Price trend in the S&P 500 Index remains up, but last week's downside action and the rebound off of that action sets the stage for possible trades in either direction. If last week's low is taken out, then a possible downtrend will be signaled by taking out an upwards trendline. If the high of the week prior is taken out, the signal is a continued trend.
Moving average envelopes remain in uptrend mode on the weekly bar chart, are teasing with neutral mode on the daily bar chart of the S&P 500 Index, and have reentered uptrend mode on the short term 60-min bar chart.
The Relative Strength Index (RSI) is in uptrend mode on the weekly bar chart, and coming out of neutral back to uptrend range on both the daily and 60-min bar charts.
Since last week we have a change in the Dynamic Trailing Stop (DTS) indicator on the daily bar chart. It is now in downtrend mode on the intermediate term. Longer term, as represented by the weekly bar chart, the DTS is still slightly in uptrend mode for the S&P 500.
Our top Elliott Wave interpretation is extremely bearish for this major stock market index. While we do follow price trends with risk capital, we do not think the stock market is a good long term buy right now.
Sentiment
VIX:
Last week's downside action has the Volatility Index (VIX) starting to come off of the complacent levels we have been seeing.
Intermediate Term: Long -stops at 1294.25 Short Term: We use semi-automated trading for the short term. Currently the system is only taking trade signals to the short side of this market.
Still watching the intermediate term for signs of a breakdown, or, alternatively, a break out. I am biased on the bear side of this market right now.
Moving average envelopes are neutral and leaning positive on the weekly bar, have entered uptrend range on the intermediate term, and are in downtrend mode on the short term chart. The Relative Strength Index (RSI) is in uptrend range on both the weekly and daily bar charts, while being in downtrend mode on 60-min chart.
We continue to maintain a bearish Elliott Wave interpretation of the EURO futures market, but are looking for more confirmation from price trend. A break below 1.287 would indicate wave-3 of (3) of [3] as being possibly underway. A break above 1.4266 would negate the idea that wave (2) of [3] is already in place, but would not negate the idea that wave [2] is in place.
The weekly chart shows that gold futures remain in a long term uptrend.
Will gold follow silver futures and break to the upside of this trading range? We are currently long and watching the trendlines.
The weekly bar chart's moving average envelop is pointing up while in a neutral zone after previously being in uptrend mode. Both the daily bar and 60-min bar moving average envelops are trending up. Trading opportunity?
Last week, we mentioned that while the long term trend in Swiss Franc futures continued to be up, the intermediate term trend was, at that point, neutral and trying to figure out which way to break. On the daily chart last week, we can see that Swiss Franc futures moved above an intermediate term downward parallel line. The price bar following that brake had a low that was higher than the trend line. That caused us to go long this market for the intermediate term.
The long trade has been successful, but we want to give it some room to breath. While we my choose to close at a higher level, our maximum stop is moving up to 1.0520 in order to keep any losses to an absolute minimum while allowing the trend room to continue if it will.
Our moving average envelope is in uptrend mode on both the weekly and daily bar charts, while being in downtrend mode on the short term 60-min chart.
The Relative Strength Index (RSI) is in uptrend range on both weekly and daily bar charts, but is diverging negatively a bit with prices on the weekly chart. RSI is in downtrend mode on the short term chart. Last week we pointed out possible positive RSI reversals set up on all three charts. Those RSI set ups were fruitful and were part of our descrestionary decision process to go long this market when the trend line mentioned above was broken to the upside.
These tools can be used to follow the current intermediate term trade. Depending on the trader's discretion they could let either the intermediate term signal (middle chart) or the short term signal (right chart) take them out of the currently profitable trade. Using the middle chart would keep one in the trade longer, but increase the risk of loss or loosing unrealized profits. Using the short term chart would lock in current profits, but would increase the risk of loosing out on additional gains and the risk of being whipsawed.
There is no right way as long as you are methodologically and consistently limiting your risk and cutting losses short. Perhaps additional analytical perspectives such as Elliott Wave or inter-market analysis cause you to choose either the intermediate or short term approach in specific set ups and trades.
The Dynamic Trailing Stop (DTS) is in uptrend mode on both the weekly and daily bar charts. This is another tool that can be used in deciding when to exit a trade based on price action.
Long Term: Hold a mix of CHF, USD, Gold and Silver in physical form as much outside of the banking systems as possible. -Note on this strategy: Do you absolutely know if there will be major inflation or credit deflation over the long term? Me either. Many have thoughts on this, but we just don't know for sure what is going to happen. This strategy protects wealth in either instance, while allowing for possible capital gains. When the dust settles, some of these funds can be put to work in other markets. This strategy is clearly centered on the idea that the stock market is not a good long term buy right now.
Intermediate Term: Long -current maximum stop is 1.0520.
While the weekly bar chart shows us that the long term trend continues to hold, the daily bar chart shows us that the intermediate term trend is silver futures is currently at risk. Silver futures on the daily bar chart are teasing with breaking below a parallel trend line. I typically consider a break below a trend line to be when the high of the bar is also below the line, which is not currently the case.
We have tightened our stops here to 32.253, in order to protect profits and respect the intermediate term trend.
Both weekly and daily bar charts show moving average envelopes in uptrend mode for silver futures. The 60-min chart has recently reentered uptrend mode as well.
The Relative Strength Index (RSI) indicator is also in uptrend range on both the weekly and daily bar charts, and has recently moved back into uptrend range on the short term 60-min chart as well.
While the Dynamic Trailing Stop (DTS) remains in an uptrend on the weekly bar, we can see that it has recently entered a downtrend on the daily bar chart. This indicator is set at a pretty sensitive level. It is designed to lock in profits and kill losses.
Something like the DTS can be automated, but the purpose of these posts right now is to provide discretionary technical analysis. Therefore, we use the DTS as a discretionary indicator right now.
It is very likely that we will be posting automated trading signals along side these discretionary posts in the future. I am currently learning to write code and program automated trading strategies on the side right now, so look for more on that in the future. It probably will not be the DTS, or at least not the DTS alone. But DTS is a great example of a trailing exit component that could be implemented into an automated strategy.
This news from projo.com caught my attention today. It seems that Providence Rode Island is poised to dismiss all teachers.
Folks, this is what happens when governments are empowered with providing goods and services. They are not able to react to market signals until crisis mode is reached.
According to just about everything, including the basic and parallel trendlines on the charts above, the S&P 500 price trend is still up.
Moving average envelopes are still in uptrend mode across the board in the S&P 500. Weekly, daily and 60-min bar envelopes are all still going strong. The Relative Strength Index (RSI) is also in uptrend range across the board. A possible positive reversal in the RSI is occurring on the short term 60-min chart to the right.
As I write this, S&P futures are down substantially in holiday and overnight trading. If not changed by morning, this overnight selling pressure could challenge the possible positive RSI reversal on the short term chart.
Our Elliott Wave count is extremely bearish. As tactical traders, we are following the price trend with risk capital, but all capital considered to be wealth should definitely be out of the stock market in our opinion. Price trend will be the final arbiter of whether the outlook provided by this Elliott Count is correct, or whether something like the more bullish Alternate-1 count is correct.
Sentiment
VIX:
Sometimes not much changes from week to week in a market. That's the case with the S&P 500 right now. The Volatility Index (VIX), provided by indexindicators.com, continues to paint a complacent picture.
Put/Call Ratio:
Still not much going on with the Put/Call right now.
Current Stance
Long Term: Sell
Intermediate Term: Long
Short Term: Our systematic tactical algorithms for short term trading are only taking trades to the long side in this market right now. This can change more rapidly than posts to the blog.
We continue to maintain a bearish Elliott Wave interpretation of the EURO futures market, but are looking for more confirmation from price trend. A break below 1.287 would indicate wave-3 of (3) of [3] as being possibly underway. A break above 1.4266 would negate the idea that wave (2) of [3] is already in place, but would not negate the idea that wave [2] is in place.
The weekly bar chart of gold futures shows a solid price uptrend. Trends don't last forever, but we might as well ride them for as long as we are able.
In the intermediate term, gold futures prices continue to oscillate within a sideways or consolidating price range. The question now is if gold futures will follow silver futures and breakout to a new price high or if gold will fail to confirm silver's recent move.
Is the neutral position of the weekly bar chart's (left) moving average envelop a buying opportunity or just a precursor to downside price action? We will know for sure when price breaks one way or the other. The daily bar chart in the center is in uptrend mode, as is the 60-min bar chart to the right.
The basic long term trend in Swiss Franc (CHF) futures remains up.
The intermediate term price trend in Swiss France futures is neutral and trying to figure out which way it is going to break.
Our moving average envelope on the weekly chart is in uptrend mode. It is neutral on the daily bar chart, and is technically slightly bearish on the 60-min chart.
The Relative Strength Index (RSI) is kind of interesting right now in are three charts of Swiss Franc futures. On all three charts there is a possible positive reversal signal set up. The RSI is in uptrend range on all three charts as well. While no signals are 100% accurate, this set up is fairly interesting to me.
The Dynamic Trailing Stop (DTS) continues in uptrend mode on the weekly bar chart, and has moved from downtrend mode into uptrend on the daily bar chart.
Silver continues its long-term uptrend by breaking above the most recent high. Parallel channel lines are applied to the weekly bar chart to aid in following the price trend.
Taking the high out, silver futures took us out of our neutral stance as well. Clearly, this market is no longer sideways in the intermediate term. The longest trend lines on the chart above are channel lines drawn in the fashion recommend for impulse patterns in Elliott Wave analysis. The other lines are parallel lines used for alerting us to the end of intermediate term trends.
Currently Silver is at the top of the broader channel line. This gives us some caution. We will be watching the tighter parallel lines drawn against the recent surge for our exit orders though.
Our moving average envelopes for silver futures remain in uptrend mode across the board from weekly bar on the left, daily bar in the center, and 60-min bar on the right.
Relative Strength Index (RSI) is is also in the uptrend range on all three charts, but lets take a closer look at this indicator. Starting on the left, we can see that RSI recently had a positive reversal signal, where RSI reached a lower swing low while the price of silver itself did not reach a new swing low. This positive reversal signal preceded the recent advance in price, and is something you can look for in the future if you have never thought about it before. The 60-min chart to the right also gives an example of a RSI positive reversal.
Back to the weekly bar chart, we can also see that RSI is currently negatively diverging with price action. This is a warning sign. We can also see that the 60-min chart has a negatively diverging RSI.
According to businessinsider.com, Wisconsin Gov. Scott Walker has some budget problems and is prepared to call out the National Guard if state workers get to feisty.
Here is a video of some of the state workers protesting:
Folks, the states are broke. Some worse than others. Even the federal government is broke. Don't depend on state or federal governments to protect you or your assets.
Basic and parallel trend lines tell us that both the long term (weeks to months) and intermediate term (days to weeks) price trends in the S&P 500 stock index remain up.
Our Elliott Wave count is extremely bearish. As tactical traders, we are following the price trend with risk capital, but all capital considered to be wealth should definitely be out of the stock market in our opinion. Price trend will be the final arbiter of whether the outlook provided by this Elliott Count is correct, or whether something like the more bullish Alternate-1 count is correct.
Short Term: Our systematic tactical algorithms for short term trading in this market are currently only taking trades to the long side, but this can change more rapidly than blog posts.
Please note that the information published on this site is not official trading or investing advice.This site is for entertainment purposes and discussion. At no time is this site or its author making specific recommendations for any specific person. At no time may a reader be justified in inferring that any such advice is intended. Investing carries risk of losses, including the possibility to lose more than initial margin funds.
