I can’t find a single reason to be bullish next week, from any technical point of view.  The . . . → Read More: Weekend Update – Armageddon?]]> Post Number 199… Yes,it really is my one hundredth, and ninety ninth post since starting this blog last year.  (However, I think I’ll skip the 666  and 999 post… just too be safe – LOL)

I can’t find a single reason to be bullish next week, from any technical point of view.  The only thing I can see positive… is that the typical option’s expiration week is usually bullish, but past history doesn’t always play out the same in the future. The charts are still very bearish right now, and I think that will overshadow the past history results for a bullish opx week.

With that being said, I don’t necessarily think that we will crash on Monday.  We could rally up a little on Monday, and create a smaller wave 2 up, inside of a larger 3 wave down (some call it a 5th wave?).  And then plunge down on Tuesday with a smaller wave 3 inside a larger wave 3, which is what I think will happen.

We are still pointing down on the daily chart, which will continue to put overhead pressure on the 60 minute and 15 minute charts.  Looking at the chart below, you will notice that the MACD lines rolled back down, after briefly pointing up on Monday’s rally.  The 10 EMA is still below the 50 EMA, and the 20 EMA isn’t too far away from crossing over it too.  The histogram bars are still in negative territory too.

The RSI is still below the 50 level, which means that the bears are still in control.  Plus, the ADX line is now rising again, with the negative DI line (in Red) hooking back up now.  More downside is coming next week… how far is anyone’s guess?

Let’s look at the 60 minute chart now.  It’s has both the 10 EMA and the 20 EMA now below the 50 EMA, which again puts the bears in control.  The RSI is still well below 50, but did hook back up at the close Friday.  This could give the market the smaller wave 2 up on Monday.  However, I don’t think it will get back above the 50 level with the daily chart still pointing down.

Look at the MACD on the 60 minute chart too, as it’s still pointing down, and hasn’t hooked back up yet.  It did put in a lower histogram bar during that last hour that the market rallied a little on.  But again, with the daily chart putting downward pressure on it, I don’t think it will make it back up to the zero level on Monday.  Maybe it will put in lower histogram bars, but fail to crossover into positive territory.

Now let’s look at the 15 minute chart and try to forecast what will happen on Monday.  First off, the early sell off, and then sideways movement, forms a perfect “bear flag” pattern.  Not that they all play out, but if this one does, then an early morning sell off (possible gap down open) could happen.  Notice that the MACD has successfully rallied back up above the zero level, and into positive territory.  There is no way of knowing how high it will form it’s histogram bars, before rolling back down, but if you match it up with the RSI above… I’d say it’s pretty close too topped.

Looking at the RSI, you will notice it rising back up toward the 50 level.  If it can get above it, and push up toward 70, then the histogram bars on the MACD could continue to rise, and the market would too.  The ADX line is rolling back down, and so is the negative DI line (in Red).  The positive DI line (in Green) is rising, giving strength to the bulls.  But remember, this is only the 15 minute chart, at it still has a ton of overhead pressure above, with the 60 minute chart, daily chart, and weekly chart pushing down on top of it.

I think the best scenario a bull could hope for on Monday, is that the 15 minute chart rises back up and forms a smaller wave 2 retracement rally… allowing them to get out of their positions, before it rolls over into smaller wave 3 inside larger wave 3 (or 5?).

Baring that there isn’t any negative news about another country (or state… aka California) going into default, then maybe there will be a smaller wave 2 up on Monday?  However, it could have already completed itself on the late day rally (mainly short covering), which in that case… the bear flag pattern will play out, with a possible gap down on Monday.

After this correction is done, I think we will go back up for one final high.  The monthly chart looks almost topped now.  It should roll over in 1-2 months, and then P3 down would be started.  But, for now, we are close to putting in a bottom for this current down turn.  I would estimate that next week (or the following week, at the latest) will put in the bottom for this sell off, and the following week will start a big rally back up again.

So for Monday, it’s either going to be a gap down from some negative news, or we rally up a little bit while we continue to form that smaller wave 2 retracement.  Either way, Tuesday and Wednesday will look horrible for the bulls, as a wave 3 of a wave 3 down will occur.  It’s going to be Bloody…

Red

Last Friday we had a really nice sell off, which extremely rare these days.  But what does it mean?  For an answer to that we have to look at all the charts.  So in this weekend update, I’m going to go over . . . → Read More: Weekend Update…]]> CHECK OUT THE VIDEO I DID ABOUT THE NEW LOOK

Last Friday we had a really nice sell off, which extremely rare these days.  But what does it mean?  For an answer to that we have to look at all the charts.  So in this weekend update, I’m going to go over the monthly, weekly, daily, hourly, and the 15 minute charts.

The question that always comes to my mind, is whether or not technical analysis actually works?  I’ve done my best to learn it, and to adapt to fit in the news, as well as the “manipulation factor”.  But, it’s still not perfect.  The reason probably lies in the fact that I might interpret the charts different then the next person.

This “difference of opinion”, between myself and other people, is the exact reason I have this blog.  There isn’t anyway that I can cover everything, and put all the pieces together.  That is why I need YOU, the reader and commenter.

By everyone posting their thoughts and comments, we all are then better informed.  Hopefully, we can adapt and still make a profit from the market, even if it goes against us.  Believe me… I know, as it’s went against me too many times.

So let’s dive into the charts, and try to figure out what’s next.  Below we have the monthly chart of the SPX, which now is clearly showing a “Topping Tail”.  That’s a very bearish signal, which means that the “Top” may very well be in.  If so, then it’s probably down hill for the next several years.  But I’m not convinced that this is the final top, as the MACD’s and STO’s haven’t rolled over yet.  That leads me to believe we will have 1-2 down months, and then back up to the fake print area of DOW11,816 by the end of this summer.

Moving on to the weekly chart, we see that we just put in a very bearish reversal candle, closing at the low end of the candle.  You can also see that the MACD Histogram put in a lower candle, and that we have a bearish cross on the Full STO’s.  The RSI is also pointing down now, and hasn’t done so since January.  Notice how steep the downturn is on it.  This is very bearish.

Now let’s look at the daily charts.  The first daily chart shows the SPX, with another very bearish red candle on Friday.  Notice that the 10 EMA (blue line) is just about to cross over the 20 EMA (red line), which hasn’t done so since the January sell off.  Look at the RSI, as it’s fell from the “above 70″ area, and is now at the 50 line, and pointing down.  I expect it to break soon, which will give the bears more power.  The red and green ADX lines are criss-crossing, but I expect the -DI (red line) to rise back up soon, causing more selling.

Now let’s look at the daily chart of the SPY, with some different indicators.  The one thing that stands out is the clear break of the rising support line.  The first break was on Tuesday, and then the market back tested the line on the next two days, and finally failed to get back above it on Friday, as it sold off hard.  Looking at the Full STO’s you notice that the black line is pointing back up and touching the red line.  This indicates that the market could go up on Monday, or even Tuesday too.  I expect it to fail and roll back down, not crossing the 50 level.

Let’s look at the 60 minute charts now.  Now this chart is from Ron Walker’s site (he’s “the chart pattern trader”), and he has it marked as a “head and shoulder’s” pattern, but I disagree with that labeling.  From what I’ve learned, a H&S pattern must have a rising trendline, with the right shoulder having the higher part of the trendline.  Meaning that it can’t be a level trendline (support line).  It must slope up on H&S patterns, and slope down on Inverse H&S pattern.

Regardless, it still looks like the market still pointing down.  The MACD’s have rolled over and are pointing down, and are also below the zero line.  The Full STO’s are still going down, and then the ADX line is gaining strength with the -DI (red line) on top and rising higher.  All are bearish signs, indicating that the market is likely to open down, or flat, and start selling off.  The only question is whether or not it will bounce at the triple bottom or just gap down below it on Monday.

Looking at the 15 minute chart, we see it is also pointing down, with the Full STO’s still going down lower, while it’s already below the 20 level.  This is very bearish.  That triple bottom support is about the only bullish thing I can find right now.  Look at the MACD, as it’s still going down too, and the RSI is at the 30 level, giving strength to the bears.  Plus the ADX line is rising, giving power to the DI line on top… which is the negative line.

I think that we are either going to see a gap down on Monday, and continued selling until we hit 117.50 spy for the first level of support, (which should give at least an intraday bounce), and then 115.00 spy, which should be a multi-day bounce.  Or, we open flat, trade sideways for the day while the MACD’s and Full STO’s roll back up.  If so, then I’d expect them to peak on Tuesday, and start back down by Wednesday.

The moves up should put in a nice bear flag pattern, as I don’t expect the market to get back above Friday’s high.  Maybe a 50% retrace, but probably less.  This assumes that we hold the triple bottom and don’t gap down past it on Monday morning.  But either way, I’m looking for the week to be down again.

Red