Tuesday, July 14, 2009

End of Day Charts 7/14

Interesting day today with the dollar up, bonds down, and equities up. Many hammers produced in the major indices so I thought it was worth posting a few charts today. Those hammers are POTENTIAL reversal indications, but it’s also still possible that we have just begun wave c up of B, so be sharp, this is another important week.

Let’s start with the SPX daily. Here is a large mostly outside hammer that finished well below the 912 pivot point. We’re back above the 200dma, but well below the 50. Most of the daily charts produced new buy signals on the daily stochastics (with my slow settings), but pay attention as all the short timeframe stochastics, 60 minutes and less, are overbought:

The Dow daily closed barely above the 200dma and produced a perfect outside hammer on LOWER volume. That’s a pretty good, high odds, reversal indication but needs to be confirmed with lower prices tomorrow:

The XLF had a small down day today, a divergence against the broader market. It too produced a hammer, but it is inside which makes it a lower odds potential reversal indicator. The rub is that the small down day was on lower volume here than Meredith’s GS pump yesterday:

The most telling index for me is the Major Market Index (XMI). It produced a textbook perfect outside hammer right on the 200dma. Tomorrow will be an interesting and important day:

For confirmation, the DIA also produced a hammer on lower volume:

On the 60 minute SPX chart we see that prices got back above the neckline, but are way overextended here. It appears more like we are extending the right shoulder, but again need to see more price action. There’s a pretty well formed downchannel with the top now just above the 912 pivot point. The shorter time frame RSI produced a small negative divergence throughout today, but there is actually a small positive divergence on this timeframe:

Now, to counter all the potential reversal indicators, the bond market moved down in price (up in yield) very hard today. Just looking at the TLT 3 month chart, it looks like we broke the most recent uptrend line, and did so on higher volume than yesterday. Also note the much larger volume picture which is quite obvious… falling prices - higher volume, rising prices – lower volume. Also note the fresh sell signals on the oscillators:

The VIX dropped all the way to support at the 25 area:

This produced a very interesting Point & Figure chart with the breakout and subsequent return back to prior levels… note that the computer is calling this formation a “bull trap.” LOL, now there’s one I didn’t know the P&F was capable of spotting but evidently it knows a trap when it sees one! It’ll be interesting to see if this plays out – note the bullish target of 50 from the breakout the other day. Someone’s about to get trapped, we should know more tomorrow:

Intel just reported higher than expected earnings, but with GAAP accounting still reported a loss. Didn’t stop it from skyrocketing and carrying the market higher in after hours trading. That pushed the /ES up into the 912 pivot where it found resistance. Let’s see what tomorrow morning brings, we’ll get CPI data, industrial production, and the Empire State Survey.

Hey, please do me and Martin Armstrong a favor and go to this site (Contact Michael Malloy) and request that Mr. Malloy please represent Armstrong’s case. Evidently Armstrong is requesting that Mr. Malloy represent him as Malloy just won a very important case with a similar legal background… Chadwick freed after 14-year contempt sentence

Thanks and have a great evening,


Hey the central bankers are all working the same angle behind the scenes – “Don’t let him go!”

REO Speedwagon - Don't Let Him Go: