S&P 500 charts

By following the last post strategy and comparing 1-year and 60-day technical indicators (as you may see in the last post) we may see that 1-year S&P 500 chart is not as optimistic as it was a week ago. As I mentioned the 60-day chart had some indication of the possible correction and we saw the decline.

I like to compare several timeframes. In many cases smaller timeframes help to spot important events that are not visible on the bigger timeframes. At the same time bigger timeframes give more of a general picture of the trend. I believe that technical analysis cannot be based solely on one chart view or one technical indicator. In my opinion, several indicators should be considered as well as several time-frames should be analyzed.

1-year chart would be pointless to use to see when the index may be expected tomorrow, but rather may be analyzed to see when we can expect to see index over the longer term of several weeks. 1-year chart is based on daily bars and basically it’s a set of end of the day technical indicators.

1-year chart

If you take a look at 1-year S&P 500 chart now, you may see that volatility index VIX started to advance and that would not be in favor of the up-move. On the other hand SBV is still positive and still advancing. In addition we still have not seen big volume surges to the price move up. The last big volume surge was in period from November 6 to November 23, 2007 when the S&P 500 index dropped almost 7% (see last red MVO and then later absence of this indicator). Overall this chart is still bullish, however the rising VIX is not a very good point, especially taking into an account the fact that lately the market was very volatile and we saw a sharp trend reversal.



60-day chart

60-day chart has 1-hour bars and may tell when we may expect an index in several trading days. In many cases this chart reveals intraday points that could not be seen on the yearly chart, yet, it still covers the big period of time (2 months) and in many cases allows a more exact analysis of reversal points.

I may say that the 60-day S&P 500 chart is not very optimistic.

There are several factors that make me worry and in my opinion would point to the bigger possibility of the further slide down:
1. The declining SBV shows that the process of the volume accumulation during the S&P 500 slide is not over yet. Only after it starts to rise again, I may say that it hit its oversold bottom. Until then, it’s bearish.
2. We see high MVO on December 21, 2007 that points to the big volume surge during the index move up (see green MVO). It’s no doubt that that day affected support/demand balance and was one of the reasons we have a decline since December 26. Now we may see the beginning of the growing volume during the index drop – MVO is minus 5. It would be nice to see bigger negative MVO before reversal.
3. The difference between Advances – Decline volume show small rise, by indicating that there is a possibility that advancing stocks could become more actively traded then declining stocks. It would be nice to see this technical indicator growing further, which would indicate that more traders started to focus on advancing stocks.
4. The difference between Advances – Decline issues started to rise. That would point that the number of advancing issues started to grow and we close to the possible bottom that may lead to reversal. Yet, the number of the decline issues is still big. This indicator starts to turn bullish (unless we see it starts to decline again) and may indicate the possibility that other indicators may change the mood as well.
5. RSI is again dropping after being above 20 and it shows that there is still dynamic to the downside. Until we see that average gains started to grow this indicator is considered bearish.
6. The stochastic again below 20 indicating move down to the most recent lows. This indicator could be considered as bearish at this moment. It would be nice to see it growing back above 20 to consider it bullish again.
7. The volatility index VIX is grooving since December 21 and this is not very good for up-move.

S&P 500

The up-trend forces the market to move towards the December 11, 2007 high. In general the indicators favors the current recovery, by confirming my past assumption that the recent drop was not more as a correction within the dominant mid-term up-trend, yet, unexpectedly strong correction for me.

The positive sign for mid-term up-trend continuation is the further VIX decline. The fact that this is the last week of the year and most like it will go under the light trading volume makes me optimistic to see the indexes higher. Another fact is (see my 1-year chart below) that during the recovery we still did not see the big volume surges, however, we should not forget that the last correction was not caused by high volume as well… In addition I like the fact that all indexes – NASDAQ 100, S&P 500 and DJI – are moving in the same direction and we do not see a divergence any more when the NASDAQ pushes lover while the S&P is trying to climb up and vise versa.



The smaller 60-day timeframe is less optimistic then the 1-year chart. See 60-day S&P 500 chart below. Yes, while we see the SBV advancing, RSI above 70, Stochastics above 80 and VIX declining we should not worry about decline (correction). On the other side we may see that advance decline lines (issues and volume) started to decline by indicating possible weakness. In addition we may see high volume surge during the S&P 500 index move up on December 21, 2007 which could lead the index into the correction down. This chart would make me assume that we may see the advancing market slowly moving into the flat market with possible correction down.

It’s difficult to say anything about correction now. This chart is still bullish, but it already has some force that may cause the correction. I would continue to monitor this chart to see the development of these technical indicators.

Volatility

Not very nice on the market. After FED rate cut the market crushed, then almost recovered and moved down again. It looks like the indexes are tending to reach the December 4, lows. The short-term technical indicators are not good for recovery, they are more bearish now, by indicating the possibility of the further slide. The volatility started to grow again and it’s not a very good sign.

The market changes very quickly lately and it’s possible that tomorrow the short-term indicators could be completely opposite.



The mid-term indicators are mixed. Some of them started to become bearish. Even I have not seen indication about beginning of the mid-term downtrend the S&P 500 dropped almost 3%. Yes, I expected the correction within the dominant mid-term up-trend, however, very often a correction down generates logical question “Is this a beginning of the new bear market???” So far looking at my charts I may say that I did not see the reasons for a strong move down and I would still expect to see the recovery with continuation of the bull market. Yet, I could be wrong…

As I already mentioned above, the market is become volatile lately and changes it’s mood very fast. The next week is a triple expiration week that could bring additional volatility into the market.

What make me cautious is that when I look at the chart over the last half of year I see strong and sharp downswing and quick recovery rally. It has become custom when the S&P 500 may loose 2-3% over a session and then gain it back in a single session as well. We have not seen such sharp and strong moves. Over the last 6 months we had 8 instances when the DJI dropped for more then 2% and 5 instances when it recovered by more then 2% in a single session. The last time we have seen such strong moves in the period from June 2002 until May 2003. Take a look at chart - it makes to think…. Aren’t we close to something….

Market Crash?

There were 2 reasons for the market to make a strong move down:
1. As I mentioned, the market was ready for correction down.
2. The FED announcement

I’m still under the same mood. I consider it as a correction within the dominant up-trend. I do not think this strong move down would harm the general up-trend, I would consider it as a healthy correction and I would expect to see the recovery soon.

NASDAQ 100 chart

As I expected the market continued it’s up-trend. By taking a look at my indicators I may assume that we may face the increased odds of the correction within the mid-term up-trend.

The NASDAQ 100, S&P 500 and DJI indicators are still strongly points to the continuations of the mid-term uptrend. VIX volatility drops, volume activity drops, 1-year technical studies are bullish.

On the other hand if we look deeper into lover timeframes (30-day and 15-day charts) we may see an increased possibility of the moved down. Those charts do not show changes in the mid-term trend, but may indicate the possible correctional move. The healthy up-trend requires small correction time on time and in this case the up-trend can run longer and higher. Without correctional moves the uptrend could become exhausted very fast.

At this point of time, we may see some oversold 15-days levels that potentially may lead to the correction. Below you may see the NASDAQ 100 chart. The S&P 500 and DJI indicators look similar and little bit more bearish then the NASDAQ 100. Even if we see the correction down, I would not expect it to be deep.

More Up coming?

Mid-term on it’s way to new highs… Today’s recovery confirmed what I wrote yesterday and the day before yesterday.

I would expect to see more up move. So far, I do not see any indication in any of the indexes I track (NASDAQ 100, S&P 500 and DJI) that the mid-term up-trend (see my mid-term post) is exhausted.

The VIX volatility index has declined further by confirming my outlook even stronger. My other technical indicators are bullish as well.

Bull Market?

As I expected yesterday the indexes are lower… however, I would assume the recovery towards new highs. Read my yesterday post.

S&P 500

Overall my mid-term outlook is bullish.

Even if I expect a temporary pullback (continuation of the recent) I believe it should be within the current mid-term uptrend and I assume to see the indexes and all market higher.

If you read my post on November 23, 2007, you should know my main points why I was thinking about coming trend reversal. Now, when reversal occurred and we see a pullback, many traders are asking the logical question: “Is this pullback is the down-trend restoring, or this is just a correction within the dominant mid-term up-trend?”.

Basically we have to decide if the up-rally started on November 27 could be consider as a beginning of the up-trend or it was just a correction and the market will drop even deeper down.

By coming back to the S&P 500 index chart:



Some points that make me assume in continuation of the bull market:

- The SBV advances and this is a good sign to the indexes higher;

- The MACD advances as well and it would be nice to see it run over zero line into positive territory as further up-trend confirmation;

- The Stochastics advances after crossing 20 level. This is very nice for up-trend confirmation;

- The MVO=0 shows no more high volume activity. The volume dropped and there is no more panic selling or greedy buying. After big volume surges during the price move down (red MVO indicates it) we should see up-move until we face big volume surges during the price move up (green MVO);

- The VIX volatility index declines. It would be very good to see further VIX decline as further confirmation of strong up-trend

The DJI indicators show similar picture. The NASDAQ 100 in opposite to the S&P 500 and DJI show smaller volume surges during the crash and when the S&P 500 and DJI continued to drop the NASDAQ moved flat. We still can get surprised by the NASDAQ, however as I already mentioned, based on the charts I use I believe the odds are on the bull market and I expect to see the indexes higher over the mid-term.

No changes

No changes, in my mid-term. The NASDAQ 100 run over November 14 high, while the DJI is at this level and the S&P 500 is still below. It would be nice to see the S&P 500 breaking the 11/14 level to confirm the mid-term.

There is still possibility to see something like we saw after August 6-8, however, the technical indicators more point to the continuation of the up-move.

I would not play now short….

Bull Market

Great last 2 sessions – see my mid-term report two days ago.

Overall, based on the index charts I track (NASDAQ 100, S&P 500 and DJI) my mid-term out look is bullish. I would expect to see tomorrow more up.

So far I see nothing that can stop the up-move, unless we will face something like on August 6, 7 and 8, when the indexes rallied up for 3 sessions in a row and then dropped even further. At this moment, many of the technical indicators look like they looked on August 6-8. However, 12 day VIX (volatility index) is dropping – it was rising on August 6-8, and average 5-day volume is dropping as well – it was rising in August 6-8. Those two indicators make me feel more optimistic and assume that the odds are on the up-move side.

I’ll try to post an extended report based on the index charts I track during the weekend.

NASDAQ 100

No changes in the mid-term outlook. See previous post – we still could see more to the downside, however, the reversal could be very soon.

For short term I use 15-dqy chart (1 bar = 15 minutes). Below you may see the NASDAQ 100 chart with RSI, MACD, Stochastics, Advance Decline oscillators, SBV and MVO.



I would not expect to see a short-term move up until I see decline in SBV, MVO, AD oscillators and MACD. In addition it would be nice to see RSI above 30 and Stochastics above 20. The similar situation could be seen not just on the NASDAQ 100 but on the S&P 500 and DJI.

Mid-term Trend

The question is simple: is this the end of the mid-term down-trend, or we can see further slide down.

Below I have posted the S&P 500 and NASDAQ 100 1-year charts

We may see decline in the volatility index. Each time high volatility is seen near support levels and current decline is not an exception. The VIX is still at high level and it would be nice to see further VIX decline – it would confirm the reversal

Each time at support levels we see high volume – now we may see that trading volume become lover. The drop in volume may indicate that there the selling power that pushed market down become exhausted

MACD and Stochastic are still at low levels – it would be nice to see them moving up as a confirmation of the trend reversal

Over the past few session we see that the NASDAQ 100 moves basically flat while S&P 500 and DJI moved down. The similar situation was in October when, on October 11, 2007 we saw the beginning of the downtrend that was not supported by the NASDAQ 100. There is a possibility we may see another NASDAQ 100 drop.

For advance/decline indicators I prefer using 60-day S&P 500 chart. The advancing AD oscillator would point to the possibility of developing up-trend. In some cases I use smaller the 1-year frame for mid-term analysis simply to more precisely define the sensitive periods when the mid-term reversal may occure.

Overall my view over the mid-term is that trend reversal indicators are strong and now could be good time to buy for mid-term players, for those who do not mind to stay in the loosing position if the market continues to be in the bear mood. Those who would prefer enter a bullish position more conservatively may choose to wait for more strong up-trend confirmation indicators.

Another volatile session

Another volatile session: We saw strong opening (as I mentioned yesterday), strong slide down and strong recovery.

The Friday is over – November options are expired – now we should expect less influence on the market trend by option traders.

I still see the possibility that the market could be traded lover on Monday morning. However, I would expect the market move higher over the next few sessions, unless my indicators about mid-term resumption are wrong.

S&P 500

Market down again. Now, S&P 500 lead the drop.

We see the extremely high volatility over the last 6 sessions. Tomorrow is an option expiration.

Today indexes dropped, but did not hit the November 12 lows. I will not be surprised if we see the strong move up tomorrow. There is still possibility of hitting lows again.

Nice start and bad finish

So what did we have today? - Nice start and bad finish. NASDAQ 100 did lead the market down again.

Even if the market will move towards the recent lows, I’m still under the impression that this is the end of the mid-term down-trend. Advance decline and volume indicators show that the market is heavily overbought and we may expect the strong move up.

On the other hand we should remember that while all the indexes moved into the down-trend (in October) the NASDAQ 100 was moving flat at the top. Now we see that the NASDAQ 100 is trying to get what it missed moving against the whole market and pushing it lower.

The day after tomorrow we will have options expiration – another factor that may affect the stock market over the next two sessions.

Mid-term up-trend has started today???

Long week end is difficult, especially when yesterday we saw the continuation of the market crash.

On Thursday, November 8, I have mentioned I was bullish and on Friday I bought SPY options (January expiration). I preferred SPY over QQQQ because the S&P 500 index looked more bullish and heavier overbought then the NASDAQ 100 index.

I believe that there are good chances that the today’s recovery will continue. Maybe we will not see such strong rally, however, overall I would expect to see the indexes higher over the mid-term. That was the main reason why I decided to keep my options position opened.

Will it be SUNNY tomorrow???

As I expected yesterday “I would expect the further slide”, we saw the continuation of the yesterday rally.

The NASDAQ 100 was leading the market into the “hellhole”, while the S&P 500 and DJI indexes were struggling against this crush. It looks like after the strong drop yesterday the S&P 500 and DJI were ready to recover, however, drowned by the NASDAQ 100 they slide down as well.

The last two sessions have brought a huge output of the volume. No doubt, the huge number of stop losses was eaten and huge number of traders run out of the market. The tricky question is – “who has bought from those who in panic left the market???” And somebody was buying today…. Keep in mind that the volume is two side transaction: if somebody sold shares – that means somebody bought them….

Scary drop

Scary drop. Good for me I have closed my position yesterday and did not trade. Now, you may see why I prefer to stay in the position as less as possible.

After such day it is difficult to be in the bullish mood. 3% down on the NASDAQ 100, S&P 500 and DJI – does not happened very often.

Now, I would expect the further slide, however, any time the market could reverse and we may see similarly strong up-move. Lately, the market is very volatile and we may expect to see the further volatility. The next week is an options expiration week and it could add to the volatility.

What is my point on the market? - I confused – I would rather stayed out and just monitor the market tomorrow. I think it’s too dangerous to trade short - at this moment since we could be very close to the end of the down-trend. At the same time I think it’s too risky to open a long position - the market can still continue to move down.

As I mentioned above I would monitor the chart for the reversal.

30% in one trading session

Isn’t it nice – almost 30% in one trading session. Of course I closed by position by buying SPY put options.

I’m still bullish, however I closed my position. It’s just my personal trading style. I do not like to stay for a long time in position, but rather I would prefer have 1-3 short lived conservative trades within a month.

As I have mentioned above I’m still bullish and would expect to see tomorrow the continuation of he recent up-move. On the other hand the NASDAQ 100 index may still bring some unexpected surpises…

Volatile Day

Wow. 1% down at the open, then almost complete recovery, then back to lows, then recovery again. When the market opens lower I was scared that my analysis wrong, the recovery made me more optimistic, however second decline brought fear again. On the second recovery I was already exhausted...

We saw very volatile market over the last few sessions. Such big volatility is usually happened at the resistance levels when market tries to collect more bearish players and cut bullish traders.

Yesterday I was thinking about opening a position, however sharp drop down put me in the waiting mood. I was ready to open a trade only by the end of the session. I did not buy options. I think it's too risky to do it in such volatile market. Rather I have sold SPY naked puts (SFBWQ) at $1.20.

Let's see what tomorrow will bring us. Now, I'm more bullish by the following reasons:

S&P 500 and DJI indexes did not break recent low levels
The indicator still show that S&P 500 and DJI are oversold
The NASDAQ 100 has become a little bit oversold as well

Will we see recovery tomorrow

I mentioned in my previous post "my short-term outlook is not as bullish. I would still expect some further move up, but would consider staying in cash until I see clearer short term indicators." – good for me I stayed in cash…

Today the S&P 500 and DJI came close to October 22 and October 24 lows. Taking into the account hat this level is close to the August 8 and September 4 highs as well as to June 8 and June 27 lows I would say that this level is very sensitive to many traders. There should be a lot stop-loss orders around this level and as a confirmation of this we may see big volume surges on the move down for the last 2 sessions.

The day before yesterday I was more bearish in the short term, but not now. I did not played short, since I did not expect such strong move down (good for me). Now my short-term indicators showing that there is bigger odds for the market to move up tomorrow and this goes along with my mid-term bullish outlook.

I think tomorrow could be a good day to try open a long trade. I would not bet on the QQQQ options but rather I choose the SPY options ( maybe January calls) or if to be more conservative uncovered SPY put options (November expiration with $3-5 out of the money strike).

The only thing that makes me nervous is the NASDAQ 100 – it does not move along with other indexes…

Unexpected 10% on QQQQ options in few hours

As I mentioned yesterday I would expect the down move, but I would not a play short on this move, but rather use it as an opportunity to buy…

Today was nice day. After strong move down on all indexes, I saw the huge volume spikes that indicated that this correction down generated some panic among the traders and as soon as I saw the NASDAQ 100 started to recover I used this to buy options. Maybe not a lot, but by the end of the session I have pocketed 10% profit from the January QQQQ options.

The question is what's next?

By the end of the session I saw the similarly huge volume spikes to the price up-move. That mainly pushed me to close the QQQQ options position.

In spite today’s volatility I’m still in the bullish mid-term mood. However, my short-term outlook is not as bullish. I would still expect some further move up, but would consider staying in cash until I see clearer short term indicators.

At this moment my main short-term indicators on the NASDAQ 100 show that this index is overbought and for healthy up-move there is a need in a correction. On the other hand S&P 500 and DJI would show that there is still some room for up-move before we may see the that correction. I would expect more flat market for a few sessions with possible up-move. So let’s see what tomorrow bring us…

Small Correction?

Again the NASDAQ 100 moved up while other indexes dropped down. It looks like today we saw the slide that could be a beginning of the small correction. I’m still bullish in the mid-term and I would assume to see the small correction within the dominant mid-term up-trend.

Yes, tomorrow I would expect to see indexes lower, however I would not risk to place a short trade, since my indicators show that the up-move could be resumed at any moment. I would rather wait for a nice moment to open a long trade.

First Quiet Day

The new week started on the small average daily volume. It could be a sign that high volatility days are over. Today was the first session when the NASDAQ 100, S&P 500 and DJI indexes moved in the same direction and with similar dynamic.

I would expect to see indexes higher over the mid-term – at least my indicators points to hat. Of course the NASDAQ 100 is still bearish on some indicators and there still could be corrections to the down-side and I would expect the NASDAQ 100 would be a power source for this corrections. It maybe will take a few sessions until we completely be able to disregard thus bearishness.

Any way, I’m bullish and I would try using corrections downside to buy call options or sell short puts (uncovered options).

The same as yesterday, but I'm more bullish

The same as yesterday, the NASDAQ 100 tried to push the market down while the S&P 500 and DJI tried to move in the opposite direction.

At the current moment the majority of the technical indicators are mixed for the NASDAQ 100. The analysis applied to the S&P 500 points to the bullish mood. I would expect to see the beginning of the recovery more then continuation of the down-trend.

If I would think of placing a trade tomorrow I would prefer to deal with SPY, not QQQQ, simply because the technical indicators are clearer for the S&P 500 then for the NASDAQ 100. Let’s see what we will get tomorrow. So far, I’m bullish, but I would not bet on the QQQQ.

Nice trading

Today was a good day - 15% on one trade only.

What is going to happened tomorrow – that is the question. Nobody could be sure, I only may expect…

Today we saw the S&P 500 and DJI retesting their October 22 lows with strong recovery after. It looks like the S&P 500 and DJI could be at the bottom of the correction and we may see the recovery soon. On the other hand the NASDAQ 100 failed to follow the market during the slide down that started on October 11. There comes conflict situation – while the S&P 500 and DJI indicators show oversold levels the same NASDAQ 100 indicators show overbought levels.

I spite the fact that the NASDAQ 100 failed to follow the S&P 500 over the past few weeks, I would expect to see the recovery rally more then continuation of the down-trend over the next week.

Regarding tomorrow – I would skip trading – too high volume on the NASDAQ 100 over the last 2 session.

15% in a few hours - no bad

The short position (sold short at $1.44) was covered by buying at $1.22

As I expected

As I expected yesterday the market is down.

During the morning recovery I have sold short QQQQ cals (QQQLC at $1.44)

Let's see if that will work. 15% would be nice

NASDAQ leads the market - for how long?

Starting from the October 10, 2007 the S&P 500 and the DJI are in the deep correction. In opposite, the NASDAQ 100 has moved flat all this time.

The Last 2 sessions we saw the recovery from the correction and the logical question could be asked: “is this the end? Will market continue to recover or it’s just a temporary stop before further drop?”

Today we saw big volume on the NASDAQ 100. No doubt, some “big money” played “some games” in this sector today. As a rule after such big volume the market need some release and I would not expect the NASDAQ 100 move strongly further up. I opposite I would expect slow down in the up-move and maybe only modest rising, but most likely flat market over the next few sessions.

If I see that the NASDAQ 100 starts to follow this scenario, most likely I will start thinking on selling short QQQQ option calls.

Creation

By following my friends’ advices I finally started.