A Message from Market Internals at the Nov 3 High

Nov 4, 2014: 11:28 AM CST

While price screams “higher, higher!” Market Internals yell “Caution!  Look out below!”

Let’s see who’s winning the battle of Price vs. Internals as the S&P 500 crept to a recent all-time high.

I highlighted three events where Market Internals aligned with – or confirmed – the upward price action.

When Market Internals make new highs along with price, it suggests ongoing strength and that the trend will likely continue higher (thus look to buy retracements or breakouts as price trades higher to continue the trend).

However, divergences – or lower highs in Internals while price is making a higher high – are caution signs that suggest ceasing buying pullbacks and shifting to a more defensive posture ahead of a retracement (or short-term reversal).

That’s what is happening now as price pushed to a new all-time high yesterday on weaker internals (particularly Breadth and TICK highs). Continue Reading…

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November 3 Breakout Market Update and Stock Scan

Nov 3, 2014: 2:34 PM CST

Stock prices continued to creep higher after breaking above the 2,000 level in the S&P 500.

Sellers stopped out and buyers entered, helping to propel price higher in a breakout event.

Here’s our updated levels as the S&P is inflated to all-time highs:

The impulsive breakout above 2,000 on Halloween set the stage for a continued bullish breakout and movement up away from the 2,000 level.

The instant (simple) target was the prior all-time price high into 2,020 … and then even beyond that.

Ultimately, the market remains bullish while moving through “open air” and all-time highs beyond the 2,020 level.

The market thus becomes cautious on a re-break or potential Bull Trap under 2,020.

Continue Reading…

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Fed Aftermath Market Update and Stock Scan for October 30

Oct 30, 2014: 2:35 PM CST

At the end of QE3, stocks continued higher on the reported GDP growth and the S&P 500 tagged the underside of the 2,000 index target.

Let’s update our levels and note the top trending stocks so far in today’s post-Fed session:

After a logical sell-off from a knee-jerk reaction to yesterday’s “End of QE3″ announcement (see yesterday’s post), stocks traded higher and broke sharply higher on a Bull Flag pattern earlier this morning.

The result was a short-squeezed impulse toward the 2,000 index target, at which point the S&P 500 turned lower and traded into the 1,990 support confluence.

For now, we’re monitoring the neutral zone between 1,990 and 2,000 with a breakout above 2,000 setting the stage for a future rally to new all-time highs… or a move under 1,990 targeting the 1,980 or even 1,975 downside targets. Continue Reading…

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Three Knee-Jerk Reactions to the Federal Reserve End of QE Announcement

Oct 29, 2014: 2:35 PM CST

The cross-market landscape reacted predictably to the end of the QE3 policy experiment and we’re monitoring follow-through from these initial movements.

Let’s take a look at three key markets and how they reacted to the expected news:

A quick, zoomed-in perspective shows a knee-jerk sell-off in Gold which was accompanied by a knee-jerk buying surge in the defensive TLT (Treasury ETF) and the US Dollar Index (seen here as the UUP ETF). Continue Reading…

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Fed Day End of QE3 Market Update and Stock Scan Oct 29

Oct 29, 2014: 1:15 PM CST

As expected, the Federal Reserve announced an end to its QE3 stimulus program and stocks reacted immediately with a knee-jerk sell-off lower.

Let’s update our levels and note the top trending stocks so far in today’s special session:

Continue watching price action closely in the high volatility period after today’s Federal Reserve announcement.

The key level will be the 1,975 index in the S&P 500 and a break above the 1,983 level could trigger an impulsive bull flag breakout.

Otherwise the market is a bearish play under 1,975.  The Fed Day aftermath makes today unique. Continue Reading…

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