The Morning Brief 4-7

Morning Brief 4-7
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The Morning Brief 4-6

Morning Brief 4-6
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April Newsletter

April Newsletter
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The S&P 500 hit two major points today

The S&P 500 hit two major points today.  The first major point was hit this morning when we had a test of the 50 day moving average at 1300.18 in the Futures. 1300.25 was the low of the day and the 50 day moving average held with ease.  Once the low of the day in the Futures was the 50 day moving average, all eyes shifted to the second major point; the down trend for the year at 1314.50.  The market then grinded up the rest of the day looking to test the down trend.  The market not only violated the down trend, it closed above the down trend.  The bulls are in full control.  They got everything that they wanted today, even the VIX closed back below its 50 day moving average.  From here I am looking for the market to test the highs for the year.  Thursday is the end of the quarter and the highs of the year at 1337.75 could be tested by then.  I included a copy of today's morning brief.
Morning Brief3-29

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Morning Brief March 15th

Morning Brief3-15


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S&P confirms with VIX that a correction has started.

This is a follow up to  to my last post.  At that time I noticed the VIX  was signaling that a correction was coming in the S&P.  I believe that today the S&P confirmed with the VIX that the correction has now officially started.  I have a feeling that there will be institutional and hedge fund selling now coming into the market.  I believe this because we have broken a major trend line and this is the first time we have been below the 50 day moving average since Sep. 1, 2010.  The question is where do we go from here?  Last time we had a violation of the up trend in the S&P it had a 120.89 point break the following week.  Last time the VIX violated its down trend it rallied 19.62 the following week.   Also noting that the MACD could soon turn negative in the S&P and the VIX MACD is already positive.  All that I know is today's action was very bearish and the buying has finally seemed to stop.   The down volume today was 88% of the up + down volume.  That is not good.  Looking at the charts I believe that next week could be a wild one.
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Is the VIX signaling a correction in the S&P?

The VIX is telling me that the S&P is on its way to violating the current up trend starting a correction.  I say this because when I look back to Feb. 1st 2010 the S&P started an up trend and the VIX started a down trend.  The VIX ended up making a low at 15.23, from there the VIX began to rally and then violated its down trend.  The S&P then followed by violating its up trend.  The VIX triggered the start of the correction in the S&P.  The recent low in the VIX was 15.22 and now has violated the down trend.  Repeating the same pattern made from April - May 2010.  I now wait to see if the S&P confirms by violating its current up trend.
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March Outlook

As of today the S&P, Dow and Nasdaq are all up about 4% YTD.  The Indices are all moving at about the same pace.  The leader to the upside has been the Nasdaq but as of late the Nasdaq has struggled more than the Dow and the S&P.  The Nasdaq is usually the leader of the market in terms of percentages.  They usually outperform to the upside and exaggerates the downside.  Which ever way the Nasdaq starts to head this month the other two markets will probably follow.  The bulls have a thorn in their side  and that is Crude Oil.  Now that Crude Oil is comfortably above 100 I believe that is a problem for stocks.  If Crude continues on its run we will probably start to fall.  The other factor in the market that I believe could hurt stocks is that Gold made new highs for the year.  Gold opened this year on its high and was down about 7% at one time only to rally back and now go higher for the year.  I believe this is a problem for stocks because high Gold prices tell us that there is still fear in the market.  Aside from all the issues that are bad for the stock market the tape itself is not telling you to be worried if you are long.  I believe that the recent move down in equities has held areas of importance.  I watch the 50 day moving average because so many funds and institutions watch this average.  It becomes a big pivot for the market just because so many eyes are on it.  As of right know that moving average is 1293.54 and we are holding an up trend from Sep. 2010.  Failure at this trend line should result in a test of the 50 day moving average and that is where the market will show its true colors.  The rest of this month I will be listening to news in the Middle East and the price of Crude Oil, but I will also be focusing my attention as to whether or not we get a Dow Theory confirmation to the downside.  The Dow Jones Transports are well below their 50 day moving average and have confirmed to be in bear territory but the Dow Jones Industrials have not yet confirmed. A Dow Theory confirmation would change the trend of the primary market from bullish to bearish.  The DJI has to close below 11823.7 to confirm Dow Theory.  If this happens I believe that this will pull all Indices lower and the correction that is widely talked about will begin.  Until then and only until then will I become a bear in this market.  I will be eagerly waiting to see what happens.  I have attached some charts below to show you what I have been talking about.  I hope everyone has a great month.  Thanks, Anthony (DELI)
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All eyes on Crude Oil and Middle East

This week has been all about the Middle East and the price of Crude Oil.  The S&P is trading against Crude Oil.  Crude rallies we break, Crude breaks we rally.  Today I was doing some selling before the open from 1302.00 to 1303.75 and got stopped out 1305.25.  I thought that the market would hold the single ticks from Market Profile that I pointed out in my Morning Brief but I was wrong.  When the market finally opened I waited to see how we traded around the pivot at 1303.75.  The early morning low was 1302.75, once the market went 1303.75 bid coming off that low I started to dip in on the long side.  I felt that if the market stayed above 1303.75 we should test resistance at 1313.00 but we came up short only trading up to 1310.00.  I still made some money on my longs, just enough to get me even from the shorts that I took pre-market.  I stayed on the sidelines and waited to see what the market was going to do.  I felt the market would either rally up to 1313.00 or retest 1303.75.  I tried to buy the retest at 1303.75 and that was only successful for a few ticks before I noticed Crude starting to rally again.  Once the morning low of 1302.75 was taken out I started to get short.  I tried to stay short but they were not making it easy.  I ended up just scalping making a few ticks here and there.  I was watching Crude and just started to fade whatever Crude was doing.  That worked out for me.  Today was choppy and tricky at times but if you just faded Crude you ended up making some money.  We have to remember that we are also in rollover and technicals are really second hand right now.  I still believe that you need to have technicals but don't count on them working all day.  With all of the news coming out of the Middle East along with rollover that just spells CHOPPY.  There is always tomorrow and tomorrow happens to be Friday.  I am looking forward to the weekend.  Have a good night.  DELI
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Stocks fall over worries in Middle East

Today the market had quite a ride.  In my morning brief I wrote that I was looking to get short at 1332.50 leaning on this area of resistance.  They got me out of some of my shorts because they started to rally into some single ticks from Market Profile.  I stayed short with a small position and waited for the market to trade back down below 1332.50.  Once it did I started pressing and added more shorts on.  I scalped my way out on the way down to support at 1322.75.  Once they broke that area it was pretty much doomsday for the longs.  I just tried to keep getting short and covering but it was tough because there was never any good rallies to sell from there.  Kept my money and just watched as they traded down to 1313.00 where there was support.  I dabbled and got long small, never really committed to being long.  All in all today was a good day to make some money.  High volatility and high volume.  Looking for tomorrow to tell me a lot about what today really was.  Read my morning brief in the a.m for my thoughts.  Have a good night.  
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The Grind Continues

The market continued on its up trend and made new highs for the year. Nothing surprising happened today just the same old grind up trade. The market hit my resistance at131750 and traded higher up to 132000 just high enough or should I say low enough to keep in my shorts. My stop was at 132025. The market then traded lower to 131325. There never was a time today where there was a lot of selling. We closed just below my resistance at 131750. We might see some selling going into tomorrow possibly trading back down to 130950 where we left some single ticks. I put up a market profile chart up showing the single ticks. I believe that the market may consolidate up here for awhile building support in this area. I am not bearish but we may trade lower from here tomorrow because they didn't close as well as I would have liked to see. The VIX closed higher at 16.30 up 37 ticks for the day. The VIX seems to be range bound for awhile as well. Nothing exciting today as I look forward to tomorrow.

Inside Day

The market just needed a day to take in what has happened in the past week. I still believe the trend will remain bullish. I believe that we will see some resistance in this area but ultimately go higher again. Bull markets are very hard to day trade because you are constantly thinking that the move higher is over and you are possibly long from the top. You have to be disciplined and use your short term charts to find areas of support. Buying breaks and not buying into rallies. I struggle with this myself. Everyone seems to believe that we are going higher and that is easy to fade because most people tend to take the contrarian trade. When everyone is one way you should be the other. I believe in that but sometimes it just plain doesn't work until you are long out of the market. You have to be patient and let the market tell you when it is time to sell. Today I put in a daily chart of the S&P cash from March 2006 to show you what we did last time we crossed 1300 in the S&P. You will see that we gradually moved higher to about 1326 then slipped back down to 1220 to only rally back up to 1390 all in a 8 month period. This tells me that we should start get pretty volatile in the next several months.

Rally, Rally, Rally

Another good close on Wall St. We closed above my support area of 129975. This tells me that we should trade up to 131700. This market just wants to go up. This morning in my brief I noted that I would be watching the VIX to see if it got below 18. When it did we just never looked back. The VIX closed at 17.63 which is a bullish close for the market. I believe that we will see some resistance at 131225 before we test my resistance at 131700. Today I included a chart showing the S&P over the past 13 years. Just looking at this chart I cannot find any time that the market consolidated in this area. I put a horizontal line to show the only place that we have failed from a couple of times. If we get above that area we should see some stops. We just go from highs to lows and back up to highs. I hate to agree with all the bulls (because I hate a crowded trade) but they seem to be right. Barring any global events I think that the low for the year is in at 1255.25 in the mini. Friday was chance to get in at a great price that you may not see for awhile. The good news is that the market seems to be getting busier and that is a good sign for bulls or bears. Have a good night.

End of the Month

The S&P was up 2.2% for the month. The best January since 2006. Nothing seems to take this market down. Friday was just a chance for the longs to reload. I am usually a skeptic of moves like this, but with Gold on the decline and the Euro on the up and up it is hard to fade this rally. The market is just telling us that there is very little risk in the currency market. This just points to a solid stock market. The opening range for Gold in 2011 is the high of the year. That is very bearish and I hesitate to say that Gold might be in for a real correction. The S&P opening range for the year is the low of the year. That is very bullish. The trade right now seems to be long equities and short gold. Todays trade was a grind up. The market opened up today and never really tried to sell off. It was surprising to me not to see any selling on the close. The market is just bid and will continue to stay bid as long as we are above the 1255.25 low for the year. The one x factor for this rally could be that the VIX is now above its 50 day m.a. and did not sell off much at all today. I will be watching the VIX closely. My daily pivot in the S&P is 1282.25. We closed above that today. The bulls are in control. We should trade up to 1299.50 if we can sustain trade above 1282.25.

Correction?

Not sure that I am in the camp of a correction in the market at this point. I believe that the market sold off due news in the Middle East. Until the market takes out opening range for the year at 125525 (which is also the low of the year) I am bullish. I felt that today the market should have went lower if this were a correction. The Dow only being down 166 is not that big of a deal. Depending on what news we have this weekend I believe in buying dips on Monday. I have been noticing that gold is fading the S&P this year. The opening range for the year in gold is the high. That is the exact opposite for the S&P. I will be watching to see what happens in gold. I believe that lower gold prices will be even more bullish for equities because it takes the risk out of a currency crisis. Even though everyone seems to be thinking that a weakening dollar will cause the stock market to rally, I would rather be watching gold. Gold is now trading like a currency. If gold takes out the high of the year what will happen with the stock market? I believe a new high in gold will be the reason to become bearish on equities. So until then, I am bullish.

Time

The market is just waiting for the new year so we can rally again. The quieter it gets the more likely we are to continue this up trend. The vix has been brutally beaten down to a mere 17. That is not good for shorts. Amazing how this is the best December since 1991. This is probably the slowest in even more years. This is also the smallest amount of short positions in the market in over 4 years. I have not been fading it but it is still hard to put together a good week. This market it just being manipulated to the upside. I am a Bull until any of the big moving averages are broken on the daily. Trade small and smart.

Waiting

The market is just sitting above all the major moving averages. This just tells me that we should continue on this uptrend. When they try to break them down there is just no one in a hurry to sell. The Bulls are in full control. Waiting for next year seems to be the trade that most traders are taking right now. If you are long this market why should you sell? I see no reason to be selling or getting short until we take out the 50 day moving average. Trade small and smart. Take minimal risk right now. No one is getting rich trading this market. If you make money in the morning, just go home and enjoy the rest of your day.

Bulls are Back

The market has now held it's 50 day moving average(green line) for three days in a row. The market is telling you that we are going higher. We are going to close above the 20 day moving average(blueline) as well. All signs that we will probably make new highs for the year. My next resistance area is 121725 in the mini. Above that we should trade up to 124450. Buying breaks for now.

Starting up Again

I am suddenly getting the urge to write about this market again. The action for the past few months has been so boring that I have lacked enthusiasm. That has changed. The market volume is picking up. I believe mostly because of all the crazy things happening in the precious metals along with commodities. Basically anything linked to the dollar trade. I see a very tricky next six months coming in stocks. Are we going to make new highs in the Dow? I don't think so. I believe that we will see a big rally that everyone wants followed by new slide back down. I believe that we are close to a top and I will post some charts coming up this week to prove my theory.

Bearish

The market basically has a double bottom for the year. I don't believe it. This market is just begging for longs to get in. I am bearish because at the end of everyday we sell off. That is the sign of a bear market. Not to mention there is no volume on any of these rallies. I am staying bearish as long as we stay below the 50 day m.a. on the S&P(115710). Today I have 107800 as my pivot. Above that is 109700 and below that is 105950. Selling rallies.