Yet Another Bear Flag
While SPY made a bullish, inverted head-and-shoulders reversal pattern on its intra-day chart after the FOMC announcement on Wednesday and may rally a bit on Thursday, its daily chart is starting to look like another bear flag. SPY had a high-volume drop on Monday, and a sharp, but low-volume retracement Tuesday and Wednesday. That’s a classic bear flag. If SPY is unable to surpass Wednesday’s high, the next leg of the bear flag projects down to the May 4th gap at 87.89.
QQQQ, IWM, XLF, and ES all have the same pattern, and DIA may already be leading the way down. The XME popped back above the neckline of its head-and-shoulders top, but did so on light volume.
The market needs to rally on strong volume immediately; otherwise the SPX has another 20 points of downside coming soon.
Losers
The top four weakest sectors since the June 11th peak are: XME, XLE, XLB, and XLI.
Ant Stampede
Wednesday morning, breadth on the NYSE hit a peak of +2100. That’s a lot of stocks being up. You don’t get breadth like that every day. In fact, the last time was June 1st – a day when the SPX was up 24 points. And the SPX was up only 6 points on Wednesday? That’s a major bearish divergence. The market may not be able to generate breadth like that again for another three weeks. When you get that many stocks rallying, you have to put some points on the board, and the market failed miserably. Lots of stocks were up, but not by very much; sort of like a raging stampede of ants. Yes, there are a lot of them, and they are coming at you hard, but they are easily squished nonetheless.
George, 5 years ago when I was here we had nothing but dial up and satellite. (slow speeds) this wifi has slow feel to it but thankfully i can connect
Rainy day here. (after midnight in the states i know) LOL
K,
Nice to hear that area is “up to speed” with its Internet. What is the time difference, you’re 9 hours ahead?
Matt,
Nice market analysis. No fire ants allowed.
End of month, end of quarter time frame is upon us…Matt, may I inquire, are you holding puts now or waiting for a better entry ? I’m still riding some DXD and QID with cov. calls sold (49 and 35 respectively), and FAZ Oct 10 calls are a lotto ticket…
thanks !
after:
I like the QID position you have put on! I think you’ll get exercised with QID (I know this is contrary to the smart money tech buyers) possibly today. What do you think?
The futures, as always, had the same pattern as SPY yesterday at the close. So they had the same inverted head-and-shoulders pattern. And at midnight, in an unusual straight-up move, the futures completed the pattern. I had 904.50 for the target, and they actually hit 908.50. The moral of the story is that the energy in SPY’s H&S pattern looks like it was expended in the futures.
after, yes, I’m short.
Thanks for the great analysis Matt!
downtrend line from spx peak @956 now @ 907
ready to short any sign of weakness now
Well, I guess the energy in SPY’s H&S pattern was not discharged in the futures overnight. SPY just came very close to the 98.85 target that I mentioned back here. So, maybe that will be it for today.
a burst above 907 could send it towards 927
spx still trading outside 5 min bb…strong 3rd or c wave action up
The green volume is pretty strong today. Sure glad I let my puts fly last night. Watching 910-911 as first resistance and I think that people have been talking about gap resistance on the SPX at 915-916 ish level.
above 911 opens the door to 927
spx now inside 5 min bb will take 1/2 short position on next surge
took 1/2 spx short position here
910.85 is key http://3.bp.blogspot.com/_TwUS3GyHKsQ/SkKVL_5nGyI/AAAAAAAAA9Q/adR2PUxDw8M/s1600-h/spx5.png
stop is at 910.86
The market didn’t move very much yesterday, so I wasn’t expecting the usual reversal to the reaction to the FOMC announcement. However, the market did drop intra-day yesterday, and this move up this morning seems to be correcting that reaction. This would also explain the unusual surge in the futures last night.
As Charlie points out, volume is strong this morning. SPY’s first-hour volume was the strongest since the June 11th peak. If the market can at least hold these gains, I would probably switch from bearish to neutral. However, there is a good chance that this action is just a technical reaction to the FOMC, so I wouldn’t be surprised to see the market fade. The XLF has turned red, so we have a red flag already.
nice buy there Phil.
spy downtrend from june 11 peak @ 90.5 has been touched 3 times and again now
charlie…thanks…i hope
charlie…liz anne sonders of schwab wrote …”hope is not an investment strategy” lol
Looking at the daily, the SPX is backtesting its 9MA while the Q’s have bounced off the 36MA.
george….daily qqqq is testing uptrendline from march low and 18dsma from below now
george…flip a coin http://evilspeculator.com/wp-content/uploads/2009/06/2009-06-25_spx.png
phil,
if you don’t mind me butting in… horror and shame… that’s what I see.
The Q’s had a longer term goal goal whereas QID was working out a short term goal. Q’s showing a bull flag – I’m stubborn here though – Q’s get smacked by days end, IMHO.
I suppose this makes sense. That market plunged on Monday because the Fed was talking about exit strategies, and yesterday the Fed did not adopt any such strategies. So, Monday’s plunge should be reversed.
Matt, I noticed that was the story (exit strategy talk) you were adopting, and although I’m not sure that’s the script it sure works for now! If I’m wrong and this does not trend down by this PM’s close I’m back to the drawing board – pricing in a nouveau riche victory and inflation boogey man.
These puppies have gone straight up. Going to be a hard fall.
SPY is filling Monday’s gap. The Q’s have already filled theirs and are now up against their June 12th gap. XLF, IWM, and DIA are still a good distance from their Monday gaps. I suppose the Q’s are the key as they attempt to take out 36.36.
918-920 is the average from May lows to June highs. If we trend out of that I’m calling it a short squeeze and looking for some significant volatility but the range changes nonetheless.
charlie…. when i lefta whil ago i was short ….now i come back and i find i was stopped out and now i am long…..crazy market….now i have to find a stop loss point….
The SPX needs to hit 921.23 to fill its Monday gap. So far, it has come up 3 points short.
phil Says:
June 25th, 2009 at 10:21 am
above 911 opens the door to 927…..charlie….i will sell @ 924
SPY just made a bearish inverted hammer candle on its 15-minute chart with pretty good volume. The market might correct a bit here.
phil:
Would you like some coffee? Lunch, etc?
this looks like 4th wave action in spx …will sell next surge
mitch..i just got back from lunch…..coffee….no thanks..too hyped up ….
Matt,
“SPY just made a bearish inverted hammer candle” You got that spot-on.
THanks
still think one more surge coming….
spx can close gap on next surge @ 921
1 min bb pinching…”big “move coming
Mitch,
I’m still in there with QID and just added…let’s hope we get a sell-off at the endo f the day…
out of spx….flat now
Thanks George, though this hasn’t been much of a correction so far.
added more DXD @ 48.26
was concerned with end of month, end of quarter, but will take advantage (hopefully!) of thiis entry point\
may sell the 49 strike call on this…
I put in shorts at the 91.60 level. That is pretty close to gap resistance along with the 38.2 fib retracement from the entire move downwards from the peak. That was my first order via my mobile… hopefully it will be a good one.
Will add more if we go higher.. Right now.. SPY at 91.57, but the volume on the last few candles has been very low. Thinking we might go higher still.. but I’m hoping not.
Maybe it will top out at 921 on the spx as Matt points out.
I’m with you though Phil.. if we go much past 924.. I’m out.
charlie….i sold my spx long just before the surge i said was coming….lol
gap close is just about a done deal
charlie …now we are in no mans land between 911 and 927….thats it for today till one of those is breached…..hasta la vista
yeah.. we are in a “neutral zone” right now. Maybe I should hedge my shorts a bit.. thinking of what might make sense right now. We didn’t drop far enough for my liking.. and with the strong volume today and fill of the gap (which is happening as I type).. this is all very bullish to me.
i gave up most gains the past 2 days… i should have exited trades and gone on vacation relaxed
~930 is:
62 Fib off the “top”
makes a nice H&S
hits an upper channel line from last year
The Q’s still haven’t been able to take out 36.36.
Charlie,
The gap-fill is bullish, though in the short run such an event is often bearish.
Matt
The TICK just made a double-top and a lower high; probably due to the resistance at the gap. Now, I will watch it to see if it makes a lower low on this cycle down.
SPY looks like it is making a head-and-shoulders top over the last half hour.
Matt,
What time frame is that H&S you’re looking at?
Tks
No MOAR today with all of these slap-happy buyers sticking the shorts that ganged up on this possible turning point.
BBT only up .31c, but has been a cash cow today.
MOOooo
Matt.. did you take off your shorts from this morning? You had mentioned that you were short given the futures action.
TNX -1.26. No help there. S/B up that much. GO figure.
Some volume selling coming in right now on the markets..
George,
It was the 1-minute chart, though it has already met its breakdown target. It was just a small H&S. SPY has fallen to a support level now around 91.60 and may or may not bounce off of it.
Matt
I wrote a 94 call naked for july at 1.14
i hope i’ll buy some new clothes by time it expires (and i collect 114)
K,
“The Emperor Wears No Clothes” so don’t worry about being naked.
K,
What time is it where you’re at right now?
K i’m up a few cents now on my last DXD installment, lets hit the shops together !!
it’s 8:20pm george..
6hrs ahead of my old eastern time
George,
http://www.worldtimeserver.com/current_time_in_AL.aspx
Matt
thanks Matt,
and you can thank the double post (which matt deleted , thanks) to the slow wireless “dialup” haha.
all i can say is ilove the food, the women, the alcohool and the feeling of being home.
now when i can get cable like speeds here i might just move.
stupid 5 min tick didn’t stay below -600 for too long so i could see my bears come out. sucks
SPY might be making a larger H&S now with the left shoulder at noon and the head at 1:23pm. If SPY breaks below 91.46 on strong volume, then the target would be about 90.75.
Thanks Matt.
Careful here, SPY is back testing its 5min 36MA. If it fails… down the tubes.
can you please flush so i can test my tubes?
BBT is about the choppiest I’ve ever seen it.
REALLY unhappy with ICE. It should be flyin’. The last time it went against the market – MOAR.
george……. moar in ten year notes….(tnx anti moar) sell em if ya got em
Not looking good for SPY.
phil,
Good point.
SPY 5min MACD trendlines could bounce here at the zero line. Not doing so yet. Has gone below the 5min 36MA. Could try another run, but 15min looks like it is turning over.
SPX 15 min Three Amigas.
SPY trying again to overcome the 5min 36MA resistance. Up against it now.
As Matt pointed out.. we may be looking at the H-S pattern that has been developing over the past 2 days. Would need to see some kind of drop in the market so that this head can finish forming though. If 15 min rolls over.. we might just see that.
JG, nice spot.
Charlie,
Glad you and Matt are pointing those patterns out… I have a hard time seeing them.
Tks
SPY’s volume was strong this morning, but it has tapered off. It looks to come in substantially lower than Monday’s. So, so far, I would say that there has not been a lot of conviction to today’s buying.
Red team takes the ball..
91.40-91.50 is the key here. If the market loses this today.. on volume, then the big H-S pattern from the past 2 days remains in play. Neckline around the 89.60 level right now. After that.. the right shoulder should form with a peak of 910 – 911 or so.
These are all ifs.. and assumes we actually finish the H-S formation.
Doesn’t look good for the bear team right now.
Mitch Says:
June 23rd, 2009 at 10:50 am
phil:
thx for the link. I’m feeling a 918-920 in the next 7 days. I investigated an S&P e-mini position through CME.
marty,
I was rootin’ for the qid for ya’
No MOAR, but the Q’s failed to take out 36.36, and I think that was the primary drama of the day.
SPY filled its intraday gap it had on the 22nd.
The next gear will be reverse.
We were @ 889 when I said the above. Would have been a profitable ST move.
Mitch: What’s the feeling now for next seven days?!
Sudhir:
I based the feeling on an average – divorced from emotion (other than the rush of contrariness) from the fact s&p was dangling at taking out a months worth of gains. I’ve learned a ton here and one thing I’ve picked up from several commentators is not fighting the tape and realizing the range and working within it cautiously.
Mitch,
I’m holding on. Bonds were strong today. If they’d gotten clobbered, I might have sold. Everything else moved up… so staying green, as Paula says…