Buy or Sell? Updating the Levels for the Big Four US Stock Market Indexes

Believe it or not, the big four US Stock Market Indexes – S&P 500, Dow Jones, NASDAQ, and the Russell 2000 – are painting different pictures of the current sell-off and test of support.

What’s the message of each market index and where might we be going from here?

Let’s take a look and plan our pathways, starting with the S&P 500:

For background and additional video analysis, check out my prior video updates:

Stock Market Retracement or Reversal?  Comparing 2010 and 2011 to 2015” (so far so good)

The RSI Indicator and Stock Market Reversals” (more educational than predictive but helpful)

After a stellar collapse in August, price retraced as expected and consolidated for a month, stalling into the 2,000 index target with a big reversal candle.

From there, price continued the sell-swing to complete the “Retest of the Low” Thesis which was correct.

Another big reversal candle – a Doji with Positive Divergences off 1,880 – set the stage for another rally higher which we’re seeing today.

We’re targeting first the underside of the falling 20 day EMA into 1,945 for an initial retracement target, and then back toward 2,000 if buyers can push the market up in a reversal scenario.

Otherwise, 1,880 and 1,870 in the S&P 500 is our support-bounce bull/bear pivot.

Here’s the Dow Jones Industrial Average which has a surprising turn:

The analysis is similar to the S&P 500 with one exception.

Unlike the S&P 500 which retested (traded into) its prior low, the Dow Jones held above its late-August reversal low and instead found a pivot reversal off the Round Number Support Line of 16,000.

That’s our short-term bull/bear pivot as we see the market already trading into its first retracement target:  The underside of the falling 20 day EMA near 16,400.

Like the S&P 500, if above 16,400, we’ll look for a bullish short-squeeze rally toward 16,800 (falling 50 EMA).

Here’s the Tech-Heavy NASDAQ:

The Monday during the three-day crash in August saw a mini-”Flash Crash” event on the open.

The NASDAQ instantly hit 4,300 and propelled itself 200 points higher off this level.

The next day’s closing low near 4,500 set the stage for the current failure into 4,900 and retest of 4,500.

We’re focusing on 4,500 as the Bull/Bear Pivot Point with a possible rally targeting 4,750 if buyers do continue their campaign here.

In this sense, the NASDAQ can be compared to the S&P 500 – not like the Dow.

Finally, the Small-Cap heavy Russell 2000 was the weakest on the current sell-swing lower:

Unlike all three other US Stock Market Indexes, the Russell 2000 broke its 1,100 level – the August Spike Reversal Low – and traded 20 points lower.

The index reversed yesterday off 1,080 after creating a new swing low for 2015.

The Russell thus has higher to travel to the upside toward its falling 20 day EMA near 1,140 and our pivot points for support will include 1,100 (simple Round Number) and of course 1,080 which is yesterday’s spike low.

Focus on these levels:  The Prior Low from August, the Falling 20 day EMA, and plan your trades on movement toward or away from these key index evels.

Afraid to Trade Premium Content and Membership

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Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).


Afraid to Trade.com Blog

The WeekDAY Trader – It’s Good to Be Back

Here are some mid-week observations now that I’m back on the grid with respect to my weekend inquiry to financially back a selected group of traders, thanks to Nirav Patel (@Nirav777) and his trading team with whom I’m currently trading, another shout-out to Vader (@vader7x) who is in the zone, and a reminder for all of us to work diligently to guard our integrity and character in an industry with some dirty corners.

Don Miller’s S&P Trading Tank

Market Recap Sep 30, 2015

Since Friday we’ve said that the market was setting up for some type of significant bounce as the action was poor and eventually we’d hit an oversold level where there would be some buying came in. We also said it wouldn’t mean much in the big picture. So today was a bounce. And it doesn’t mean much in the big picture. The S&P 500 gained 1.91% and the NASDAQ 2.28% to narrow losses on a…

Read the full article at StockTradingToGo.com


Stock Trading To Go

Bouncing Rally Market Update Sept 30 and Stock Scan

As we officially end September, let’s take a look at today’s planning update as stocks rally from support with positive divergences.

Let’s update our levels and plan the remainder of today’s session:

In-depth analysis is always provided to members of the Premium Daily Reports – I hope you’ll join and benefit.

Here’s a quote from last night’s member strategy planning report:

“The positive Breadth and Momentum Divergences – and Daily Reversal Candle – do place our attention now to the BULLISH side for a possible bounce/intraday reversal up off current levels.”

After a V-Spike Reversal took price under 1,880, buyers found value and boosted the market higher.

The bullish upside gap this morning took us above – then beyond – or previous target near 1,900.

The target above that was 1,920 from which we saw our intraday reversal lower in the morning.

Receive daily updates, planning, and education by joining the Afraid to Trade Premium Membership.

Let’s see what our Breadth Chart reveals about current market strength (or weakness):

Unlike our sell-session Monday, all sectors are strongly positive which highlights the strong bullish money flow into the market during today’s bounce-rally.

The weakest – not by much – sector is Energy and the strongest is Technology, but that’s not a big distinction against the backdrop of such positive sector breadth performance.

Here’s a top-level or full-perspective view of today’s S&P 500 stock performance (courtesy of FinViz.com).

Here are today’s strongest trending (intraday) names – candidates for pro-trend continuation:

Synaptics (SYNA), SanDisk (SNDK), Ralph Lauren (RL), and Western Digital (WDC)

Bearish downtrending candidates include the following stocks from our “weakness” scan:

United Natural (UNFI), Autodesk (ADSK), Knight Transportation (KNX), and Fleetcor Tech (FLT)

Follow along with members of the Afraid to Trade Premium Membership for real-time updates and additional trade planning.

Afraid to Trade Premium Content and Membership

Follow along with members of the Afraid to Trade Premium Membership for real-time updates and additional trade planning.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).


Afraid to Trade.com Blog

Virginia Tech: Example of built environment disfigurement to accommodate non-self-driving cars?

I recently visited Virginia Tech (note how Google shows  Nidal Malik Hasan as #1 among the school’s “notable alumni,” a good reason to invest in PR…).

The school impresses the visitor with its NFL-grade football stadium, Four Seasons-grade hotel and conference center, and stone buildings (but the architecture school is a hideous concrete eyesore! (photos)). Due to the handsome stone construction, the school has some of the feel of Princeton, generally admired as one of America’s nicest college campuses. With 31,000 students Virginia Tech needs to be physically larger than Princeton, with 8,000 students. However, the physical inflation is more dramatic than the student ratio.

My theory is that Virginia Tech is spread out to a large extent because of the need to provide massive surface parking lots in front of most buildings, a requirement dictated by (a) the 100-year period of private ownership of non-self-driving cars, and (b) the expense of digging underground lots. It is tough to imagine casual collaboration among departments at Virginia Tech due to the long walks from subcampus to subcampus. Because the campus isn’t all that walkable, there is a huge amount of car traffic even after 9 pm on weekdays.

I’m wondering if once the self-driving (and shared) car (or RV) is here we will regret having built so many spread-out campuses to accommodate what turned out to be a relatively small fraction of the period of European settlement of the Americas.

Philip Greenspun’s Weblog

SMBU’s Options Tribe Webinar: Kerry Given, Parkwood Capital: Trading Delta Neutral Options Strategies

This week, Kerry Givens will appear on the Options Tribe for the first time to discuss his approach to delta neutral options trading including his approach to trading iron condors. Read more […]
SMB Capital – Trading Education

Going Shopping for Ascena Retail Group

Written By: DragonFly Capital

c69564006_v1

Ascena Retail Group is a specialty retailer with several brands. The top ones are Justice, Lane Bryant and Dress Barn. Yes, this is not Neiman Marcus or even Nordstrom. And the stock is has taken a hit over the summer from its highs in mid June.

The chart below shows a a gap down in July and then continuation to a low with the market August 24th. This took it below the 200 day SMA and finally out of the Bollinger Bands®. But since August 24th it has done nothing but move higher.

asna

In fact the move up to 14 took it back over the 200 day SMA last week. The slight pullback since created a Cup and Handle pattern, and this targets a move to 17 on a break higher. The conditions are ripe for this to happen. The RSI is rising in the bullish zone while the MACD is avoiding a cross down and heading higher too. With over 13% short interest there is also the possibility of a short squeeze to give it a boost. The last hurdle seems to be the 100 day SMA at about 14. A move over that and time to go shopping.

Get my ebook, Markets for 2015 and Beyond, a long term forecast with all proceeds going to charity.

Want to learn more about Dragonfly Capital Views?
Dragonfly Capital Views Performance Through September 2015 and sign up here

Dragonfly Capital

Waiting for the Right Moment to Buy?

Written By: DragonFly Capital

obama-arm-crossed

There are a ton of indicators that traders use to try to get an edge on the market. And that is the major problem with indicators. Indicators were designed to try to create a a warning signal that something was changing. They needed other indicators and price to confirm.

But somewhere along the way that changed. traders decided that it was easier to cheat the indicator set up. To jump ahead of confirmation. That seems like a recipe for failure. Death by a 1000 cuts as the rest of the story does not line up.

With that backdrop I have one indicator to look at that is back to extreme conditions. It is the Percent of Stocks in the S&P 500 Above their 200 Day Simple Moving Average. This indicator closed the day Tuesday at 23.20%. This is up from 20.4% Monday, but both are really low levels. From the chart below you can see it has only happened 3 other times in the last 12 years.

200day

The three prior occurrences happened in 2008, 2009 and 2011. These dates will immediately trigger the fear sensor in your brain. But they should actually trigger the greed center. These extreme lows area buying opportunity. When? When the other indicators including price turn around and start back higher.

There are certainly some lessons to learn from this chart. In 2008 this bottomed as a precursor to a slight bounce in the market before the move to the ultimate bottom in 2009. Will that be the case again? That is why you wait for confirmation. In 2009 a new extreme low was made under 5%. A buying opportunity for sure. But at the right time. It persisted for 6 months. Finally in 2011 the low was a bit higher and bounced quickly, like now, but fell back again also like now, before reversing and the market rising.

So is this extreme low a buying opportunity in the S&P 500? Absolutely, it is just a matter of when.

Get my ebook, Markets for 2015 and Beyond, a long term forecast with all proceeds going to charity.

Want to learn more about Dragonfly Capital Views?
Dragonfly Capital Views Performance Through September 2015 and sign up here

Dragonfly Capital

Nineteen Hundred

I’m using a simple round number (sort of like the overpaid geniuses at Goldman that just cut their year-end price targets on the S&P to 2000 for this year and 2100 for next year…………they get paid for this?????) but my opinion is that we’ll bounce no higher than 1900 on the ES futures before resuming the oh-so-fun […]
Slope of Hope

Keef Richards

Music means a great deal to me, but I’ve never had much interest in the Rolling Stones. Thus, when I saw on Netflix there was a new documentary about Keith Richards, I wasn’t going to bother, but I noticed what strong reviews people were giving it. Even though spending 90 minutes watching a documentary about Keith […]
Slope of Hope

Market Recap Sep 29, 2015

Indexes swung around the unchanged line most of the day but by the end of the session the S&P 500 had gained 0.12% while the NASDAQ continued to slump to the tune of 0.59%. Goldman Sachs cut its year-end forecast for the S&P 500 by 5% to 2,000 on Tuesday, citing a combination of the slower pace of economic activity in China and the U.S. and the fall in oil prices.

Read the full article at StockTradingToGo.com


Stock Trading To Go

The 2015 Boom and Bust for Biotechs and Health Care

In yesterday’s big sell-session, Biotech and Health Care stocks were among the biggest laggards of the day.

Let’s take a look at the strong rally in 2015 that gave way to a bust or reversal recently.

We’ll start with the Biotech iShares ETF – IBB

A strong rally in July – continuing a strong uptrend through 2015 – occurred on reduced volume into $ 400 per share.

From there, price simply retraced to the rising 50 EMA – nothing unusual – and then broke impulsively under this level at the beginning of August on high sell volume.

When the market collapsed, Biotechs collapsed with it, falling from the $ 400 peak to spike-reverse off $ 300.

A logical and expected “ABC” Retracement pushed the ETF back into the underside of the falling 50 EMA at $ 360, but the trend took a turn for the worse when shares collapsed last week on increasing sell-volume.

At this point, we’re seeing an oversold rally develop off the $ 290.00 spike low and an upward pathway potentially opening up toward the $ 330.00 pivot again.

Nevertheless, focus your attention for the moment on $ 290.00 and $ 300.00 per share.

The situation is similar in Health Care (XLV):

Likewise, shares peaked in July on reduced bullish volume into $ 77.00 per share in the XLV ETF.

From there, all seemed well – except for the pick-up in sell-volume through August – until shares tumbled three fateful days in a row in August.

A mini-flash crash collapsed the price toward $ 57.00 for a brief moment ahead of a similar “ABC” Retracement toward the underside of the falling 50 EMA.

From there, shares began a renewed tumble lower on the highest volume bars of the year.

XLV shares are pivoting higher off the $ 64.00 level potentially toward $ 68.00 if we’re seeing another V-Spike Reversal.

Either way, note the current levels, the rapid transition from a strong to a weak trend, and the current volatility in these funds.

Afraid to Trade Premium Content and Membership

Follow along with members of the Afraid to Trade Premium Membership for real-time updates and additional trade planning.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).


Afraid to Trade.com Blog

Study this Free Course on the “Why, What, and How” of Trading with Elliott Wave

If you’ve dabbled with Elliott Wave in your trading or have absolutely no idea about it, you’ll likely benefit from this new three-part free educational course on the Elliott Wave Principle.

At its core, Elliott Wave is a  more-detailed approach to the works of Charles Dow, Richard Wyckoff, and many other “founding fathers” of Technical Analysis as they discussed principles of Price Action and Accumulation/Distribution Patterns.

Elliot Wave Int’l – and the educational arm Club EWI – just released a free three-part “Crash Course” (click here for more info) for you to get started or brush up on the Elliott Wave Principle.

Video 1:  “WHY Use the Elliott Wave Principle”

Video 2:  “WHAT is the Elliott Wave Principle”

Video 3:  “HOW to Trade with the Elliott Wave Principle”

As an multi-year affiliate of Club EWI, I wanted to call your attention to this free educational bundle to jump-start your interest if you’ve never considered Elliott Wave.

Take a moment to view the videos and keep an open mind as you add a potential new tool to your growing trading arsenal.

Thanks to the EWI Team for making this available to the trading community for free.

Corey


Afraid to Trade.com Blog

Who else is excited to be subsidizing Tesla Model X purchasers?

http://www.teslamotors.com/modelx will shortly show the launch of the new electric SUV (not “pavement-melting SUV,” which had become almost a Homeric epithet). Fully loaded this is a $ 132,000 car. If you pay federal income tax you will be contributing to a $ 7,500 subsidy for each person (a.k.a. “rich bastard”) who buys one. It seems like a marvelous engineering achievement so… who else is excited to be offered the opportunity to work extra hours every year in order to help rich people buy this new toy?

And when do we get to subsidize an all-electric Rolls-Royce?

[Disclosure: A rich friend of mine has one of these on order and I am looking forward to riding in his.]

Philip Greenspun’s Weblog