Where's The Price Of Oil After OPEC's Decision?

In this video, we will take a look at some possible scenarios on what the crude oil price might do in the near future.

Click here to view the video.

Market Wants To Go Higher

Here is a review of the market along with the following stocks: AAPL, NFLX, GPRO, BABA, FB, TWTR, TSLA, AMZN, GOOGL, GS, BAC, XLF, XLE, CRUDE OIL (CL_F), GOLD (GC_F).

Some Notable Twitter Post -1/27/2015

In case you might have missed it, here are some of the post I've made on my twitter stream today that might be of some interest to you.

A Follow Up

The video I have posted on the Memorial Day weekend sort of gave us some ideas on what to look for from the recent market move, and here is a follow up on that video.

Changing Move

The market is making another surge to new high territory. While the SP500 and the Dow Jones Transportation made a new all time high last Friday, the Dow Jones Industrial is still some distance away from its previous all time high. Currently, the large cap market such as the SP500 is getting near the neutral area and the small cap still leaning on the bearish zone.

It Just Keep Going

The market simply keeps going up as there is nothing to impede its march toward the 16,000 for the DJIA and 1800 for the SP500. The Russell 2000 still lag all the market indices and warrant a close watch for clues of possible pull back or blow out.

The following chart shows how all the indices are synchronized on making new high while the Russell 2000 is trailing behind.

Another Round Of QE Is Coming?

The market is appear to be pricing in some kind of easing from the Central Banks. Here is a look at some of the sectors that can help move the market higher.

Click on the title if you do not see a video player on your screen to view the video.

Downtrend Continue

The US dollar continues to strengthen due to 'flight to safety' caused by the uncertainties from the Euro crisis and the direction of the US economy.

All the major sectors appear to have turned downward. Until the current uncertainties are removed from the market, the market will continue to be very news driven. Unless one is shorting this market, it is best to move to the sideline and wait for the dust to settle before start looking for long positions. Presently, it is best to be 'out of the market wishing you are in' than 'in the market wishing you are out'. Capital preservation is job one right now. Do not be tempted by a dead cat bounce that will likely to happen in the near term as the market is getting to the oversold condition. Wait for confirmation from the market that the end of the downtrend has occurred before moving back into the market.



Disclosure: Long SH, PSQ, and AAPL PUT

Sector ETF Review

Here is a video reviewing some of the sectors that have been pushing the market up and how they could drag the market down.



Disclosure: no position

Murky Picture

The lagging market indices from last week have caught up with the DJIA and they all move to new recovery high today. The only remaining lagging market index is the Dow Jones Transportation (DJT). The DJT continue to trail all the market indices.

On the surface, the market still appears it wants to go higher. Underneath it, there are signs that this uptrend could be ending. One sign is the recent market leaders are showing some exhaustion price action. The semiconductor sector ETF, SMH made an intraday reversal today. The energy sector ETF, XLE wicked up and ended with an inverted hammer (shooting star) candle. The SP500 ETF, SPY also is beginning to show sign of fatigue. The QQQQ and the XLK ended the day with long wicked inverted hammer. If the market was not in an extended state, these inverted hammers or shooting stars will not be a concern. But this market has been rising without a pause or a correction, these price actions could be a sign that most of the longs are in the market and a reversal could occur shortly.

Here are the charts. The trend still look good, but the price action is a bit disturbing. The market is presenting a murky picture. Until the picture is cleared up, I am taking a step toward the sideline. I would rather err on the side of missing a big up move than being trapped in a sharp reversal.

SP500:



DJIA:



DJT:



Nasdaq 100:



QQQQ:



SPY:



XLK (Tech ETF):



SMH (Semiconductor ETF):



XLE (Energy ETF):

It Did Not Disappoint

From my previous post, I have indicated the Dow Jones Transportation index told us the Dow Jones Industrial will move to its January 2009 high, and true to its form, the DJIA did not disappoint those Dow Theory watchers. Not only it has reached the January 2009 high, the DJIA surpassed it and moved to the bull flag measured move level of 10,800 intraday on Friday.

DJIA:




With the quadruple witching away, now the focus will be back to watching the price actions and listening to what the market has to say. The three primary sectors I am monitoring for signs on where the market is heading are; financial, energy, and the technology. The latest price actions from the XLF, XLE, and XLK, ETF for the financial, energy, and technology respectively are telling me a pullback is on its way. These ETFs along with many stocks have reached their price target level and started to weaken.

XLF:



XLE:



XLK:



Does this pullback signal the end of the rally? From the noise in the market about 1250 for the SP500, I doubt this pullback will put an end to this rally. If you have been following this blog for a while, you would have known this 1250 level is the measured move of the inverted head & shoulder pattern formed last year. Having many traders talking about this 1250 level, this level has become a target (we know what happen to targets…they get hit.)

SP500:



Before the SP500 will make a move toward this 1250 level, it has to complete the pullback it has started last week. The level of support for the SP500 in the near term is the 1115-1130. Look for this level to show some reactions. If it fails to find support at this level, then look for next potential support near 1085. For the near term, a lot of profits need to be shaken out. Therefore, I am taking the short side.

Payback Time

It appears the bears are in control now, and the price actions are a mirror image of the time when the bulls have control of the market. Major indices failed to hold the current support level and the bears took it down decisively. For those that been buying into this dip is probably feeling it now. Click on the following charts to view where the next possible support level might be and to read the commentary. The bias remains to be bearish. Buying here could be like catching a falling knife.

DJIA:



SPX:



NDX:



RUT:



XLE:



XLK:



XLF:

More Than Moving

For three consecutive days the DJIA had a triple digits loss. For this shorten trading week, all three major indices, DJIA, SP500, and the Nasdaq loss around 4%. Today’s drop was more than a move, it was a dive. Shortly after 1:00pm EST, the market started to accelerate on the downside. Most of the intermediate support levels I have mentioned in my previous post were broken. The DJIA, SP500 and Nasdaq 100 are coming down to test major support level. These support levels are: 1025 for the SP500, 9650 for the DJIA, and 1660 for the Nasdaq 100. One can sense the tone and sentiment for the market have changed. Will this down trend simply a correction or a reversal? This will depend on how the indices react when they reach the major support level. For now, the bias favors the downside. I will not be buying on the dip here.

Here are the updated charts with some possible support level to monitor:

DJIA:



SPX:



NDX:



RUT:



XLE:



XLK:



XLF:

Are We Moving?

Finally, the SP500 broke out of the trading range after spending the last 2 weeks in a range bound trading pattern between 1130 and 1150. The market sold off today and the SP500 is preparing to test the 1115 support level. Is this the beginning of the correction that so many been waiting for?

As I have mentioned in my previous post to watch how some stocks behave after their blow-out earnings report for clues on where the market will be headed. From GS and GOOG price actions after their earnings report today, it looks like the market is heading down to test some key support levels. Not to ignore how INTC and IBM traded after their earnings report. I will not be surprise to see 1115 on the SP500 be broken and move down to test the 1085 level. If it breaks 1085, then the market is on the move to lower level, and I would call it something other than a correction. Until then, here is the updated SP500 daily chart. Click on it to get a larger view.

SPX:



The three key sectors that have been pushing the market higher for the last nine months are: financial, technology, and energy. The following charts show how the ETF for these sectors have been behaving and what key support levels to watch out for when the market move lower.

XLF:



XLK:



XLE:

Rough Start

After a rough start at the beginning of the week, the market finished the week with somewhat of a mixed picture. The DJIA gave back little bit more than 1%, approximately 101 points for the week by closing around 9438. The SP500 is essentially flat, losing 0.25% or approximately 2 points and closed near the 919, and the Nasdaq 100 gained about 9 points or 0.6% by closing out the week at 1480. On the surface, these point losses do not appear to be significant, but the manner in which the market has behaved throughout the week is worth a second look.

Prior to Monday, the three major indices, DJIA, SP500 and Nasdaq 100 were riding on their upward trend line. When the week starts, the DJIA encountered three consecutive down days that took it down to near the 8250 level to find support. On Thursday, all three indices went up for the first time (the only time) this week and bought the DJIA back to the 200 SMA to test for resistance. The SP500 did not do too much better than the DJIA. It has broken below the 50 and 200 SMA before it bounces back above these two moving averages. Now, the SP500 is approaching the 925-930 resistance level where this level was previously its support. Not all is negative for the SP500. During the course of this correction, the SP500 50 SMA did crossed over the 200 SMA, but with a very weak (almost flat) up slope. The only index that seems to show some strength is the Nasdaq 100. After it has come down and tested the 50 SMA for support, it has recovered all its earlier losses and ended up with a small net gain for the week.







Next week will probably be another nail biter. Any signs of the DJIA fails to reassert and hold above the 200 SMA, and the SP500 unable to reclaim the 930 level, the bears will jump in and pound on them to retest those critical support levels I have indicated from my previous post. The only danger for the Nasdaq 100 is that it might be dragged down by the down draft from the DJIA & SP500. Presently, the tech sector appears to be the one with the strength and it probably will be the leader to take the market up if this bear market rally is to be continued.

For now, I will avoid the energy and the financials sector. I am also keeping clear away from the consumer discretionary and the consumer staples. The only sector I will focus on is the tech until the DJIA & SP500 have demonstrated they have regained some of the technical strength they have recently loss.

The Three Sectors

The three primary sectors that have led this bear market rally are: financial, energy, and technology. In order for this bear market rally to continue, these three sectors must resume its leadership. To get a perspective on how these sectors are performing, I will analyze their respective ETF, XLF for the financial, XLE for the energy, and XLK for the technology.

First up is the XLF, it has performed strongly since the March 2009 market low and the stress test was initiate on 19 major financial institutions. Recently, the strength from this sector have diminished and starting to roll away from the major moving averages and broken below the price channel support. Unless it can hold the April high and the May low support, and the 50 SMA along with the 20 EMA can reverse direction, this bear market rally for the financial will come to an end.



The energy was another sector that has shown tremendous strength during this bear market rally. As crude oil moved above the $70 a barrel, the energy sector begins to top out. Recently, the price action on the XLE has broken down and it looks very likely to be heading lower. Very doubtful this sector will provide the strength to keep this bear market rally going.



Finally, the tech sector appears to be catching its last breath. It is still hanging in the price channel and holding minor support. This sector along with some defensive sectors could provide strength to continue this bear market rally for a bit longer. It is this wild card that the market has not shown us the direction it will take.



Without the participation from any of these three sectors, this bear market rally cannot be sustained. As the 'green shoots' started to brown, and lack of evidence a recovery is around the corner, other sectors will also roll over and headed down.

Sectors Review

As the market is consolidating to get ready for its next move, I thought it would be a good opportunity for me to post my review on some of the market sectors. Before I proceed, I like to recommend all my readers to visit Dr. Brett's blog (it is also listed in my blogroll under TraderFeed,) he gives a good summary on the sectors performance and many valuable trading development techniques. In this post, I will cover those sectors that Dr. Brett has summarized.

The tech has been one of the leaders throughout this rally. The XLK has been trending higher and the 50 SMA has crossed over the 200 SMA. As the second quarter coming to an end, lot of those skeptical fund managers that have been underweight in tech will dress up their portfolio with tech stocks before the end of the quarter. This window dressing will boost the tech ETF, XLK higher.



The financial has been strong until its recent consolidation. Similar to the tech sector, lot of people were skeptical about the financial sector. For those skeptics that have missed this rally, they are feeling they must move in during this consolidation to make up for their miss. Also, for those fund managers that have been invested in financial, they will increase their position on financial to dress up their portfolio with recent strong performers. After the XLF consolidated near the 200 SMA, the end of the quarter window dressing will move it above the 200 SMA and continue its upward trend toward the Nov 2008 high level.



With crude oil going from the $30's to over $70 a barrel, the energy sector has benefited from the crude oil rally. Looking at the energy ETF, XLE, it appears there remains some additional upside. Although the crude oil rally might be near the end, but the momentum on the energy stocks will continue for a bit longer due to window dressing and the anticipated pick up in demands due to the summer months.



Until recent increases in the long bond yields and the mortgage rates, the consumer sectors were performing quite nicely in anticipating the recovery is just around the corner. As this bear market rally make its final move, the momentum should carry over to these consumer sectors for some additional upside. The strength of this upside will depends on the perceived action or inaction on the interest rate by the Fed to combat the rising bond yield.





Momentum for the materials ETF, XLB might be slowing a bit, but the uptrend remains intact.



The industrial sector is similar to the consumer sectors. It is consolidating above the 200 SMA for support. Until signs of technical deterioration, uptrend remains intact to break above the Jan 2009 high.



Finally, the health care sector is gaining strengths as money rotate into this sector.