Stock Market Bulls At Critical Juncture; Watch VIX Volatility Index

Bulls 1, Bears 1. Thus reads the scorecard so far this week. Clearly, stock market bulls have work to do if they want to keep the ball in their hands.

Here are some high level takeaways:

  • So far this week, both bulls and bears can claim victory
  • Watch out if/when VIX breaks out of downward sloping Oct 14 trendline
  • Stock market Bulls have the ball and it could prove costly if they fumble; The S&P 500 is at a crucial technical level

One week ago yesterday, the S&P 500 large cap index (2123.48) scored an intra-day all-time high of 2134.72. The index had just broken out of a nearly-three-month range. Things were looking pretty good and Bulls were sitting in the driver’s seat.

One week later and we probably cannot make that same assertion with the same level of conviction as the breakout hasn’t materialized just yet.

S&P 500 Chart

sp 500 stock chart technical support levels may 28 2015

Tuesday gave a big jolt to what otherwise has been a pleasant ride. Bears took over that day, and were able to inflict some damage.  Not only was the index pushed down below the breakout point but it also lost the October 2014 trend line. This is not the first time in the last seven months the index has lost that trend line. It happened on May 6 (blue arrow in the chart above), but it was fleeting; two days later the index was back above it.

With the strong action yesterday, the S&P 500 is essentially sitting on the confluence of that dual resistance. One more nice push, and it will be back above it.  The breakdown will have been negated. While this remains a possibility, between then and now, some notable differences have occurred elsewhere.

Dow Jones Transportation Average (TRAN) Chart

dow jones transportation index stock chart may 2015

On May 6, the Dow Jones Transportation Average (TRAN) was still above its nine-month horizontal support (orange arrow in chart above).  Now, it has lost that.  As well, it has broken below the channel it has been in from the start of 2015.  Once again, with the one-plus-percent move yesterday the Average now finds itself right underneath the lower end of that channel.

The next few sessions are crucial.

This also applies to the Volatility Index (VIX).  In the middle of last October, the S&P 500 came very close to losing 10 percent before reversing.  The so-called fear index peaked at an intra-day high of 31.06 then. The S&P 500 has gone on to make one after another new high, even as the VIX has consistently made lower highs (see chart below). On Tuesday, it rallied 20-plus percent intra-day but was stopped right at that downward sloping trendline.  The range is getting narrower.  A decision time is approaching.

Volatility Index (VIX) Chart

vix volatility index downtrend line chart may 2015

As things stand now, there is enough divergence in the data for both bulls and bears to cherry pick to support their own bias – probably what happens when not everything is moving in sync. Bears, for instance, can point to the lagging transports. Bulls can point to the recent breakout by regional banks, and semis yesterday.

S&P 500 Earnings Chart

sp 500 stock market operating earnings 2015 chart

It is natural for bears to point out how 2015 operating earnings estimates for S&P 500 companies have nosedived. The path of downward revision has been ugly. By 2Q ’14, estimates for this year stood at $137.  It is $116 now (see chart above).  Earnings were $113 last year.  On 2015 estimates, the S&P 500 trades at north of 18x. Not cheap. Bulls are no longer focused on 2015, rather 2016.  Over the last two quarters, 2016 estimates have come down as well, but nothing comparable to what 2015 has been through.  By the way, as early as 4Q ’14, 2015 estimates stood at where 2016 estimates are currently. Makes you wonder what kind of faith we should be putting into these estimates.

Or take the next chart, for that matter. It shows U.S. households exposure to equities.  As a percent of financial assets, it stood at 31.1 percent in 4Q ’14 (1Q ’15 numbers are not out yet). This is higher than the 29.1 percent in 2Q ’07, shortly before things began to come apart, but not as high as the all-time high of 36.8 in 1Q ’00. So for bears, the green line is already flashing yellow/red. For bulls, there is room for it move higher still. In other words, no blow-off top just yet.

US Households Share Of Equity Ownership

us households equity ownership percent share history chart

This pretty much describes the past couple of days – the duel between bears looking for pullback/correction and stock market bulls looking to push the S&P 500 past 2138 (and towards 2200).  Bulls have the ball right now, and they better not fumble.  This is too important a spot for bears to intercept.

Thanks for reading!

 

Read more on Paban’s blog Hedgopia.

Twitter:  @hedgopia

No position in any of the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

 

Goldman Sachs Stock: Wait For The Coming Pullback (GS)

I recall tweet replies of the unkind nature when I suggested that selling Goldman Sachs stock (GS) near $170/share (a hair above tangible book of $166/share) didn’t seem like a very good idea to me. Fast forward a few months and GS stock is almost $210, and printing a number of DeMark indicators that suggest it finally needs at least a rest.

Yesterday Goldman Sachs stock chart printed a daily TD Sequential Countdown 13 Sell with the related “Risk Level” (i.e. secondary exhaustion area) at $213.49. TD Alignment – a mix of various overbought/oversold DeMark oscillators – is at a 4 out of a max of 5.

Looking at the weekly time frame, we see that it also has an active TD Sell Countdown 13 Sell signal and is very likely to print a fresh TD Sell Setup at the end of this week.  “Risk Level” for the active Countdown Sell is at $213.49. The weekly chart also shows the next TD Relative Retracement Level at $214.00, and the prior one at $207.91 remains non-qualified. TD Alignment is also at 4.

However, bulls can rest their arguments on the monthly chart. GS (and by extension the rest of the market??) looks like it has at least several more months of upside before it completes the monthly Countdown Sell suggested by the “qualified” break of TDST Level Up at $164.40.

So for the next few/several weeks it looks like there will be an opportunity to trade around a long position and/or sell calls for cash flow. But for the longer term, Goldman Sachs stock still shows as having plenty of gas in the tank.

Goldman Sachs Stock Chart – DAILY

goldman sachs stock chart demark exhaustion gs may 27 2015

Goldman Sachs Stock Chart – WEEKLY

goldman sachs stock price chart gs demark analysis may 27 2015.jpg

Goldman Sachs Stock Chart – MONTHLY

goldman sachs gs stock chart monthly price bars 2010-2015

Thanks for reading and happy trading.

 

Twitter:  @FZucchi

The author has a position in GS at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

 

Dow Jones Industrial Average (DJIA): Technical Chart Update

Similar to other major U.S. stock market indexes, the Dow Jones Industrial Average (DJIA) has been moving higher amidst a considerable amount of market chop. As we near the end of May and the end of a seasonally favored market period, I thought it would be good to update readers on the current technical state of the Dow Jones Industrial Average.

On October 15th, 2014 the Dow Jones Industrials (DJIA) made a low of 15855.12. Using old school trend line charting, we see the following:

  • The uptrend was tested and held on February 2nd, 2015.
  • The uptrend was tested and held several times until April 30th, 2015.
  • In the next 17 trading sessions, price closed below the uptrend line 8 times but never violated or even pulled back to Fibonacci support levels.
  • The current projected target is 18583.84.
  • Key support levels reside at 17663.2 and 17515.59.

Currently, the high of May 19th, 2015 of 18351.36 is a level that I’ll be watching closely for a clean break and close above. Otherwise, traders would be wise to watch their support.

Dow Jones Industrial Average (DJIA) Chart

dow jones industrial average djia chart technical support levels may 26

Thanks for reading and remember to always use a stop!

 

Twitter:  @TheFibDoctor

No position in any of the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

 

Are Gasoline Prices About To Take Another Leap Higher?

RBOB Gasoline prices increased 69 percent from the January low, while Crude Oil only moved higher by 41 percent. The so-called boon to consumers of cheaper gas prices is slowly whittling away. What’s interesting is the apparent relative strength of gasoline prices versus Crude Oil if you look a bit more historically.

For instance, if crude oil were to double from the current level, it would be at $120 – still some $27 below the peak in July 2008. If RBOB gasoline prices were to double, it would be at $4.14, a whopping 50 cents above its 2008 high. The difference between crude oil and its refined products is known as the ‘crack spread’ and is often closely monitored and forecasted by fundamental energy analysts. Companies like Tesoro Corporation (TSO) and Valero Energy Corporation (VLO) tend to like when this spread widens. TSO and VLO share prices have done quite well versus the overall stock market in the last few years, not surprisingly.

refinery stocks vlo valero tso tesoro price chart

Turning specifically to RBOB gasoline – it appears to be bullishly consolidating at the moment, perhaps poised to make another leg higher. The $2.10 level is resistance. In terms of upside targets, there is an old gap to fill from last September near $2.65 (this gap is due in part to a new prompt month contract rolling out at that time). Unfortunately for US consumers, a $2.65 price on RBOB would mean about $3.30 per gallon at the pump.

rbob gasoline prices chart may 26 2015

Seasonally, RBOB tends to begin to struggle this time of year, contrary to popular thinking that prices continue to increase through the 4th of July holiday. The below chart (credit to Signal Financial Group) aggregates the past 20 and 30 years of RBOB prices into average calendar years.

rbob gasoline prices seasonality chart

The chart of RBOB continues to look constructive, and a move above $2.10 would help confirm bullish momentum. So keep an eye on gasoline prices and that crack spread!

 

Twitter:  @MikeZaccardi

No position in any of the mentioned securities at the time of publication.  Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

 

The Rotation Report: Preparing For The Week Ahead

Well, it’s time to hunker down and get ready for another week of market action. I hope you all enjoyed the long weekend! The good times always go by too fast don’t they?

Be sure to check out my favorite reads of the week from around the financial web. This week’s list was killer.

A major fibonacci level has stalled the S&P 500’s breakout (thus far). That’s concerning until it’s taken out.

S&P 500 Chart

sp 500 market chart topping candles may 26 2015

The choppy market action has made this a heck of a stock pickers market – the chaser’s playbook has been working well.

Here’s a quick overview of several key sectors that I’ll be following in the week ahead.

Biotech

The Biotech iShares ETF (IBB) is testing a key technical resistance level. It’s formed a descending channel pattern and what happens here should bear some importance.

ibb biotech etf chart technical resistance may 26 2015

Treasuries are setting up for a bounce and seem to be a top market theme heading into the week. Check out this chart of the iShares 20+ Year Treasury Bond (TLT).

tlt 20 year treasury bond etf technical support may 26 2015

Emerging Market Bonds continue to hold up well and are finding buyers just above an important pivot level.

emb emerging markets bonds etf chart may 26 2015

Real Estate is strengthening in a consolidation/basing pattern at the 200 day moving average.

iyr real estate sector etf chart may 26 2015

Financials have broken out to new 52-week highs. Momentum looks weak but perhaps it is just temporary as the market works itself out.

iyf financials sector etf chart may 26 2015

A Look Overseas

For the first time in weeks Hong Kong followed Shanghai higher Friday. That’s a big signal in my opinion. The Hong Kong iShares (EWH) broke a continuation triangle higher on Friday. Put this one on your radar.

ewh hong kong etf chart may 26 2015

Russia via the Market Vectors Russia ETF (RSX) looks broken and may offer a good opportunity on the short side up here.

russia etf rsx technical resistance may 26 2015

Copper

Various Base metals are testing bounce levels. Copper is testing its rising 50 day moving average.

copper prices chart technical support level may 26 2015

Lastly, the U.S. Dollar is strengthening, but the Euro and Aussie dollar (not shown) are set to test key support early in this week.

fxe euro currency etf chart technical support may 26 2015

Thanks for reading.

 

Follow Aaron on Twitter:  @ATMcharts

Read more from Aaron on his blog.

No position in any of the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

 

Is The Russell 2000 Index Targeting New Highs?

The Russell 2000 Index (RUT) has received some attention lately as it is still beneath its April highs. However, from a technical perspective the Russell 2000 is still in good shape.

Back in February, I wrote about the Russell 2000 Riding Its Bullish Channel Higher. It’s time for an update.

In the chart below, we can see that the RUT is well above near-term supports. As well, we still have an outstanding long term price target above current levels. Let’s review.

  • After failing to hold above the July highs, the Russell 2000 Index declined 5.7 percent into January. It then consolidated in a 49.94 point range throughout the month of January 2015.
    • Price then broke out of the January range and moved up +11.05%.
  • I have identified 2 levels of resistance which are now support.
    • The July 2014 high of 1213.55
    • The December 2014 high of 1221.44
    • Both support levels have been tested and held sans 1 day on March 10th, 2015.
  • Longer term target is 1308.09.

Russell 2000 Index Daily Chart

russell 2000 index technical analysis support resistance chart may 2015

Investors will look for price to build upon its recent rally. However, it should be noted that a pullback that pushes below the identified support levels would be reason for caution. Thanks for reading.

 

Follow Dave on Twitter:  @TheFibDoctor

No position in any of the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

 

Chart Of The Day: German DAX Bounces Off Key Trend Line

Over the last two weeks, the German DAX stock market index has tested and held its uptrend line from last October. Holding this trend line would be a huge win for European stocks, as well as other major stock market indices. Here’s why.

First, the German DAX has been a global leader since last October. While U.S. equities (i.e. the S&P 500) were consolidating in early 2015, the German DAX was pushing higher. From October to April, the German DAX jumped over 40 percent. This big time run has made the DAX a visible leader within global equities – and losing leaders isn’t a good sign for any market.

Second, Europe is still dealing with a wounded currency (the Euro) and lingering sovereign debt concerns. A significant drop in the German DAX would likely damage psychology across the European markets. Any thoughts of this scenario can be avoided by the DAX holding its uptrend line.

Last week’s rally was a good sign.  11,300 looks like the line in the sand over the near-term.

german dax technical support levels chart may 25 2015

 

Twitter: @andrewnyquist

The author does not have a position in any of the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

 

Intel Corp (INTC) Stock Update: Base Building

When I last looked at Intel Corp. (INTC), the stock had just put out strong earnings and was attempting to bounce after a 3 month decline of around 25 percent. At that time, the setup and earnings report looked good but we were waiting to see if the “big money” felt the same. As well, the stock price (at that time) was below it’s 50 day moving average and downtrend. Here’s an excerpt from that post:

“…it’s a start. A key test will come tomorrow as the stock will likely test its 50 day moving average and downtrend line. A closing price above $32.50 would be constructive and potentially set the stock up for a run at the $34.50 level (the February highs and open gap).”

Fast forward to today, and you can see that Intel’s stock price has been moving higher in a constructive manner. After taking out the 50 day MA and downtrend line, it consolidated before pushing higher. It’s now testing its 200 day MA. A move above the 200 day would bring the open gap and lateral resistance into view around 34.50.

Note that the 50 day is trying to curl higher as well. This doesn’t mean that the stock is out of any dangers, but it’s a good sign that INTC is trying to build a base. Although the stock has underperformed the NASDAQ 100 (NDX) over the past 6 months, it has shown relative strength of late.

Intel Corp (INTC) Stock Chart

intc intel stock chart technical resistance level may 22 2015

 

INTC:NDX Relative Strength Ratio Chart

intc stock relative strength nasdaq 100 2015

It will be interesting to watch INTC battle its 200 day MA. On the one hand, retests from the underside can prove to be tricky and offer resistance. And on the other hand, we have an open gap over head that is acting like a magnet. It may not get “filled” in the near-term but it will likely entice the stock for a kiss.

Thanks for reading and trade safe.

 

Twitter: @andrewnyquist

The author does not have a position in any of the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

 

Apple Inc. (AAPL) Chart Update: Price Pattern Still In Play?

Apple’s stock has spent the past few months consolidating some big gains. And the consolidation range has been wide and tradable for those that are more active. But as Apple Inc. (AAPL) nears its all-time highs again, investors are busy debating whether slowing momentum will lead to a top. That’s a valid question and long-term investors will need to watch price indicators closely to determine exposure.

This past February, I highlighted 3 Things Apple Bulls Need To See. In that post, I highlighted a bullish consolidation and breakout pattern that had been occurring on the weekly chart. This pattern (or series of patterns) is exactly what bulls want to see in any security they own. Below is an updated chart.

Price has flattened out and the slowdown in momentum shows up in the RSI divergence. But, price is what matters here. The stock is still in an uptrend and testing all-time highs. A breakout would confirm the trend, while any move under $120 would be a red flag.

Apple Stock (AAPL) Weekly Chart – The 2013-2015 Bull Market

apple stock aapl chart consolidation patterns bull market 2013-2015

Looking at a near-term daily chart, you can see the consolidation/pullback and breakout pattern from January/February. The consolidation pattern is getting a little long in the tooth (March/April/May), but AAPL is nearing all-time highs again. Will the pattern repeat with follow through to the upside. This retest is important near-term, and potentially intermediate term.  Also note that the retest of highs for Apple stock comes at the same time the NASDAQ Composite is testing its April highs.

Apple Stock Chart – Daily

apple stock chart aapl technical resistance may 20 2015

Thanks for reading.

 

Twitter: @andrewnyquist

The author does not have a position in any of the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

 

S&P 500 Chart: Price Compresses As Traders Await Next Move

As many momentum, directional and trend traders will attest, the past several months have been pure chop. Despite the new all-time-highs for the S&P 500 Index (SPX), the move higher has been a series of stutter steps.

Checking in on the chart of the SPDR S&P 500 ETF (SPY), we can see a clear pattern of smaller pullbacks and bounces since the February rebound. SPY has hovered in a neutral RSI (9) state, tip-toeing into oversold territory only once since the start of the year.

S&P 500 Chart (SPY) with Relative Strength Indicator (RSI)

s&p 500 etf spy stock market chart relative strength resistance

Other technical indicators tell the same story – a rapidly narrowing Rate-Of-Change (ROC) rate, unusually small price channels – all of which highlight the difficulty of trading in this market. But the price compression can’t continue indefinitely. We will be watching for the inevitable resolution on the S&P 500 chart.

2015 has definitely been a year where patience and risk management have been tested.

S&P 500 Chart (SPY)  with ROC & Price Channels

s&p 500 spy etf chart narrowing range on roc indicator may 20 2015

Have a great rest of the week. Thanks for reading.

 

Follow Sal on Twitter:  @BtrBetaTrading

The author does not have a position in the mentioned securities. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.