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stock market updates - Factor Trading - Peter brandt

Stock Market Updates

Stock Market Updates

It is with some discomfort that I am always pointing out potential tops in the U.S. stock market indexes. But, I must call them as I read them. The S&P daily chart has made ZERO upward progress in 18 months. A possible complex H&S top formation is under construction. Also note the appearance of a 7-week H&S top pattern. I am willing to short this smaller H&S pattern if given a well-defined risk point. I will give up on a bearish interpretation of the S&Ps if a new high is made – but this does not mean I would have any interest in being long in new high territory.

The Nasdaq is tracing out a possible broadening top, although as I have pointed out in recent updates, the rally from the Feb 2016 low has exceeded the normal construction of a true broadening top. Outside of the Nifty (India), the Dow Utilities (dividend play) and the Japan Mothers Index, I have a hard time finding a futures market index I am willing to own.

 

S&P 500 completed head and shoulders top - Stock market updates - Factor Trrading - Peter Brandt

 

Nasdaq is tracing out a possible broadening top - Stock market updates - Factor Trrading - Peter Brandt

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Is the present decline in the S&Ps a déjà vu of 2011?

 

Examining the chart structures of 2011/2012 with the present period

Classical charting principles at the core represent analog analyses -- that certain price patterns tend to repeat over time with slightly different variations.

An interesting analog situation has developed in the S&Ps. Some technical analysts have declared that the current market construction is analogous to 2011/2012 and will be similarly resolved by a continuation of the dominant bull trend. I completely disagree. Let’s examine the construction components of each period. The top chart is the S&Ps during the 2011/2112 period. The bottom chart is the current market.
  • Both periods had a textbook H&S top and, coincidentally, each top was completed in the month of August -- both marked as Stage 1
  • Both periods quickly met the target of their respective H&S top patterns only to develop a period of extreme volatility -- both marked as Stage 2
  • Both periods then rallied sharply back into the price zone of the initial H&S top pattern only to develop an other range of volatility -- both marked as Stage 3
2.23_ES_2011.2012 2.23_ES_2015.2016 Read More

The chart case for a bear market in U.S. equities

 

All major U.S. stock indexes are forming potential tops

A case can be made based on classical charting principles that the current decline in the U.S. equity markets is just phase one of a larger price decline -- in other words, that U.S. stocks are in a bear market. Consider the following. Factor believes that the most significant price of the day is the closing price and the most signficant price of the week is Friday's closing price. The weekly closing price chart of the DJIA displays a possible H&S top pattern. This top has not yet been completed, but a Friday close below 15,800 would do so. 2.14_DJI_Wc Read More

The U.S. stock indexes are NOT making H&S tops!!!

Xmas tree H&S  

Note: The post herein was absolutely wrong on the analysis of the H&S top in stock indexes. Guess what -- traders are wrong from time to time. I make bold calls and some are right and some are wrong. At the end of the day, price is king and nothing else matters. Members of the Factor research service know that I over-rode the analysis herein on January 6, cautioning that the stock market had deep internal trouble.

Classical charting principles have rules. The Head and Shoulders is a classical chart configuration. The apparent and well-advertised H&S top in the U.S. stock indexes do not meet the rules.

Perma-bears, a H&S top is not sitting for you under the Xmas tree!

Sorry to all of you stock market doomsayers, but labeling the U.S. stock index charts as H&S tops just does not work. Volume is an important criteria upon which to judge the validity of the H&S patterns. Richard W. Schabacker (Technical Analysis and Stock Market Profits), and later, John Magee and Robert Edwards (Technical Analysis of Stock Market Trends), are considered the pioneers in classical charting principles. According to the founders of classical charting, as a rule volume should be greatest in the left shoulder or head and lightest in the right shoulder in order to validate a H&S pattern. As the charts of the Dow Jones Composite, Dow Industrials and S&P 500 show below, the largest slug of volume has been in the right shoulder. This is NOT a sign of a valid H&S pattern, thus the interpretation of a H&S top in the U.S. stock index charts is not likely to be correct. 12.23_DJIA Read More

The Chart of the Month — MSCI World Index building a top??

 

MSCI World Index forming a massive 2-year H&S top

The MSCI Index appears to be rolling over in a right shoulder of a significant top pattern. One must be blind not to notice the similarities between this potential top and the chart top completed in 2008. Also, notice how the right shoulder held at the 6+ year trendline. The completion of the H&S top would also violate the trendline. A completion of this top could lead to a decline toward 1400. MSCI   But I am NOT a doomsayer. In U.S. stocks I am NOT a bear and I am NOT a bull. In fact, I believe the S&Ps will remain in a range of 10% above the recent high to 10% below the recent low for the next five to eight years. 12.14_SPX Read More

S&Ps — a breakaway down gap is very possible

 

Will the June 29 down gap in S&Ps become a breakaway gap of major technical importance?

Gaps in almost all markets are unimportant because of their frequency. But unfilled gaps in some markets carry serious technical significance because of their rarity. Uncovered gaps in such markets as Gold ($GC_F), S&P futures ($ES_F), $EURUSD and $USDJPY are extremely rare. When the possibility of an unfilled gap develops, traders must be on high alert.

With the “No” vote in Greece, global stock markets may come under strong downward pressure when they open just a few hours from now. A sharp downward move in the S&P futures would set up the very real possibility that the June 29 down gap — presently unfilled — will become a breakaway gap of major technical importance.

7.05_S&Ps_D

Unfilled gaps in S&P futures are extremely rare. The last unfilled daily gap occurred with the advance on January 2, 2013, as shown below. This gap resulted in an advance by the S&Ps of 49.9% to the May 2015 high.

7.05_S&Ps_D_Jan13

An unfilled gap also occurred on July 15, 2009 (see chart below), resulting in a 62.4% rally to the September 2012 high.

7.05_S&Ps_D_July 2009

Perhaps the Greek vote will be viewed as a positive for U.S. stocks — we should know this within the next few days. But, the longer the June 29 down gap remains uncovered, the more technically significant it will become.

7.05_S&Ps_M

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Some shorter-term charts that are ready to move

Nasdaq ($NQ_F, $QQQ), S&Ps ($SPX, $ES_F), Apple ($APPL), NYSE Composite Index ($NYA) and Nike ($NKE) appear ready for a strong advances

Hey all you stock market bears, get prepared to fade these breakouts!

 

4.23_AAPL 4.23_ES_D 4.23_NKE 4.23_NYA 4.23_QQQ

Analyses of these charts — and many others — are routinely provided to members of the Factor Email Service (see upper menu bar)

 

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Chart patterns I am watching this week

 

The following is the weekly Factor Update sent to members of the Factor service for the week of September 7, 2014. To become a member of the Factor service, click here for “Subscription Membership.”  If the pdf is not visible below, click here.

 

http://www.scribd.com/doc/239067009/Factor-Update-September-7-2014

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A lesson in charting — great trendlines often begin at a price gap

 

S&Ps are in a very well-defined price channel — a decline toward 1900 is possible

Beginners in the art of price charting desire to draw trendlines and boundary lines using orthodox high and low prices. Experienced chartists learn that charting is a much more nuanced craft.

The S&P futures market serves as a case in point.

Novice chartists would draw a trendline using the Nov 2012 orthodox low. However, trendlines are often born from important price gaps. The Jan 2, 2013 gap in S&P futures stands as a daily, weekly, monthly and yearly breakaway gap. Thus, a trendline is best drawn using this gap, not the Nov 2012 low.

On a daily chart, the S&P futures have been advancing within the boundaries of a 19-month price channel. Prices are finding resistance at the upper end of this price channel. Should the upper boundary turn prices down, the most likely support would be the lower channel line in the price zone of 1895 to 1905 (box). Interestingly, the 1895 level was significant resistance from Mar through May 2014. Often times, resistance, once penetrated, becomes support. This is NOT a prediction of a price decline to 1900. Personally, I think too many market participants are expecting a price correction for one to happen. Yet, a trader must constantly be prepared for a variety of scenarios.

7.30_ES_D

In my opinion (not worth much), the key to the S&Ps will be found int he NYSE Composite Index. $NYA is forming a well-defined H&S top pattern. A decisive close below 10,880 would complete this top and leave the S&Ps vulnerable for a decline to 1900.

7.30_NYA_D

 

$ES_F, $SPY, $NYA

 

This type of market research and charting lessons are continuously provided to subscribers to Factor membership. See information on the menu bar at the top of this page.

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If you want to be short U.S. stock indexes, do it with your enemy’s money

 

Major global indexes are making new all-time highs

 

Around the world, major stock market indexes are registering new all-time highs. Are these false breakouts, or an indication that further advances are in progress?

The German DAX is registering a new high, completing a continuation H&S pattern on the daily chart.

5.26_DAX_M

5.26_DAX_D

The S&P 500 posted a new all-time closing price high on Friday. The daily graph has arguably completed a 11-week continuation H&S pattern with a target of 1972.

5.26_ES_M

5.26_ES_D

The India Nifty 50 (traded in Singapore) is in a major bull market with targets as high as 7950, then 9500.

5.26_N50_W

 The monthly chart of the U.K. FTSE is poised to make a new all-time high on the monthly chart. The daily chart is forming a coil that could launch the monthly chart pattern.

 5.26_ZX_M

5.26_ZX_D

There is a secret to being short these markets — get short with your enemy’s money.

$SNF_F, $ES_F, $FTSE, $DAX, $EWU, $EWG

 

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