Tuesday, February 14, 2012

Morning Market Summary and Charts 02/14/12 #SPX

First, Happy Valentines Day to all! Every weekend STB starts with "share the love and the knowledge". That really happens here every day as the core commenters do a fantastic job sharing market and news insight. February 18th marks the 3rd anniversary of STB. Many thanks to all for helping make STB the success that it has become. We'll keep trying our best to wake up as many as possible to the truth until they shut us down one day.

Enough of the love fest. I'm not feeling much love for the government, Fed, treasury, IMF, ECB, SEC, DHS, politicians everywhere, Wall St. or the banking elite (just to name a few). Why bother report anything anymore on the markets? What's the point when the markets are totally controlled?

Well, the point is that they can't maintain this forever and we need to do our best at timing the markets to capitalize while we still can. Technical analysis has been the only proven method to maintain any integrity or reliability thru the era of QE levitation. Actually the combination of TA and following the Fed has been spot on.

What's happening now? Well Obummer's thrown out another trillion dollar deficit spending plan (his 4th I believe - hopefully his last). That increased ratings downgrade rhetoric (you know the US is no longer AAA right?). Debt is at record levels and still expanding. Banks and countries around the globe have been downgraded. the EU issue is so bad they have come back to the Fed (and you and me the American taxpayer) for more bailout assistance.

So why does the market keep climbing this wall of worry? Well other than the Fed liquidity pump, HFT algos only programmed to lift, and the eternal promise of never ending QE there is no other reason. So, we must wait for the holes in their funding to capitalize as bears or to sell and re position as longs. Right now Operation Twist and some other Fed "tools" are in use. The next key dates occur in March (9,13,20).

STB has done an admirable job preaching patience and walking the market up all year. The combination of channels and wedges have really delivered thus far. Markets are primed to fall as this 60m chart shows.

SPX 60m - This wedge has had the lower support diagonal lowered once, but I'm not sure that will happen again. The black wedge could still be in play. I have added two head and shoulders possibilities to this chart. A smaller one within the head and a larger one. The right shoulder still need to form and of course the head needs to top out first. Support and fibs are on the chart. That red wedge has another inside day max or a shot at a last overthrow.

ES Minis 4hr - Price is hitting 1352 ceiling and falling into yellow channel, blue wedge and 1341 support. Similar to yesterday where STB called a flat to down day and delivered. Now price is really starting to work over that support.

Patience and form. For the bears we have pretty overbought conditions with the ending wedge and divergences screaming sell. The minis green channel busted and backtested. The yellow channel has cracked. Now all that is left is the wedge support and the backtest of the red busted resistance off the '07 highs near 1327.

Patience and form. It's coming. Protect sort positions with sell stops. Have a plan. Scalps or short swings are what I'd be more focused on. Hit and run gangsta style till the next trend is identified. Transition periods are tough, so keep it simple and have powder dry.

If the bears can crack 1341 it should be game on for at least a corrective. I'll be looking initially at form. Looking for the possible HnS's identified above to play out meaning a couple of right shoulders should be forming (which only makes sense unless this sucker goes straight down). If it cracks minis 1327 would be my first target.

GL and GB.

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