Recap: QE3 price not value or dodging a bullet?

This week, 9/13 Fed announced QE3 $40b of MBS purchases a month until further improvement in Labor market condition is visible. So that's it, detractors have been shouting about the breakdown of the transfer mechanism or saying flat out that money printing doesn't do anything for the economy, while Keynesian think even this action is bit too small. I don't think QE has done much for the improvement in the labor situation, and I just dislike this kind of manipulation, not saying anything about the politics of it. Also, I'm getting a bit concerned about the way both ECB (Draghi's bazooka) and now the Fed have touted unlimited intervention. They're moving a lot of bad assets onto their balance sheet which only makes me worry about the banks going BK.

That said, it is the world we live in and we trade prices and let investors (missing in action so Fed then?) decide on the value. SPX broke a major resistance level this week. I'll start with the monthly chart: 5/31/08 high of 1440.24. If you look at the chart, that peak doesn't look too prominent in the scheme of things, the move down was huge, 1576.09 to 666.79. If you look at the chart since 1997 onwards, we've moved into the monthly ATR of 100pts, So breaking up to the peak of May 08 doesn't seem too far fetched, given that we've moved 76pts this month and we've had QE and a major resistance has been broken. On the other hand I would have been happy to have SPX turn lower into the lower price channel support from here. So the market must turn lower this week or it would confirm my upward target however incredulous it may seem.

Weekly chart below you can see that the move above was on good volume and the fact that we had a second day continuation only makes us believe that it might have legs, only time will tell. With that said, maybe first ever bullish view, I'm not positioning long here. Also, I think Friday's price action of giving up mornings gains, might be hope for the bears of a possible return to sense.

Recap 8/13/2012: SPX weekly moving higher

Last post was a while back, I have been investigating some quantitative approaches, but I thought I would update the SPX weekly chart and my thoughts on the market.

First, in April the market was on the upper channel resistance and we dropped about 10% from there the possibility of Central bank intervention kept us from moving any lower. At this time the bounce off that low seems to have formed a bullish flag which targets the near term highs in the SPX. Now, thats a bit too bullish for my taste but I have a few participants that I believe are better at this than me who believe that might be were we are headed. So take a look

Right now i think the markets have the bulls wondering why they should buy and the bears worrying about getting stopped out of their positions. Everybody is waiting for news to clear the air a bit, last couple of days the volume has been pathetic and I think might continue to be so. (Maybe the volume has been this pathetic all this time, we just don't have Knight Capital fooling us anymore?)

Anyways, near term targets seem to be the 1440, 5/08 high and it that breaks then we're going all the way up to 1600 (I doubt this level will be reached this year)

On the Central Bank front the Fed's next meeting is in September and will probably decide on a mortgage twist type intervention and while Europe is on vacation now, more news or decisions on the Euro front will be forthcoming in September. And it seems likely that news would support the market with some kinda of Greek exit which is already priced in. I heard a comment "Lehman has taught us that loosing a few billions in bailout is better than 100 or more times that in case of bankruptcy", that makes sense and after all paper money has no limits on capacity. Anyways, its the world we live in. 

Market Recap: Major US market indices bearish outlook

I wanted to present four weekly charts of the main US market indices SPX, DJ, NASD and RUT. What is common to all are the parallel channel and that we are bouncing off the upper resistances on them. Which makes my near term market outlook bearish.


First up: SPX, market hit the channel trendline resistance and bounced off it mostly on some earnings (ref AAPL) shrugging off the not so great economic data, pattern seems clear although we never know which Fed official would prop us up.

Next: DJ Industrial: The channel is roughly over the same period over a longer term channel, DJ has been lagging somewhat lately on the lower time frames.

NASDAQ: This index broke resistance trendline and has been leading all other indices but it too might have to take a step back as AAPL is feeling some pressure lately, in spite of the blockbuster earnings last week. On AAPL my view is the risk reward isn't as appealing as an long term investment going forward, but I'm in no way a sector or AAPL specialist.We'll have to watch what the tech sector does from here on.

Russell 2000: This midcap index is forming a bearish head & shoulders pattern, not in a channel but is bearish nonetheless. Its bouncing off an important support ling and the right shoulder could form higher but if this breaks beware.

I think these charts convey my outlook for the months ahead, we may trade range bound or lower, I'm worried about what happens in Europe with the French elections and the never ending PIGS debt. Stay  nimble.

Market Recap: 4/4/2012 - Bears have more work to do

Some technical damage today with a decent size selloff and no bounce off the lows. After the FOMC minutes and Europe bond sale. I think what was interesting today was that the longer term trendline from Nov ( 3/28 post ) was retested and somewhat broken. Thats a bearish sign and if that breaks we will have some sharp moves lower but not so sure that happens yet. First its a short week with a holiday on Friday, usually day before is seasonally bullish. Also, if you look at the 30m chart below we have channel support that has held near close, so the uptrend is intact.  

As of writing this, Asia is trading lower so we'll have to see how Europe does overnight, we might just drag sideways in indecision too. Short term support from 2/29/2012 is at 1378 about 20pts below close today so thats to keep an eye out for.

Market Recap 3/31/2012: And that was Q1 2012

I wanted to post the long term weekly chart of SPX to get an idea of a longer term level that I think will be reached soon thanks to the Fed. The resistance line at 5/23/08 high at 1440.25 is my near target. We'll have to wait and see if its met, only roughly 2% away.

The market has shown some intraday bearishness but the trendline support from 3/28 post held up and SPX is trading in a sideways channel as in the 30min chart below, we may retest either of the channel lines although the stochastics are overbought and I'm a bit bearish into the open Monday.

 

There was some interesting action in the treasuries, 20yr treasuries sold off sharpy yesterday, given the negative correlation with SPX this is could be bullish and may have been behind the bounce off the low on Friday. This would be something to keep an eye on tomorrow.

Market Recap: 3/28/2012

 Well one day move on Bernanke's statement all nearly wiped out two days later. So here are some thinks I'm looking at. The daily chart below shows long somewhat of a longer trendline support.

The pink line from the Nov 25, 2011 low shows the Santa rally when we thought the market was about to take a turn for the worse. The Fed came to the rescue. Now two days ago when we thought the market had run its course a bit yet again Ben B talked easing. And while we're at it, the dip 3/6 was again supported by another Feb chief calling QE4,5,6 ... So that's really whats been driving the markets. We see a similar long term trendline support on the ES mini, and clear bounce off the support line.

Over the last few days we've definitely seen an inclination to move lower and only dragged higher. The chart above is the hourly candles. The short term trendline support makes for a rising wedge which I'll be watching tomorrow. If the trendline breaks we could move to retest the 3/23 support near 1389. But that seems a bit too drastic, especially given the overall bullish moves (not to mean fundamentals IMHO)