Posts Tagged ‘XLF’

  • Markets are Still Acting Weak
    , December 16th, 2011 at 5:20 pm

    It was another rough week for equities and the markets continue to look vulnerable. The video below reviews key levels of support and resistance for the $SPY $QQQ $XLF $SMH and $IWM

  • About to Crash?
    , December 16th, 2011 at 12:19 pm

    We saw a spirited rally this morning which once again failed to hold and markets continue to be quite vulnerable to further selling. Yesterday we observed that the best case scenario was the beginning of some stabilization, but with markets back to the edge of the cliff and below declining important moving averages, the risks still appear to be to the buyers.

    By the way, the headline was written to get attention, I am told my headlines need to be sexier… Stay disciplined.

    click chart to enlarge

  • Support Broken Tends To Act As Resistance
    , December 14th, 2011 at 12:43 pm

    We have been correctly suspicious of the pattern of lower highs and lower lows below the declining 5 day moving averages for the $SPY $QQQ $XLF and $SMH and that has hopefully saved you some money. The weakness in $SMH was our primary reason for concern for the broader market and after the $QQQ lost support at 56 and the $XLF broke down through 12.80 it became obvious that further weakness would be coming. The SPY has also fallen below the widely watched 50 day moving average at 122.90

    We like to observe the Fibonacci retracement levels for potential levels of support, but until markets actually find support on a shorter timeframe, they are simply levels to observe. You can see on the charts below that the $SPY is trying to stabilize at the 50% level, the $QQQ at the 61.8% level, $XLF near the 50% and the $SMH has exceeded the 61.8 and is considered a “failure.”

    The one thing that is certain on the intermediate term timeframe is that the pattern of lower highs and lower lows remains intact and until we see that change, equities remain “guilty until proven innocent.”

  • Uncertainty Reigns Ahead of Fed
    , December 13th, 2011 at 12:35 pm

    Markets experienced some large volatility this morning but are now quieting down ahead of the Federal Reserve statement. The declining 5 day moving average continues to be a problem level for the $SPY $QQQ and $XLF The $SMH is in much worse shape and gives us reason for concern.

    On a larger timeframe (not shown), the $SPY continues to trade below the downtrend line connecting from the July highs as well as below the declining 200 day moving average. At the same time, it is holding above the 20 and 50 day moving averages. See how clear that is? Exactly, markets are still telling us that uncertainty is high.

    For the markets to be able to sustain any upward momentum, the pattern of lower highs and lower lows below the declining 5 DMA will have to be broken, at a minimum.

  • Recovering Market but Still Fragile
    , December 9th, 2011 at 6:19 pm

    The battle at the 200 day moving average continued in the $SPY this week and after being rejected from that level on Thursday, the market fought back impressively today.  The big rally we saw two weeks ago seems to be getting absorbed through a time correction rather than a deeper price pullback and that is positive because it shows there is a stronger sense of urgency for buyers.  Markets are not healed yet, but the process of price recovery is more encouraging than it has been in a while.

  • S&P 500 Up 7.3% This Week, But Still Down For Year
    , December 2nd, 2011 at 4:30 pm

    Last Friday the market closed on the low of a week long selloff and the market looked terrible.   On Monday, the markets exploded higher with a large gap, which left shorts scrambling to cover and sidelined cash wondering if it was just a blip in a downtrend.  As the market held the gains we saw another large gap higher on Wednesday which further pressured shorts and make disciplined traders who are accustomed to “cleaner setups” feeling like they once again missed out.  Of course there were intraday opportunities and some decent setups, but most of the people I know felt like they missed a lot of the action.

    To keep things in perspective, the $SPY is still negative YTD, despite a massive 7.3% rally this week.  The market volatility has been phenomenal this year and there is no reason to think things have settled down or become more normal.  The video below discusses some of the key levels to keep an eye on from here.

     

  • Retracement Levels Being Hit in SPY and QQQ
    , November 30th, 2011 at 2:12 pm

    Reasons for today’s strength can be found all over the internet, the discussion here will remain focused on price action.  We have been observing the Fibonacci retracement levels from the October highs to the low from last Friday and today the market is reminding us of why it is good to use these price tools for reference points.

    The $SPY has exceeded the prior support at 122 which would have been a logical place to look for resistance and has instead rallied up to the 61.8% level where it appears it should level out and digest the gains.

    The 56 level is important for $QQQ because it is; prior support, ~50% retrace and approx level of the declining 20 and 50 (not shown) day moving averages.  It seems there should be consolidation in this area.

    Yesterday I expressed a lack of confidence in continued strength and if you shared my viewpoint then today’s large gap up ruined the opportunity for low risk entries.  It is normal to question a patient and disciplined approach when the markets make such a large move and you are not participating.  I always like to think of the phrase “it is better to be on the sidelines in cash wishing you were in than it is to be in the market wishing you were out.”  Patience and discipline always reward us in the bigger picture.

  • Market Clarity?
    , November 28th, 2011 at 4:32 pm

    Today’s action was quite erratic and did little to provide any clarity to trade with confidence. The video below does show that there is some logic to the way prices are acting, but it is very difficult to have much trust in the action.

  • Rough Week for Stocks – Video
    , November 25th, 2011 at 2:34 pm

    It was a rough week for stocks as key support levels were broken and selling persisted. Right now there are no signs of new support levels being formed and a defensive posture remains prudent. While markets remain below their declining 5 day moving averages they should be considered guilty until proven innocent.

  • Moving Averages are Just POTENTIAL Support Levels
    , November 21st, 2011 at 4:21 pm

    There are times when a moving average will offer trend support or resistance to the penny and a lot of that has to do with the self fulfilling nature of technical analysis near widely watched levels.  The 50 day moving average is a very widely watched technical level and many people were looking to buy as the market touched that level.  Well the $SPY gapped down and closed below the 50 dma, so the perceived opportunity to buy never materialized.

    I like to say that the moving averages are just a reference point to compare trend to and that they give us an idea of when to look a the action on a shorter term timeframe.  The video below describes more…