancing volume exceeded declining volume by only 80 million shares. By contrast, in a strong market advancing issues would number somewhere around 2000, decliners would come in close to 1000, and volume would be heavily skewed toward advancing issues somewhere around 3:1. Based on today’s numbers, $SPX should have only added a point or so, not the 4.66pts it actually did add. It’s seems to me that there’s some churning going on under the hood, which is code for “distribution.” If this kind of dynamic does not change right away, then the markets just won’t be able to go up and will fall of their own weight. There’s always tomorrow and maybe things will be different but if not then I’m going to start getting extra krispy paranoid which really isn’t much of a stretch for me.
GL & be careful.
Just a chart of the Q’s for now. Thinking this was just a dead cat bounce today. Really have to wait until tomorrow’s close to know for sure.
AAPL being down almost 6.5% today put a lot of pressure on the $COMPQ and $NDX/QQQ’s, but this was also too much for the $SPX. Don’t know when this is going to change, if ever, but until it does then expect more pressure on the above.
60min chart of the Q’s showing that even though it got hammered today it probably didn’t get hammered enough. Q’s are also moving within what for now should be considered a bull flag, but if AAPL doesn’t find buyers soon then it could turn into something more sinister. Should the Q’s drop below the swing low of 64.26, then they could be headed back below 62. To prevent this, the Q’s are going to need to break out of this bull flag pattern pronto.
IMHO, $SPX should have taken back more than 2.23pts today and instead should have recovered all of Monday’s and Tuesday’s losses, like we’ve seen so many times before. There’s always tomorrow but if $SPX does not make a new high soon, then we are probably looking at a change in market dynamics like we saw after the September high.
Stay on your toes and GL.
AAPL was down 1.76% today and if this is the start of AAPL’s next leg down then the general markets will tag along and that’s all there is to it. If AAPL does not rebound tomorrow or soon after then you just have to be prepared for the fact that this little rally leg has run its course.
Daily chart of $SPX showing an indecision candle today. Since it’s a red candle it has to be seen as bearish for now. Last week we had a two day pull back and then pushed to a new closing high. Now that we’ve had two days of pull back, we should expect a snap back for tomorrow, and if we don’t get that then I’m going to start getting ‘sell’ signals on the daily charts.
There’s no way to know yet whether what we’re seeing is just some good old fashioned profit taking or selling in an effort to avoid the new capital gains taxes. $SPX traded 2.5 billion shares today, which is about right. I think that if we start to see heavier volume then that could be a sign of tax selling. That’s what I’ll be watching for.
GL and be careful.
In closing below 1411.63, $SPX not only confirmed that last Friday’s Doji was a reversal Doji but $SPX took back almost all of last week’s gains. It appears we’re set up for a pull back of one degree or another. Last week’s pull back lasted just two days and that might be the case this time.
Today’s nearly 7pt drop was not enough to trigger any ‘sell’ signals so, IMHO, the market remains a ‘hold’ at this time.
On the chart below, you can see that $SPX is now trading below the rising trend line. That trend line was always too steep so once we find out if the market is truly going to roll over or if it’s just pausing before the next move up then I’ll move the trend line. Also, the RSI 14 has broken its trend line, which was too steep, as well, and I will adjust it too. I don’t have a problem moving either of these trend lines as long as the recent low of 1343.35 holds because until then we’re just looking at a higher low type of situation. Should 1343.35 give way before the market stabilizes, then that’s another story. But we’re not there yet.
ISM number and the stand off in D.C. certainly had an impact on the markets today. No idea what will move the markets tomorrow.
GL & be careful