Subscription service begins November 1st, 2012...

First off I want to thank all of you for reading my blog over the last few years, it's been a pleasure!

Now starting November 1st, 2012 the blog will transition to a weekly market report newsletter that will be sent each weekend to subscribers. So from now on all future posts and analysis will be for subscribers only. Each weekend subscribers will receive a market report with a detailed analysis and forecast for a plethora of different markets. Among them will be the Dow Industrials, Transports and Utilities averages. The S+P 500, S+P 100 and Q's (NASDAQ 100) averages, along with two individual stocks in Google and Apple. Over the last few years followers have seen my forecasting in real time. Coupled with the technical analysis that continues to project excellent support and resistance levels ahead of time. All of my posts are available and are time stamped, so I encourage everyone to look through them and see if this service can be of future help to you and your decision making in these volatile markets. It's as good of work as anyone out there in the public eye. And most likely better!

Don't just take my word for it though, let's take a look at a few posts just in this year alone:
My call on Apple - May 2012

My post on May 15th called for a low to form on Apple somewhere between $530 and $526. Then making new all time highs after.

The results:
On May 18th Apple put in a swing low at $522 and never looked back, trading as high as $705 in the process!!!

Next: My call on the overall direction of equities, June 2012
It was June 1st following a dismal jobs report number and the futures were falling faster and faster. The majority were scared and selling fast. My post called for readers to buy! buy! buy! and that strong support was near for a run to new bull market highs.

The results:
The market bottomed out the next trading day and never looked back. Eventually making new bull market highs and rallying over 16%!!!

Next: My call on where the market most likely will put in a swing high
It was August 20th and the market was close to taking out it's high from April, making new bull market highs as predicted. I laid out a plan on where I thought longs should target and even reverse short, as it was likely to become a swing high area.

The results: The area for resistance was marked as 1474-1500 on the S+P. On September 14th, about a month after resistance was called for, the market put in it's swing high at 1474.51 on the S+P. Target was achieved and held as resistance to the very point! And it has at this point in time traded over 70pts lower since, with probably more downside to go before support is eventually found.

Those are just a few examples in this year alone, of posts that helped readers make beneficial financial decisions. Just one of those calls alone would have made up for subscription fees and much more.

For $50 a month you will receives these detailed reports every weekend. Payment transaction is via paypal for excellent security and service and for peace of mind. There are no refunds, but there are no commitments, you may cancel at anytime. I'm confident you will find these weekly reports extremely helpful whether you are a short term trader or investor. These days with more and more program trading and indexing, following these market averages is absolutely necessary and critical. Even if you invest and/or trade individual stocks you must be aware of the major market averages. For no matter whether you have a portfolio of stocks made up of the best companies in the world. If the overall market direction is down, most likely your stocks will follow. So no matter who you are or what you do, if your in the markets in anyway, I know these reports will be very beneficial to you.

Apple Update...

Apple quarterly earnings are due this afternoon, so let's take a look the big picture for a minute.

A lot of energy has been built in Apple here, we've got almost 5 day's of inside price action counting today. Since the $622 level and trend line has been broken, back test also failed. Now unless price can break back above that trend line, expected support now rests below around 583.25 - 571.82 which would match the size of the April drop in both pts and percentage.

 

(Bottom chart) If in the case that support zone fails for whatever reason and/or if the general market rolls over, a potential pattern emerages which could create an inverted head and shoulders with a neckline somewhere around those 522 lows. That if broken would yield at least a test of that open air pocket between $440-$420 price level, and possibly as much as $350 or so. The leaders like Google and Apple have underperformed lately, which is a general market reversal sign. But in many cases throughout history, I find the averages still stage another push or two up as the laggards play catch up. This could very well be the case here.

 

We'll see what happens after the bell.

Market Update...

First off, our upside resistance level mentioned months ago (1474) became the ultimate swing high of the rally, to the point!

Now what's next? Well the biggest drop we seen since the reversal in June measured 54.19 points, that equates to support at 1420.32 SP from last highs. 1422.38 (area we bounced from today) is April's bull market high. Also I've marked the swing highs and lows on the chart since we've been inside this current bull flag formation off the 1474 highs. It's been 2 down moves of 43 and 45 points with 2 up moves of 40 and 38.50 pts. That equates to 1420-1418 as support respectively.

So we've got confluence below us, I don't really like Friday's high volume high range bar hanging above. But unless we can see a reaction against the prevailing trend that is greater than any of the previous reactions I'll assume the trend will continue for a little longer.

That being said, this short term bull is getting old. I'm going to use the size of the last breakout rally (77.95 pts) as my measuring stick. Take that from today's low and we get 1500 SP on the dot, matching the trend line resistance above. I think that's as good as place as any for a swing high.

It's possible we then see a type of inverted head and shoulders pattern (see 2011) before breaking down, we should see bearish divergences emerge as well on the internals. We should then be looking for at least a drop of 155pts that matches the drop from the April highs to the June lows of this year, and most likely test that trend line below.

I am still long term bullish and I believe once the coming reaction finds support we should see a rally to follow that takes the S+P back up to it's all time high in the 1550-1576 area.

Google support?

Google is in the middle of a sell off after reporting weak earnings. From a technical perspective ONLY, I see potential support here and below for at least a short term bounce.

History of Market Cycles....

Top chart is a quarterly chart of the Dow Jones Industrial Average dating back from the 1929 stock market crash to the eventual breakout in 1954. The bottom chart is a monthly chart of the Q's or Nasdaq 100 stock market index etf from the great tech bubble of 2000 to the present.

As you know I'm a big believer of market cycles and patterns, my theories and technical analysis is all based on past performance of supply and demand patterns that make the best tools for judging imbalances and preparing for what is to come in the near future before it actually plays itself out. Though not perfect (no methodoligy regarding the stock market is or ever will be) and not easy to pick up and see without a lot of screen time.

Now looking at these charts I've pointed out only a few of the glaring similarities between the times. There are many others that you have to really have a trained eye to see. But for simplicity I've only pointed out the most important ones.

First off, notice the similarities in how far the retracment's in both major crashes produced. In the case of the 1929 crash a retracment of 89% proceeded in a time span of approximately 2 and a half years. Compare it to the great technology bubble which when busted produced a very similar 84% decline in prices which also took about 2 and a half years to complete.

Interesting huh? But that's not where the similarities end. After the 1929 crash low completed in 1932. An approximate 32% retracement rally ensued spanning 4.5 years. Let's match that with the present. We had a low form in late 2002 after the tech bubble, and once again in line with the past we had approximately a 32% retracement in prices during a short term bull market that spanned roughly five years until late 2007.

Then after that I think we all now what happened next, the financial system was in serious danger and the Dow and S+P 500 made new lows. However the Q's 2002 low remained in tact, we double bottomed in 2009 and have been moving higher since.

Now we are trading above the 2007 high in the Q's, right in line with the chart above dating back 70 years ago.

The breakout eventually occured in November 1954 some 22 years later. Which would give us a target of aproximately the year 2024-2025 to expect a breakout to all time highs in the Nasdaq 100 index, of course with bumps along the way.

Buy! Buy! Buy!

So the media headlines read loud and clear....Europe is a mess and in danger of imploding, US data slowing down, 10 yr treasury yields at all time lows and the Volatility Index is climbing higher and higher.

Truth is, equities will be coming into strong support on the major indices charts posted above given this mornings big opening gap down (top is OEX-SP 100 and bottom is the Q's -Nasdaq 100).

I reiterate that I still anticipate one more good rally to new bull market highs, around the S+P 500 1475 level, once this current dust settles and before it's all said and done.

Buy! Buy! Buy!

Apple Update

Apple looks ready to drop into the $530 price zone.

As confluence, we've got a previous swing high at $526.29 and an open gap at 530.69 which establishes the support zone.

Once this reaction concludes I expect to see Apple trade above it's all time high at $644.

S+P 500 update

The broader market has been rattled by Euro news once again, it looks like a replay of last year all over again.

What I am anticipating over the next couple of months is a bull market correction to the 1290-80 level on the S+P shown on the chart above.

In either case I still believe the up trend is intact and that once this low somewhere around 1290-80 takes place over the next month or so, the bull market will resume and make new highs above 1422.

Apple Update...

Apple has finally come into some short term selling pressure, going forward I believe the stock will end up trading down to around the $548 level which should come in as support for a move above to another all time high price in the stock.

The $580 price level was first support zone matching last reaction size, the market traded down to it and turned about $40 higher to $620 price level. It's continued to see selling pressure so I believe this means another lower low should form.

Next major support zone is the aforementioned $548 area that has confluence on a few different counts. 1) an open gap level 2) would make a 15% pullback in the stock that matches the approximate size of the October-November 2011 correction and 3) It matches the same size of the reaction from last week if subtracted from the last swing high at $620.

Once the reaction is complete a new bull market high for Apple stock prices should resume.

Oil Update

The above chart of Oil is a weekly chart outlining the entire bull market since 2009. First box outlines a 54 pt upside move. Projecting that into the 2nd outlined box yields an upside target of 121.

Short term ranges as outlined in the next smaller box, marks the breakout move in Oil from October 2011 into the new year of approximately 28 pts. Last outlined box with same 28 pt range projects a price target of 120.

Thus a large part of my projecting of 120-121 in Oil prices going forward before any significant pullback in prices. Going forward 103 level should come in as good near term support for this move.

US Dollar Update

US Dollar apprears to be in a short term breakout pattern which has a current target around the 82.50 level. I believe this breakout should carry the USD to at least the 85-87 level in the near future.

Long term trend remains downward and if strong resistance is found going forward at the 85-87 level I believe a drop proceeding could very well take the USD below the 72 level.

Gold Update: A tale of two scenarios

Gold has been, I guess along with the S+P last year, a little tricky to forecast. Seemingly other outside factors can push this market around more so than others. I try my best to stay on top of this each day, but in saying that I feel you always have to have a "plan B" in case what your initial instincts are telling you, turn out to be incorrect.

I've done exactly that in this case with two scenario's for Gold prices going forward, a scenario A (top chart) is what I feel has the highest probability of playing itself out from a technical aspect, but I imagine from a fundamental aspect also.

I've also added a lesser likely (in my opinion) scenario in case we get a breakdown from the double bottom low around 1535 on Gold (Bottom Chart). If this plays out with a breakdown scenario B will the one in play. Proving once again Technical Analysis is an art and not an exact science.

To the charts; my most likely scenario played out in the top chart has a box range outlined which took Gold to it's all time high above 1900, a trading range has proceeded between roughly 1800 and 1550. I really would like to see a break above 1800 to feel better about the upside targets being hit. In any case Gold should find at least short term support at the levels indicated on this top chart, longs should be looking for anticipation of that breakout and targeting first the big 2000 level which is more psychological than technical, and the main upside objective would end up being a little above 2100.

Scenario B on the weekly chart (bottom chart) forecasts prices going forward on a break below this trading range in Gold. Downside levels would then be very much in play going forward with a maximum downside being around the 1100 level. Bears should be selling around that 1800 level or the top of the range in anticipation of the breakdown of the range, and looking to cover at projected support targets.

TNX (10yr Treasury Yields) Update

The Ten Year Treasury Yields (Ticker Symbol: TNX) are in short term breakout mode with this week's price action easily confirming.

Upside targets are marked on the weekly chart above, as well as downside support going forward.

A little more upside...

The end of last week's price action leads me to believe the market in fact still has some more upside remaining in it before any size-able sell off occurs.

The daily chart of the S+P 500 above shows the next projection target to be 1417.58, I now expect the market to hit that target to the upside before at least a 5-10% correction will develop.

S+P 500 update

Our S+P upside target which was stated in this post click here created over three months ago caught the swing high of this current rally almost to the point, 1.5pts to be exact. And has traded as much as 40 points lower since, now the question remains what happens now?

I believe some further downside price correction is to be expected, I've marked the immediate areas of support and resistance on this daily chart of the S+P 500 cash. The market has retraced into current resistance, it reamins a time to be cautious now and hedged against future downside.

The next wave lower off resistance should carry the S+P below it's last swing low at 1340, into the first support zone on the chart. This zone has confluence and matches the last reaction size we experienced in late November and is about a 5% drop from current highs.

Watch for some price stability there, it's an ideal zone for initiating some long positions targeting above 1400 SP prices.

Be aware however that prices could indeed need to pull back to the support zone below in the 1250-1265 area. This area has multiple confluence zones and matches a 10% pullback from current highs with the last major correction swing in the fall of last year.

I expect this area to be the maximum downside for any such retracement and then a march above 1400, into the 1425-1475 extremely critical price area mentioned in this post click here, should resume.

SP 500: The Big Picture

Regardless of whether you trade or invest, and regardless if you trade or invest the S+P 500 directly it is important to understand where and how the benchmark is trading. The markets are moving more and more in unison with the major indices whether it's through indexing or etf's I can't say for sure. But whatever the case may be, it's the reality, so without a gauge of the overall picture you can still find yourself underwater buying good companies simply because the overall indices are in a Short Term, IT, or even Long Term bear market. I use the SP 500 simply because it has the most exposure to all of the sectors of the equity markets. The Nasdaq is also a great barometer of the risk-on trade.

To the charts, it's important to set aside the news and the noise and look back at the bigger picture as a whole and form your own conclusions, in my opinion the more you do this the better off you will be. I will share my own opinions which may or may not fall in line with the majority.

The top chart shows a daily chart of the SP 500 cash market since the March 2009 lows, as you can see clearly marked on the chart each of the 3 waves up that have completed and the 4rth wave up that we are currently in. I've also outlined the sell off reactions we've seen. First notice how the sell off reactions have increased in size even though percentage wise a drop of 38% was completed in each of the last two sell offs before the market bottomed. So even though the percentage move may have replicated, the bears are finally starting to see value in selling this market at these higher prices. You can also see the power of repetition as the rally wave ups have closely matched in size and strength, as outlined. Our current rally wave has an upside projection of 1425-1435 as. Of course if you recall from the last post, the next immediate upside target comes in line around 1385 or so. Each target should be met with a reaction size with at least profit taking.

Now let's take a look at a slightly longer time frame to look at an even bigger picture, the middle chart above is the monthly chart of the SP 500 cash. It shows the bull market run of 2002-2007. A nice 5 year bull market run that ran just over double in value from it's lows and created a bull market rally of 807.46 pts. Now we can match the size of that bull market to come up with an upside target for the very long term of approximately 1475 or so. So between the 1425 - 1475 level the market will indeed be telling whether this can be a sustainable bull market, or just a bear market rally on the Very Long Term time frame.

Anything can happen in these markets right now with the underlying fundamentals, I must stress I am not making any predictions for the longer term, my time frame has always been the short term, but I always try to stay on top of the bigger trends. I'm also just stating the probabilities for the bull and bear case, the 1425-1475 level going forward is THE line in sand in my opinion, if sellers don't come out there they won't come out for a long time to come, as the equities will make new all time highs. If they do decide to show up, and the overall markets put in another lower high, I would expect a drop with a maximum downside target in the mid to low 500's in the SP. Again as noted on the chart, that is a maximum downside target, there's many support levels below it would have to break through to get there, which I will point out when/if the time comes. Again only speaking/thinking in terms of possibilities right now.

The third and final chart above shows a daily chart of the SPY, the blue lines outlined show the breakaway gaps when the market was last trading at those price levels, that going forward will prove to be resistance if/when we get there. These lines are smack in the middle of the 1425-1475 SPX levels mentioned in the top two charts, to give even more confluence and fine tune possible entry/exit strategies.

Now what is a breakaway gap? Well a gap in general is an imbalance, when the market closes and opens the next day up or down from the previous day's close, the imbalance is the day's gap. The daily gaps tend to get filled or tested that same trading day, if not sometime in the future. So breakaway gaps are price gaps/imbalances that fail to get tested. They later become magnets and/or support and resistance depending on whether the gap is above of below. The breakaway gaps are in the early stages of the financial crisis in late 2007 before things really got nasty. So you know interest at these levels will accelerate if/when we return to revisit for some unfinished business.

So basically this post can be taken is a reference of what we've done and what to expect in the future, you can use this as you wish for whatever time frame you look at, or not at all. It can be a word of caution, as we approach very important levels soon, loading the boat on the long side regardless if the economic data is getting better, may not be the best idea. If long from well below, it could be a signal to lighten up a bit and see how it reacts going forward. If bearish and think the world will end soon, then it can be areas to start scalling into short positions. It does seem with 0% interest rates forever, that a bear market swing back down to the 500's in the SP may be quite a stretch, and you could very well be right and I happen to agree. However recall in 2009, who would have thought we would ever see these current price levels so soon. That seemed as impossible as maybe revisiting 500 SPX is now, we'll just have to wait and see. The markets and supply/demand will be the ultimate judge.

Stay safe!

S+P 500 Going Forward

As mentioned in these previous December posts, number 1 and number 2, we had both short term and long term upside targets. The short term was hit, now working our way up to the long term.

However we are getting close to Long Term upside and a confluence of resistance is close by. So I put together a post as to what to expect going forward.

First off, chart displayed above is the daily chart of the SPY, which is the index etf to the equities benchmark the S+P 500. The confluence of resistance above is as follows, the blue lines are open gaps from June 2010 trading, the yellow line is the May 2nd high, and of course the green line is the projected upside long term target. So as you can see a third sell-off reaction could be imminent at anytime.

However, I still don't expect more than a 2-3 pt correction (20-30pts if following the SP 500) until we take out the May high and hit our target. In either case, whether such a reaction starts now or at the long term target, I will be looking for a sell off reaction of a size between the last two sell offs inside this uptrend, and no greater than 13.22pts (or 132 SPX pts). For now I would use the lower rising trend line as support for any such reactions, and in the case of a break below that I would be looking for support at the open gap from 2010's last day of trading as the MAX downside for any such sell off.

Now once a sell off reaction has completed I fully expect to see the SPX trade up between 1420 - 1470 to finish of a 3rd rally from its March 2009 lows. At that point I would be extremely cautious, as there could be a sharp swift sell off that could take the S+P below 1000 and possibly much much lower. But first things first, we'll cross that bridge when we get there.

I plan to create another post over the weekend, to outline the longer term trend, what we've accomplished since March 2009 and what to anticipate and prepare for in the future, why I believe 1420-70 level should be an area of caution at least.