Saturday 27 April 2013

Weekend update - US weekly indexes

The US indexes saw net gains of between 1.1-2.5%, with the Rus'2000 small cap leading the way. The Dow was the laggard this week. Despite the gains, none of the indexes made new highs though, and that is indeed the one thing the bears can still be relieved about.

US markets about to get burnt?

Lets take our regular look at six of the main US indexes..

IWM (repre' Rus'2000 small cap)

The R2K was the leader this week with gains of 2.5%, yet the weekly chart is very clear, we're putting in consistently lower highs. Bulls beware!

Despite the gains, the MACD (blue bar histogram) cycle ticked lower, and is now in its second week in negative territory. First key downside is a break of the 89s..and proceeding to the 85s - the old resistance from last September.

Nasdaq Comp

The tech sector came very close to breaking a new high..but just fell short by less than 1%. MACD cycle ticked higher, but still looks set to go negative cycle within the next week or two. First downside target is a weekly close <3200, and that will open up 3050/3000. Getting a weekly close <3000 is going to be VERY difficult.


The mighty Dow was the laggard this week with moderate gains of just 1.1%. MACD cycle is still 2-3 weeks away from going negative cycle, and we also await a bearish cross (black line below red).

First downside target are the 14300s, and then 14k. A weekly close <14k, would open up a hit of the lower bollinger - which by mid May will be around 13k. That's a very long way down right now, around 10%.


The master index saw gains of around 2%, and also came very close to breaking new highs...but failed. MACD cycle is negative for the second week running, First big downside target are the 8500s, that is 6-7% lower.


The all important SP'500 saw net gains of 27pts, with a weekly close of 1582. The Thursday high of 1592 was a mere 5pts shy of the April'11th high.

It would seem that we have put in a very important marginally lower high, and so long as 1592 is not broken over, bears should have some moderate confidence that a challenge of the 1536 low will be made within the next 3-7 trading days.

A break of 1536 will open up the February 1485 low, and that is just 10pts above the old resistance/highs of last September.

Primary objective should be a hit of the lower bollinger band, currently @ 1407, but by late May it will be around 1450. It looks extremely difficult to envision sub 1400s any time soon.


The old leader climbed 1.3%, but it is still putting in a general series of lower highs. As expected, the MACD cycle is now negative. A very obvious downside target are the 5400s, which is where the rising lower bollinger will be in the latter part of May.


So, the US market managed an up week, but we have arguably put in what I believe is a rather critical marginally lower high. I had been expecting a rally - to around the low 1570s, and it sure felt uncomfortable with that little foray into the 1590s.

Fortunately though, we've seen a little weakness to close the week, and it is now simply a case of whether the bears can kick this market down hard..or whether the bulls are going to get yet another attempt to take out the recent highs.

All things considered - not least the weekly index charts, I believe the market will break lower into May, and that we'll soon be trading <1500.

Holding to the original outlook - sp'daily5b - best guess

What is now absolutely straight forward is that this scenario gets thrown out if we see any daily closes above the Thursday 'marginally lower high' of 1592.

Arguably, bears need to see a very significant fall either Mon' or Tuesday. As usual, a 3-6hr bounce is then likely, before a sharper fall.

The lower bollinger on the daily is currently 1539. A daily close BELOW this lower band will be important this coming week.  But hey, first we need to take out that recent 1536 low.

Q. What about the big fall highlighted in late May ?

- It is just a possible bigger downward scenario/count I am keeping in mind. It will only have a chance of occurring if we are trading in the sp'1490/80s, arguably no later than May'10th.

Looking ahead

Next week is absolutely packed with data/events, there is something significant each day. Highlights include Chicago PMI data on Tuesday, ADP jobs on Wednesday, and also the headline BLS monthly jobs data on Friday. Market is expecting 153k gains with a static rate of 7.6%. Again, anything <100 would be a major disappointment.

However, perhaps even more important than the jobs data will be the FOMC. Yes, it is already time for another announcement from the paper printers at the US Federal Reserve - this Wednesday at 2pm.  As ever, it will be all about how the algo-bots interpret the fed speak.

*I am heavy short the indexes (via SPY), and Oil (via USO). I will look to exit at the end of any day where there are significant market declines, and seek a re-short the following day. Key objective are the sp'1490/80s, sometime this May.

back on Monday :)

Bonus video - from Ron Walker 'Chart Pattern Trader'

He remains somewhat overly on the 'doomster' train (which yes, coming from me sounds odd), but still, its worth a look, if you have a spare hour, and a lot of coffee/tea.

Daily Index Cycle update

The main indexes again closed mixed. The Dow and Transports managed fractional gains of 0.1%, the R2K lost 0.5%, and the SP -0.2% @ 1582. If the market has put in a key marginally lower high, then next week should see a much stronger wave lower, taking out sp'1536.


SP'daily5a - H/S formation idea



The indexes continue to be trading somewhat mixed these past few days. The Dow is still extremely resilient, and the marginally positive close was again testament that the 'dip buyers' are still out there.

What to make of this week?

Well, a bounce certainly was expected a week ago, but my expectation that it would get stuck around 1570 was a serious under-estimate. The five day rally to 1592 did one thing though, it put in an important lower high. Yes, it was a mere 5pts shy of 1597, but a lower still a lower high.

Even more important to keep in mind is that the recent low of 1536 was also a lower low.

So, we have a lower low...and a lower high in the past few weeks. That's a start, but I won't be pleased until the next down cycle takes out 1536. Once that is broken, we should be seeing some kind of major downside action to hit the primary target zone of sp'1490/80.

Its been a long week, so that's it for today.

Goodnight from London
*next main post will be late Saturday, on the US weekly index cycles.