Will Q1 Earnings Season be the Impetus for Price to Break-Out of this Consolidation?

The stock market has been doing a good job of late chopping up shorter-timeframe traders.  Here is how I see the market …

S&P 500 Index ETF (SPY) – Weekly Chart

The above weekly chart highlights the fact that we are clearly in a corrective pattern for the SPY off of an extreme trend strength warning signal (dark blue candles) made by charting software … we are now in a position of having the ATR in resistance, so until we can get a better idea of this weekly price structure, it behoofs traders to take caution with their overall exposure to equities.

S&P 500 Index ETF (SPY) – Daily Chart #1

The daily chart shows that we are in a bigger consolidation pattern and are no longer trending … traders have to be more nimble in this type of trading environment.

S&P 500 Index ETF (SPY) – Daily Chart #2

Even if you are a big equity bull, it is not clear yet that the corrective pattern is complete … the C-wave of the correction did not actually go down to make a new lower low below the A-wave low.  Typically that last push to a new minor low is necessary to take out stops and set-up the squeeze higher out of the corrective pattern.  Also, the market usually makes one fake-out move to the upside to get the weak hands out of their shorts and to get the naive bulls more aggressive.  If that happens here again with this price structure, I would expect price to push higher for the next week that would peak above the trendline off of the two prior highs – that break would get many traders further committed to new longs as they “play the break higher”.  The market tends to bitch-slap this early break-out attempt.

I would then think that the market pushes down to make that new C-wave low … that is when we will see if this is indeed a corrective pattern and we can therefore make a more legit move to attempt a break of the prior highs.

S&P 500 Index ETF (SPY) – 195 Minute Chart

The bigger question I am still monitoring, however, is whether or not we are making an ABC correction or whether we are making a bigger 1-2-3 price structure that is part of a much bigger distribution pattern or even the marking of a very important market top.  If we are making that bigger move, then look for SLOT resistance to hold and price to turn lower.  Maybe that move lower starts after monthly OpEx or even closer towards the end of April??  We shall see …

Cheers … Leaf_West

Energy Has Found its Resistance Level …

I wrote two pieces about energy stocks and crude oil prices back on August 29th (click here) and on September 14th (click here).  The call on crude oil and energy stocks were pretty good if I do say so myself.  Both crude and energy stocks are at areas where I think they have found obvious levels of resistance.

Crude Oil Futures Contract – Daily Chart

Crude has made a beautiful 3-wave price structure out of a downward broadening price pattern.  My software is painting dark blue extreme trend strength warning candles with pink divergence dots right as price has pushed into the 1.272x – 1.618x extension target zone for Wave 3.  As good a spot for crude to begin a corrective pull-back price structure as any.

S&P Energy Index ETF (XLE) – Daily Chart

As I suggested back in late August, energy stocks made it all the way up into the median line of the upward sloping weekly broadening price pattern.  Crude and energy stocks are going to crush a lot of dreams here over the next couple of weeks I would think.

Cheers … Leaf_West

 

Today will Be a “Fade the Highs” Kind of Day …

I always try to get a sense of what type of day it is possibly going to be well before the start to the start of the regular cash trading session.  Today it looks like the NASDQ will be the kind of market where it will be ok to try and fade any push to new highs after the opening.

NASDQ Futures Contract (NQ) – 7 & 12 Vision Renko Charts

The bigger time frame charts are in a nice bullish trending position … we have now recorded a negative divergence signal on the 12 Renko chart, and we have pushed above the 1.0x Standard Deviation level on price momentum for the 7 Renko chart.  To me that 6617.50 level is likely going to be the high for today and probably for the rest of the week.  To me that means it will make more sense to try and look for short entries intra-day today and possibly tomorrow.  Longs will probably only work on larger oversold intra-day signals …

NASDQ Futures Contract (NQ) – 2 Vision Renko Chart

The 2 Renko chart painted some dark blue candles with pink divergence dots … this is another good sign that the pre-cash session highs are likely the high for today.

Cheers … Leaf_West

 

AMGN Update …

The possible AMGN expansion phase move I talked about on November 26th (click here) is going as good as can be expected, especially considering all of the market noise …

AMGN 195 Minute Chart

As you can see in the above chart, we have probably come to the top of the first thrust in this current expansion phase.  I think AMGN will likely push higher right into year-end or just before year-end so I am going to wait for a MA Spread signal before I sell my Jan 170 call options – these have doubled since I bought them and I suspect I will be out just before Christmas is the smaller time frame charts tell me that the potential theta burn has a greater chance to exceed any year-end window dressing.

Cheers … Leaf_West

Are Gold and Gold Miners Finally Ready to Go?

I wrote about a possible bottom in gold back in mid-October (click here), but for the most part the trades I put on  back then did not work-out.  No biggie as I was legging into that possible trade set-up and the amounts were in reality, insignificant.

I have started some new trades in NUGT and HGU (TSX Canadian exchange for my retirement accounts) today as I am thinking that maybe, just maybe, the US dollar, gold and the gold miners are ready to start moving.  Here is my view of the charts … Continue reading