Goldilocks Now, But She'll Be Vanquished

Just one look at the daily chart of SPX tells us - in hindsight - that this may have all been about gap acquisition. I was completely right and righteous to be bullish on the Christmas Eve massacre low, right on up to the 50-day moving average, which was the original target.

After that, I was compelled by the market’s technicals to be bullish for a drive to the SMA 200, and then 2815 resistance, and then… a top-test. I not only felt not righteous with these compulsions, I felt a little soiled. Hey, it’s just a human (as opposed to a newsletter writer/market commentator) talking about human feelings.

There is a difference between being contrary and willingly bullish and being compelled to be bullish. I don’t like the feeling of that second thing very much. Anyway, there is a gap and do you know what? Last summer’s rally filled a similar gap (not shown here) from late January 2018, proceeded upward into a nice bull trap, and then October happened. FYI. The bears were disoriented and thus pissed all last summer. But any self-respecting bull trap would by definition piss the bears off because it’s the same psychology that traps the bulls, only in reverse.

spx

So SPX is finally at its top-test limit, with its leadership chain (SOX>NDX>SPX) still strong as NDX is at new highs and SOX is well into new highs. We also have the scenario of SPX to 3000 (+/-) open if it is to hit point 5 on a potential Megaphone. Continue reading "Goldilocks Now, But She'll Be Vanquished"

Stocks Struggle After Day Of Records

Hello traders everywhere. Stocks are struggling to gain footing in the positive territory a day after the S&P 500 and NASDAQ both posted record closes. The NASDAQ itself set a new intra-day day high of $8,139.55 before retreating into and out of negative territory on the day. The S&P 500 is just 0.3% away from an intra-day record high of 2,940.91 which it hit on Sept. 21, 2018, after surging about 17% this year.

The move higher came less than six months after a massive drop in December, which led to Wall Street's worst year since the financial crisis. But a pivot by the Federal Reserve in monetary policy away from higher rates and the cooling of trade tensions between China and the U.S. helped stocks rally from those lows.

Stocks Struggle

The DOW entered the day 0.6% below last October's all-time high but has failed to get out of negative territory today. There is still a slew of corporate earnings coming this week so look for the DOW to make a run at its own record high later this week. Continue reading "Stocks Struggle After Day Of Records"

World Oil Supply And Price Outlook, April 2019

The Energy Information Administration released its Short-Term Energy Outlook for April, and it shows that OECD oil inventories likely bottomed last June at 2.806 billion barrels. It estimated stocks fell by 18 million barrels In March to 2.829 billion, 23 million barrels higher than a year ago.

However, throughout 2019, OECD inventories are expected to rise rather quickly through November. At year-end, EIA projects 2091 to be with 2.915 million barrels, 53 million more than at the end of 2018.

For 2020, EIA projects that stocks will build another 70 million barrels to end the year at 2.985 billion. That would push stocks into glut territory.

LLLL

Oil Price Implications

I updated my linear regression between OECD oil inventories and WTI crude oil prices for the period 2010 through 2018. As expected, there are periods where the price deviates greatly from the regression model. But overall, the model provides a reasonably high r-square result of 80 percent. Continue reading "World Oil Supply And Price Outlook, April 2019"

Stocks Flat Ahead Of A Big Earnings Week

Hello traders everywhere. Stocks struggled Monday as Wall Street braced for the busiest week of the earnings season. The DOW fell 40 points, while the S&P 500 and NASDAQ were little changed.

More than 140 S&P 500 companies are scheduled to release their quarterly results this week, including Coca Cola (KO), Procter & Gamble (PG), United Technologies (UTX), Verizon (VZ), Twitter (TWTR), Lockheed Martin (LMT), and eBay (EBAY). Facebook (FB), Microsoft (MSFT), and Tesla (TSLA) Motors are also set to report later this week.

So far, the majority of corporate earnings reports have topped expectations. FactSet data shows 76.5% of the S&P 500 companies that have posted earnings have surpassed analyst estimates. Analysts came into the season with low expectations for the season, forecasting a 4.2% drop in profits.

crude oil

Crude oil is trading at it's highest levels since October of 2018 and is currently trading above $65 a barrel. The reason for the spike higher is that the United States demanded a cut off of Iranian oil exports to major importers like China and India who had been granted exemptions from sanctions, that statement rekindled fears that this by the U.S. could lead to a supply crunch. Continue reading "Stocks Flat Ahead Of A Big Earnings Week"

S&P 500: Drag & Drop?

Last August I was thinking of the S&P 500 index and wondered if its uptrend had been exhausted on its way to the upside. The price was at the $2833 level, and it failed to break the earlier top of $2873. The RSI showed the Bearish divergence and the index started to drift lower. I thought it was a complex correction and another drop to hit the lower bound of the $2533-$2873 range was considered to be imminent. The majority of you supported this idea.

Let’s check the updated chart below to see what happened next.

Updated S&P Daily chart tailored in August 2018.

LLLL
Chart courtesy of tradingview.com

As we can see from the chart above the idea itself was good as the price not only retested but just smashed the so-called “bottom” of the range. The actual CD segment, which initially was thought to be equal to AB segment, had reached the ratio of 1.75 exceeding the next most common after 1:1 ratio of 1.618 (Fibonacci ratio) amid the panic sell-off. The trigger, which was set on the downside of the blue uptrend, was right as the index didn’t look back until the very bottom after it fell out of that blue uptrend. That move was accurately confirmed with a breakdown of the 50 level on the RSI sub-chart. The predicted zigzag structure of the drop also appeared to be correct as it is natural market behavior when one market stage changes the other. And talking about where we were right, I also would like to show you the ballot results on the timing of the bottom of the drop. Continue reading "S&P 500: Drag & Drop?"