“I think this is a song of hope …” Robert Plant Live Stairway to Heaven

The S&P 500 has been climbing a stairway to Heaven ..

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folks coming into 2015 we had some pretty strong patterns appearing.  some worked and some didn’t – isn’t that what we expect? that being said, it was prudent to be cautious due to their presence.

here’s what I posted around a year ago:

“Let’s don’t jump up and down and scream the BEAR MARKET is here till this chariot of the bulls breaks a swing low.”

so, while we’ve sold off for the past couple days let’s not go crazy.  we have broken ONE swing low and that’s it, and it’s ONLY a weekly.  WE HAVE NOT BROKEN A MONTHLY SWING LOW.

so, keep it ALL context of the big picture.  We break a swing low on a MONTHLY and then a second then we have “issues.”

but for now, EVERYONE knows this puppy was on steroids and need some shaking out so let’s look for a pattern to BUY on a weekly (hint hint – it needs to breathe a bit) and if a bear I would still be very cautious.

what do we know and see … ?

  • we know a weekly swing low is about to be taken out and we’ll know that ONLY WITH THE CLOSE TOMORROW … we also know this has NEVER happened since March 2009 bull market began.

so, here’s the logic:

  • if weekly close below a swing low … get defensive.
  • if not, then keep in mind, we have pressure on the downside and it probably needs to breathe down so just chill …

enjoy the post below .. you’ll see some of the patterns were early, some were spot on.  that’s not the point .. the entire post below is around the market action around a SWING LOW or SWING HI and to respect them — very very strongly.

let me know if you have any questions.

chart below is the ES .. note the red horizontal swing lows. those have never been broken on close. it might happen tomorrow …

Bart

S&P Futures Swing Lows since 2009
S&P Futures Swing Lows since 2009

 

 

 


chariot-topper

As we have discussed multiple times in this venue, the move since 2009 has been one heck of a ride.  This chariot of stock market emotion is, literally, off the charts.  It is at an extreme that has surpassed 1929, 2000 and 2007.  For the past 6 months it has defied the powerful cycles and patterns we follow.  However, we are at another “potential” inflection point and based on this weeks price action the chariot appears to be running out of gas.  So, objectively, the cycles and patterns we follow appear to be working.  Let’s don’t jump up and down and scream the BEAR MARKET is here till this chariot of the bulls breaks a swing low.

djia march 15 2014

Below you’ll see a quick demonstration of the Dow Jones Industrial Average from 2002-2009.  No patterns shown but just an example of the power of the swing low.  Take note, when we lose one swing low there is usually some selling and then it bounces back and, here’s the key point, it fails to make a new high.  Price might congest in this area (going either direction – up or down) and then it starts down.  One thing to watch is “usually” the third swing low. When that gives away, selling is vicious.  So, as much as we see MAJOR patterns completing let’s not get to confident.  THE MAJOR US INDICES HAVE NOT BROKEN ONE SWING LOW IN 5 YEARS.  Over the coming weeks, pay attention to these swing lows and swing highs (note the VIX chart – not one swing high has been taken out since 2007!)
swings
VIX SWING HIGHS
Also, note the Dollar Index swing low track record and the very thin neckline that is coming into play a little lower.  We’ve reached some daily extremes in metals (Gold, Silver) and the Euro and Pound.  Sentiment means nothing when a multi year extreme is taken out and one that has been tested roughly 10 times since 2012.  Folks, a lot of stops are hiding beneath 78-79 on the dollar index.  Certainly hope support holds here …
Dollar Index Swings
so, keep an eye on the swing lows and highs over the coming days and weeks … note price action after a first or second swing low is taken out and, seriously consider safety if/when a 3rd long term swing low is taken out to the up or down side ….
CHINESE YUAN 3152014
DJU March 15 2014 utility and industrials
dow jones transports march 15 2014
COPPER CORRELATIONFXI 032014 EEM 03152014

Busy with @seeitmarket coming into the 2015!

Folks, what a wealth of information from Andy @seeitmarket …..

Here’ what I’ve been up to – check out the links and all of the amazing contributors:

  • the Banks … they lead us up and they lead us down.  PATTERNS suggest they are at MAJOR resistance and what this means for the overall market: http://www.seeitmarket.com/bank-stocks-near-make-break-point-2015-13986/
  • IBM … a complete laggard.  A case can be made, however, this a stock to own in 2015: http://www.seeitmarket.com/ibm-stock-reverse-higher-2015-investing-13980/
  • Copper … a BUY has been BULLISH for China and we completed an intraday BUY at the end of the year.  Perhaps a nice bounce is coming? http://www.seeitmarket.com/copper-prices-falling-buy-zone-13975/
  • the DOW … is it going up into 20,000 in 2015? As my loyal readers, you know I was watching the .618 projection from the all time low at 28.48 and it did not hold at all. so, the logical next target is the AB=CD and, folks, that’s up at 20K+  here’s the link … http://www.seeitmarket.com/dow-jones-targeting-20000-djia-investing-13972/
  • the TRANSPORTS …the AB=CD got crushed.  so, perhaps higher is in the cards: http://www.seeitmarket.com/dow-transports-move-higher-targets-13969/
  • YAHOO – will it stay or will it go? http://www.seeitmarket.com/yahoo-yhoo-sell-price-pattern-important-time-price-13965/

Enjoy and bookmark http://www.seeitmarket.com

Bart

Swing Low, Sweet Chariot ….

chariot-topper

As we have discussed multiple times in this venue, the move since 2009 has been one heck of a ride.  This chariot of stock market emotion is, literally, off the charts.  It is at an extreme that has surpassed 1929, 2000 and 2007.  For the past 6 months it has defied the powerful cycles and patterns we follow.  However, we are at another “potential” inflection point and based on this weeks price action the chariot appears to be running out of gas.  So, objectively, the cycles and patterns we follow appear to be working.  Let’s don’t jump up and down and scream the BEAR MARKET is here till this chariot of the bulls breaks a swing low.

djia march 15 2014

Below you’ll see a quick demonstration of the Dow Jones Industrial Average from 2002-2009.  No patterns shown but just an example of the power of the swing low.  Take note, when we lose one swing low there is usually some selling and then it bounces back and, here’s the key point, it fails to make a new high.  Price might congest in this area (going either direction – up or down) and then it starts down.  One thing to watch is “usually” the third swing low. When that gives away, selling is vicious.  So, as much as we see MAJOR patterns completing let’s not get to confident.  THE MAJOR US INDICES HAVE NOT BROKEN ONE SWING LOW IN 5 YEARS.  Over the coming weeks, pay attention to these swing lows and swing highs (note the VIX chart – not one swing high has been taken out since 2007!)
swings
VIX SWING HIGHS
Also, note the Dollar Index swing low track record and the very thin neckline that is coming into play a little lower.  We’ve reached some daily extremes in metals (Gold, Silver) and the Euro and Pound.  Sentiment means nothing when a multi year extreme is taken out and one that has been tested roughly 10 times since 2012.  Folks, a lot of stops are hiding beneath 78-79 on the dollar index.  Certainly hope support holds here …
Dollar Index Swings
so, keep an eye on the swing lows and highs over the coming days and weeks … note price action after a first or second swing low is taken out and, seriously consider safety if/when a 3rd long term swing low is taken out to the up or down side ….
CHINESE  YUAN 3152014
DJU March 15 2014 utility and industrials
dow jones transports march 15 2014
COPPER CORRELATIONFXI 032014 EEM 03152014

Transports pattern complete from 42,281 days ago …

I’m going to give myself .003% w/ regards to the pattern being complete on the Dow Jones Transportation Average.  It never did hit, exactly, the 7616 target …but w/ the big move that occurred yesterday odds are that we have a MAJOR top in place.  If you have been following my blog this “target” area has been forecast for a while …

Aristotle, Diogenes Laërtius and the Dow Jones

DJTA … 120 points away from MAJOR pattern completing

I’m a pure play pattern recognition technician.  I pay major attention when using “nodes” that are 42,281 days ago.  I also pay particular attention when this “node” from 10/29/1896 has been responsible for support and resistance at every major top and bottom in my lifetime.

we finished a MAJOR pattern …the reaction is not surprising.

I type this blog, today, not because I did anything special.  Simply, for the past couple weeks I knew a pattern was completing on the transports in this area. And, having been down the travels of a professional trader and succumbing to expectations, having to be right, etc. I simply have now trained my persona to EXPECT NOTHING.  It’s a PATTERN and it will either work or it won’t …

Now, that being said, I do ask that you (my fellow bloggers) think about what could potentially be at work here … did the major institutions know this level before I did?  I doubt it … did the Federal Reserve have someone tell them that the Transports were going to encounter major resistance?  Again, doubtful.  Did Warren Buffet have this knowledge?  No, I submit nobody was CONSCIOUSLY aware of this level.  But, FOR WHATEVER REASON, the psyche, emotions, feelings FLIPPED ON A DIME.  At the PATTERN level EVERYONE SOLD.  Think about it … no CNBC, no FAST MONEY, no fundamental talking head pundit … a NUMBER was hit (natural square OBTW) and bada bing bong boom EVERYONE SOLD.  Take a moment and think about that one …

It worked, the GOOG, YHOO and others didn’t … it’s all probability.

W/ that in mind, the PROBABILITY is rising, albeit slowly, that we are on the cusp of the biggest bear market we have EVER experienced in this country or world.

As for me, I’m just going to wait for a PATTERN and deploy capital …

Make it a great weekend

Bart

DJTA 4 HOUR CHART
DJTA 4 HOUR CHART
DJ Transports ... 1896-2013
DJ Transports … 1896-2013

 

Dow Jones Transportation Average – a chart tour starting in 1896

if you have been following the posts over the past couple months, you’ll find that I’ve moved (pretty much alone) into a very cautious, if not outright  bearish mindset based on the patterns that are appearing across the circle of life.  one of the more prevalent patterns that I’ve been watching is the DJTA.  from the all time low of 49 on 10/29/1896 it has been shown how this key “node” was the anchor behind support in 1987, 2000 and 2009.  Using this node we can now project for targets on the DJTA.  anywhere between 7400-7600 on the index should be extremely important resistance if not an a major inflection point.  here is the chart (updated as of 11/30/2013)

November 30 2013 DJTAso, we’ve got just a little bit more to the upside, so I decided to take a peak at the entire DJTA and look for patterns that support a bearish nature once this level is hit.  take a view thru the charts, no screaming buys but I do see 1) parabolic rises, 2) monthly sell patterns appearing and 3) some stocks that topped years ago.  so, be mindful of this level and, well, we’ll see if the  patterns work or not ….

JBHT dec 01 2013 jblu dec 01 2013 Main20131201105517 kex dec 01 2013 lstr dec 01 2013 matx dec 01 2013 NSC dec 01 2013 Main20131201110751 luv dec 01 2013 unp dec 01 2013 UAL dec 01 2013 ups dec 01 2013 November 30 2013 DJTA December 01 2013 ALK chrw dec 2013 CNW december 01 2013 CSX dec 01 2013 delta dec 01 2013 EXPD DEC 01 2013 FDX DEC 01 2013 gmt dec 01 2013

 

 

put the needle on the record, put the needle on the BROKEN record – caveat emptor

apologize for falling off the blog bandwagon early this week…got smacked like a brick in the face w/ a stomach bug. just resurfaced … actually got some emails from you asking where the posts are…thanks! since my record appears to be broken, thought I would add some thoughts from 50+ years of trading…each of these men are friends and mentors of mine …

Larry Pesavento (www.tradingtutor.com) put out a chart on the Shiller P/E ratio but actually added some “other” criteria to the chart in the following manner:

  1. Shiller P/E anything > 18 (current is 25+)
  2. S&P 500 at a 5 year high
  3. S&P 500 at least &% above 40 weeks smoothing
  4. Bulls > 50%, Bears < 20% (Investors Intelligence)
  • Prior Instances of this happening: 1972/1987/2007
  • note – in 2000 bears never fell below 2000
  • note – this happened in 1929 on imputed sentiment

the most recent clusters have been in May 2013 / Aug 2013/Nov 2013 …. why hasn’t the market gone down, just a bit?  Well here’s why …

mentor/friend Mike Jenkins (www.stockcyclesforecast.com) recently explained the amazing run in these terms:

“The FED buying of treasury bonds actually spills into the area of the FED buying stocks because indirectly they are. The ‘banks’ like Goldman Sachs now can borrow billions from the FED at a fraction of a percent and buy an ETF basket of stocks with 2% dividends and sell futures short as the hedge and also sell puts and calls to make up the spread difference arbitraging a good profit on the FED loan. This has had the effect of ratcheting up the market with each new buy program. The proof that this is at work is the fact that the biggest correction seen so far took place in late June when the S&P futures were expiring and in a downtrend and the September contract was at too steep a discount to roll out profitably so they had to liquidate some long baskets. This will happen again either in December or March and then there could be hundreds of billions of baskets unwinding just like the portfolio insurance of 1987. The big institutions learned in 2008 that no matter what the ‘valuation’ of a stock was, it could go to almost zero if a large enough seller was out there. They won’t wait around this time and they’ll create a ‘flash crash’ getting out…”

I’ll just leave you w/ two charts …one is the IWM (Russell 2000 ETF) and the continued march of the DJ Transports …

it’s coming folks … keep riding this wave but when you get smashed into the coral at the end of the break, hope you brought a breathing apparatus.  What a great run it’s been…

one last, man, I hope I am 100% complete wrong ….

update of DOW TRANSPORTS
update of DOW TRANSPORTS

 

SHORT Pattern on the IWM
SHORT Pattern on the IWM

Aristotle, Diogenes Laërtius and the Dow Jones

Abstract:  The moral stated at the end of the Greek version is, “this shows how liars are rewarded: even if they tell the truth, no one believes them”. It echoes a statement attributed to Aristotle byDiogenes Laërtius in his The Lives and Opinions of Eminent Philosophers, where the sage was asked what those who tell lies gain by it and he answered “that when they speak truth they are not believed“.[3] William Caxton similarly closes his version with the remark that “men bileve not lyghtly hym whiche is knowen for a lyer”.[4]

the BOY who CRIED WOLF or the CHARTIST who CRIED CAVEAT EMPTOR
the BOY who CRIED WOLF or the CHARTIST who CRIED CAVEAT EMPTOR

DOW JONES COMPONENT SUMMARY: this next week will mark, yet another, very important point in TIME for market to heed.  As seen below, targets and patterns are/have completed (ing) and let make one thing clear.  I am not personally tied to what the patterns are objectively showing.  So, I never have nor ever will “lie” like the fable states above.  I am simply stating the patterns are showing SELL patterns and as one who has said this before, it’s a very very precarious market.  But, w/ full disclosure I have been saying that for a while and the market keeps exploding higher. So, I could be construed as “crying wolf” so to speak.

enjoy the charts and thanks for the comments, questions …

one last — W O L F !!!!!

DOW JONES TRANSPORTATION INDEX: the low on this index was formed before the Industrial average was 45.59 on 10/29/1896.  when we go back into such long time frames we need to let the charts check the validity of this node in time/space. Using this low of 45.59 we find that it held the .382 retracement of the 1987 crash, the .5 retracement of the 2000-2003 low and the .618 (exact OBTW) retracement of 2007-2009.  additionally, as shown by the orange arrows, the “thunderbolt” or “ab=cd” move was exact in resistance at 5537 in 2010 and almost the cause of the 2007 top.  W/ those as our reference points, I believe we can objectively say that we have a good “node” to work from …

the purple arrows are “basic” measured move projections that smack right into an extension pattern in/around 7600.  Additionally, the lighter blue arrows come in around 7535 on the index.  I expect those to be MAJOR resistance areas if not the TOP.  At a minimum, an expectation of a 3500 point decline from those areas (simply the size of the last one) is to be expected.

if we take a look a current levels – 7211 close (and note, closed at the highs) – then another 300 point move or, roughly, 4 percent move isn’t out the question.  expect higher next week into this area of EXTREME resistance.

DJ Transports ... 1896-2013
DJ Transports … 1896-2013

DOW JONES UTILITY AVERAGE: the Utilities Average has a sell pattern appearing a little higher after a very big monthly sell signal.  while the pattern from the all time low in 1942 is still alive, it will be extremely important to watch this SELL pattern coming into play.  If we fail at this SELL pattern then an attack of the “still alive” target up around 570 could be a reality.  either the SELL pattern or the “still alive” will/should stop it in it’s tracks …

all time low DJUA quick look
all time low DJUA quick look
SELL PATTERN appearing on the DJUA
SELL PATTERN appearing on the DJUA

DOW JONES INDUSTRIAL AVERAGE:  back before posting, JC Parets allowed me to “guest post” (thanks) on his site using the all time low on the DOW and our former 2007 top. (http://allstarcharts.com/the-math-behind-historic-dow-charts/) that level was, essentially 15,300 and the DJIA has been bouncing in/around that level for almost 6 months.  that is what THE long term .618 price projection should do – if not be a top or bottom.  but, last week, it gave away and the DJIA took off.  folks, what we potentially have here is a 5 point reverse way pattern on a monthly basis.  IF CORRECT, the bearish implications are very powerful.  trend line resistance exists a little higher, we have a 1.27 extension pattern at 16,308 and the “top of the circle” at 16,827.  I know the “top of the circle” will have people scratching their heads but LOOK at what the bottom of the circle did the last time we were EXTREME in bearish emotion (2009).  It, basically, nailed the bottom.  Would seem natural that the top would do the same…correct?

W

O

L

F

Bart out …

DJTA from the beginning 10/29/1896 w/ a dose of a 2.6 is 4.0 to me

true confession time … some of you might know and some of you might not know that I spent my first 11 years out of college w/ the privilege and honor to serve in the United States Navy.  I flew jets, saw the world and knew absolutely NOTHING about the economy.  In fact, here’s the confession time, I have NEVER TAKEN AN ECON or BUSINESS COURSE in my life.  I was a “mathematician” at the Naval Academy simply because 1) it wasn’t engineering, 2) I didn’t have to write papers, 3) I didn’t have to take a language and 4) there was no labs.  Swear to my dying days that was my thought process … and, guess what, I graduated w/ a BS in Math (note irony of BS portion) AND w/ the rocking GPA of 2.08 in my major.  2.0 and go ….my Pops used to get on me (so to speak) and I always told him — “Pops, right now, a 2.6 is a 4.0 to me so PLEASE use that grading scale!”

why is  this germane to this post, tonight? Well, I was taught/shown and devoured anything and everything that had to w/ charts because, well, I thought that is all there is ….

why is that germane … because I am long over trying to convince anyone that this stuff works.  do the work, prove it to yourself or not but in the end it really doesn’t matter, does it? I firmly believe the market is musical and chart patterns that vibrate to the numbers which can be found in music.  That’s my edge, take it or leave it …

so, tonight, when I heard the talking head pundits on a financial tv show start slobbering over the DJTA I thought “well, I haven’t looked at that puppy in a while so go take a look …”

  • always start from the beginning (or w/ the best most historical data)
  • the all time low was 10/29/1896 – interesting we are 8 days from 10/29 in 2013.
  • from that point I went forward in time and looked to see if this was a good “node” and it certainly proved to be ….!  (yeah math)
  • from the 2000 top into the low in 2003 we have a PERFECT 50 percent retrace from that low of 49.59
  • if we use the low at 49.59 and PROJECT from 1896-2000 we NAIL the MAJOR resistance in/around 5500 ish on the DJTA.
  • from the high in 2007 to the 2009 low … .618 retracement (EXACT)
  • finally, using the 1896-2007 leg and projecting UP we get a zone of 7500-7650.

when I started this study of the DJTA I did not know any of these numbers or projections or moves would be present.  it does not surprise me at all, but do you really think as the market was crashing down in 2009 that EVERYONE knew the .618 retracement level from 10/29/1896 was at that 2100 level?

DJTA – please go up to the 7500 level ….

the vibration of the DJTA since inception ... pretty cool
the vibration of the DJTA since inception … pretty cool