S&P 500: Brutal Week, What’s Next?

The S&P 500 (NYSEARCA: SPY) made a new high of 293.94 on September 20th, 2018 but the entire move higher lacked momentum and also leadership. The monthly RSI was at or nearing 90 which is extreme reading. The S&P 500 (SPY) made a lower high on October 3rd in what turned out to start the brutal move lower during the past week. Prior to the decline, there seemed to be irrational exuberance from many market participants with some extreme complacency. A few such readings to mention here were the Equity Only Put / Call Ratio ($CPCE) and $VIX to $VXV ratio which were consistently showing complacency. The question now is whether or not the pain is over for market participants. Let’s take a look at some charts. The first chart depicts…
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2 Bullish Stocks: Twitter (TWTR) and Michael Kors (KORS)

Today I want to share 2 trading setups that I have my eye on. The stocks are Twitter (NYSE:TWTR) and Michael Kors (KORS). Charts and commentary are below. Twitter (TWTR): The company needs no introduction as most of the fintwit people thrive on this platform. The company has a market cap of $34 billion. The company reports earnings on July 25thbefore market open and the short float for the stock is 6.17%. January 2019 – 70 calls were bought today (June 26th) although there has been constant buying in this name. After the recent run to make a 52 week high, the stock has been consolidating on lower volume to let the short term moving averages catch up with price. Stock is holding both its 8 EMA and 10 EMA on…
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S&P 500 Technical Update: 4 Reasons For Caution Into Month End

The S&P 500 (NYSEARCA:SPY) had been consolidating to form a bull flag at the 2780 zone… until additional trade war related news between the US and China took center stage once more. The reaction to the news was that price broke intermediate and important price support levels around 2751-2740 on the S&P 500 Index. Range expansion to the downside took price down to an important support level on the daily chart – 2700, which also marks the 50 SMA on the daily chart. This support held. Quite a bit of technical damage occurred on this move lower but there is some positive divergence on Williams %R, a momentum indicator. Price confirmation one way or the other is required on Wednesday June 27th with month end and quarter end looming. So what gives?…
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S&P 500 Weekly Review: Will Traders See A ‘May Swoon’?

A LOOK AHEAD FOR MAY OPTIONS EXPIRATION (OPEX) It’s been a very tricky market tape for bulls and bears over the past couple of weeks. Bulls have been unable to press the stock market above resistance, while bears have been trying hard to break bigger support levels but in vain. A lot of sectors are breaking down, momentum and breadth is waning, and global issues especially with the so called “BREXIT” vote are looming in current and future headlines/news. There are many calls for “Sell In May and Go Away”. Consolidation/Digestion occurs either via price or time. While the short term action is choppy/range-bound, all that the stock market indices have managed to do so far is to pullback 2-3% after a mammoth 11-12% rally higher. The S&P 500 will be the…
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Stock Market Recap And Options Review: March 25 Expiry

The March options expiration ended with all three major stock market ETFs ($SPY, $QQQ and $IWM) finishing higher. $SPY closed well over its 200 SMA and is nearing potential resistance levels. While $QQQ also moved higher lethargically, $IWM consolidated well and broke out of a bull flag higher. $TLT showed some signs of life and is trying to bounce with a potential chance of a break higher. $CL_F (Crude Oil) moved higher while $GC_F (Gold) bounced after moving lower. $DX_F (U.S. Dollar) continues its downward move and took another pounding last week. Market breadth expansion was the norm with some intraday consolidation. With all that said, there are no sell signals yet to go short. From a breadth standpoint, here are a few indicators that may provide clues for the…
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S&P 500 Weekly Update: Stocks Fight To Hold Gains

Stocks rallied for the third consecutive week last week. Can the stock market make it 4 weeks in a row this week? The rally last week was led mainly by crude oil, and small caps stocks, with the financials sector not far off. This undercurrent of support propelled the S&P 500 higher into the beginning of a thick price resistance zone. Intraday levels of the McClellan Oscillator $NYMO reached levels not seen since 2008 last week and the indicator has remained overbought for the past 2 weeks. I certainly agree some of the market breadth indicators are overbought but that potentially has been the fuel for higher prices and what may be on the horizon for the next few weeks. There has been quite a bit of consolidation and this has kept the Relative Strength…
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S&P 500 Weekly Update: Backing And Filling… Or Worse?

Last week we got the anticipated bounce in a stock market downtrend. We are giving back some of those gains to start the week, but the key question is:  What will happen next? From what I see, I expect range-bound consolidation this week between 1884-1933 with big support at 1872 on the S&P 500 Index (SPX). Of course, there is a chance of going higher towards 1940-1950, however I will curb my expectations beyond that at least as of now. Most sectors, from a very short term perspective came into the week overbought or nearing overbought levels. So some back and filling is expected. We had a huge move from 1810 to 1933 or so. Crude Oil is trying to hold on to the gains from last week but struggling and looking…
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Stock Market Update: The Roller Coaster Ride Continues

Last week saw another week of selling in the stock market – fast controlled selling. But it gave way to another sharp oversold rally on Thursday after the S&P 500 undercut its lows. And the price action on Friday looked quite similar to January 20th although there were some positive divergences emerging over the very short term. All bounces thus far have ended at either the 38.2% Fibonacci retracement or the 50% retracement on shorter timeframe charts (hourly etc.). The path of least resistance is still down as all of the stock market indices are still below their 50 and 200 day moving averages and pointing downwards. Investor sentiment is very poor but nothing extreme. And there still is a lot of complacency on either side of the tape. As well, volatility…
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