Friday July 8th, 2016

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Stormchaser80, L.L.C.
Disclaimer: http://navigatethemarketstorm.com/disclaimer/ 
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Trading Account: At 1041 AM Eastern 7/1/2016, bought SDS SEP 16 2016 17.00 C for $1.19 
401K: Bearish
Long Term: Bear Market, targeting SPX <666 by 2022

As always, the Monthly, Weekly, Daily, Hourly and so on SPX charts I show are from all hours of the day, and therefore the prices and indicators will vary from charts which only show action during regular trading hours. I believe this method is more robust and encapsulates global sentiment, better capturing trends.

First Thoughts…

From yesterday’s (Thursday’s) post: “What’s next? Well as I said above the daily chart suggest not much. Looking at the hourly chart, Bollinger Bands are quite narrow so it could get interesting for short term traders here shortly.  I would be careful here, keep a look out for a shot higher, before the larger move down emerges. Just a hunch looking at the technicals.”

And today was that shot higher. How do the charts look?

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SPX Weekly

W

ADX: Bearish, trading range

RSI: Middle of the range

Candle: Strongly Bullish

Volume: Very low, less than last week and well below slumping 20 period moving average

Moving Averages: Close>20>100>50>200 period moving averages

% Bollinger Band: Top of the band

Bollinger Band Width: Narrowing

MACD: Bullish at a positive value, histogram ticked lower for 9 of 11 past weeks

SPX Daily

D

ADX: Bullish, trading range

RSI: Middle of the range

Candle: Quite bullish

Volume: Very low, well below flat 20 period moving average

Moving Averages: Close>20>50>100>200 period moving averages

% Bollinger Band: Upper quartile

Bollinger Band Width: Slowly rising

MACD: Bullish at a positive value, histogram ticked higher for 8th straight day

SPX Hourly

H

Near the 2131 pivot

ADX: Bullish, trending

RSI: Overbought

Volume: Mostly bullish and at the open

Moving Averages: Close>20>50>100>200 period moving averages

% Bollinger Band: Top

Bollinger Band Width: Rising trend

MACD: Bearish at positive value

 

VIX Hourly

VIX

$VIX made another low after a huge selloff.  However both the RSI and especially the MACD (which  has been a good trading indicator at least with short term trends as shown with vertical green lines) are positively diverging.

Positively diverging MACD since late March which is good for VIX Bulls in the medium term, with a relatively narrow Bollinger Band width supportive of an upcoming large move.

SPX Advance-Decline

SPX_AD

While SPX has traded relatively flat going on 2 years now, there has been an upsloping A-D line, yet the volume A-D has shown negative divergence.

SPX Breadth

Breadth

New Highs/Lows, McClellan Oscillator and Summation index all have been negatively diverging with the market (blue arrows).

SPX %above MA

SPX_MA

Percent of SPX stocks above their 20/50/200 have been negatively diverging with the market (blue arrows). Huge negative divergence seen on the Full Stocastics (red arrows).

NOTE, that the market can stay in the BUY or SELL range (green or red) for quite some time.

TLT:TIP Daily

TLT_TIP

3 New All time Highs this past trading week, but nothing to see here, ha!

The bond market Deflation vs. Inflation metric (iShares Barclays 20+ Year Treasury Bond Fund vs. iShares Barclays TIPS Bond Fund). The previous peak was 10 Feb 2016. Values late in 2014 and pretty much all of 2016 are showing higher Deflation fears than even 2008-2009.

From this chart you can clearly see when the FED stepped in (when this ratio was nearing 1, except things got out of control at the peak of the 2008 downturn until the FED figured some things out).  Clearly things changed since late 2014 and the FED has stepped aside leading to the Deflation fears building beyond the 2008 crisis.

HYG:IEF Daily

HYG_IEF

Bonds having a more muted run higher. Note how Far we are from the bottom vs. the top.

The bond market signals a sideways move in greed vs. fear since mid March, while MACD/RSI/ADX is negatively diverging indicating a large bearish move is expected in the medium term.

Oil Daily

OIL

If it can’t rally now, Oil is toast. Note how Far we are from the bottom vs. the top.

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Summary

Looking at the hourly technicals, I can see the need for a short pull back (likely Sunday night) followed by 1 new high (probably Monday morning).

While short term moves can surely play at the emotions of traders, its the long term trends that make for profitable swing trading.

Here are some bad signs I see for the market:

  1. Bullish moves have been on low volume
  2. Weekly chart shows after 2 years of sideways trading, technical indicators have weakened substantially
  3. Positive divergences on VIX technicals
  4. Negative divergences seen on Breadth indicators
  5. Negative divergences seen on amount of market supporting price
  6. Bonds (greed vs. fear) is quite muted, much closer to 2016 lows than 2014 highs
  7. Oil (economic)  is quite muted, much closer to 2016 lows than 2014 highs
  8. TLT:TIP (deflation concerns) made All Time Highs 3 times this past week, and is well above levels seen during the peak of the 2008 crisis

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Feb-March 2016 Posts: https://stormchaser80.wordpress.com/ 

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Note: I want you to know that although I have taken the steps to start the subscription business, I will continue to offer the free service through May 2016. I want there to be a good record of (hopefully) accomplishment. Plus I don’t want to spring anything on anyone unfairly. I thought 3 months was enough lead time. I also want to present something nice, and well worth your visit (and subscription).

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