Quick Color Structure V-Spike Update Oct 28

Oct 28, 2014: 12:07 PM CST

Let’s take a quick glance at the “Color Structure” of the S&P 500 on the V-Spike Reversal into Resistance and chart possible price pathways from here.

We’ll start with the V-Spike Reversal Pattern on the intraday color chart:

We’re seeing the Color Structure grid which quantifies swings in the market (and impulsive phases like the purple area).

We have a green upswing into the prior resistance price cluster near 1,980 and we’re watching this level extremely closely. Continue Reading…

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Opportunities from Three Stocks Extended Nine Days in a Row Higher

Oct 27, 2014: 12:24 PM CST

At the moment, three stocks have traded higher nine days in a row and may be ripe for a pullback.

Let’s highlight these three names from our simple scan and note potential opportunities from these lesser-known names.

We’ll start with Darden Restaurants (DRI):

All stocks will have the same logic but of course be sure to do additional analysis if you’re considering trading these candidates.

Each stock has closed nine consecutive days in a row higher in an impulsive move and logic suggests a pullback or stall is more likely than an extension well beyond 10 consecutive days in a row to the upside.

This is a mean reversion type of aggressive strategy. Continue Reading…

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The Make or Break Trading Level for Caterpillar CAT

Oct 27, 2014: 11:51 AM CST

Caterpillar shares (CAT) face a critical “Make or Break” Resistance test near the $100 per share level.

Let’s highlight this level and note the breakout bullish play above or the resistance sell-swing beneath it.

I like to keep analysis simple, and the simplest plan here is to reference the key resistance at the $99.00 per share level.

Note the highlighted bar at this level and the price movement into the underside of the 50 day EMA and 200 day SMA. Continue Reading…

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Fun Facts from 2014 About Up and Down Days in the Market

Oct 23, 2014: 3:04 PM CST

Like any year, 2014 has seen its share of ups and downs in the market (more ups than downs, actually), so I thought it’d be interesting to compare the up and down days for the S&P 500 so far in 2014.

If anything, it’s a different way to see price and study the character of the market.

Let’s start with a special look at just the up-days that have taken place so far in 2014:

While there’s dozens of methods to view charts, you’ve likely never seen a “up-day only” chart!

Nevertheless, we can look at the frequency (number of up-days in a row) and size of the up-days in 2014.

Specifically, there have been 115 up-days so far in 2014 (out of 203 days), which means that 57% of days in 2014 have been positive.

Taken together, the Average of all up-days in 2014 is 9.3 points in the S&P 500 with a Standard Deviation of 7.40. Continue Reading…

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Stepping Inside Sector Strength During the October Rally

Oct 23, 2014: 12:19 PM CST

When we see large price movements in the market – like our recent strong rally over the last week – we can break down the picture into smaller pieces by looking at “Sector Strength.”

We can study which sectors were strongest, which lagged behind, and what this may suggest for the broader market.

Let’s take a look at Sector Strength on the way down from 1,900 (on the S&P 500) and now the path higher:

When discussing sectors, we often break them down into the six “Risk On” or Offensive Sectors that typically do best (outperform) during bullish market phases.

These include Financials, Discretionary, Technology, Industrials, Materials, and sometimes Energy.

We then break down the other sectors as “Risk-Off” or Defensive sectors that tend to do best during down-markets or retracements.

Let’s focus our attention first at the bottom of the chart on the “Defensive” Sectors of Staples, Health Care, and Utilities. Continue Reading…

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