Sucktor rotation

Hi guys

Someone was wondering today what the difference btw topping and consolidation patterns would be, since price action was quite flattish today. Well one way to tell about it is by looking at sector rotation since is a characteristic of all tops. This is what I found these days:




But if we look at last two sessions performance (specially today) the roles seems to have changed (rotated) We need to see continuation next week.





In brief: topping is already being produced but we will see marginal higher prices ST. Friday price action was just too easy to short as to be the real top.

My take for early next week is: they will gather more critical mass by sucking more bears with lower prices, prolly gap down. This will fuel the next run up toward new highs. Then the top may be printed.

R.I.P Updated

OK I know I need to make my post more explicit :) but I just love R. Seixas music and this lyric represent very well what might be happening at market currently: this little rally is dying. Although we don't know exactly when, I am confident the next swing down is underway.

I have reasons to think we have seen the top today and Monday can gap down big. Alternatively we could experience some small run up on Monday but it wont last. As I said before I am looking for much lower prices as of now .





ES daily



ES hourly



As in interesting chart, we can see this one where the time frame is OPEX period....

Weekend update

Well , 2 things happened , but as usual with Mrs market it happened in an unexpected way, the ES1067,5 level we were expecting after the bounce occured today before any meaningful bounce (although we did have a 23 ES points bounce today , but it was smaller than expected).

Now, the path looks more complicated because market needs to retest higher levels before more downside , so it may need to backtest ES1112-4 level from ES1069 which is a long ways. Anyway, it seems the most probable scenario

We will post updates of FTSE setup tomorrow to follow it up since we still believe is a valid indication of what other international indices will do in the short term.


Some charts as promised:

Overall view (ES)




Close up, daily view (ES)



DJ Trans (daily)





Nasdaq (daily)


SOX daily


Russell 2000 daily



OK, now one important guy that DID NOT break its channel, and might well be a clue

DJ Industrials daily

Thoughts for next week

I will post a more comprehensive review of what happened this week later. Meanwhile here are some thoughts about next week outlook.


VIX monthly



VIX weekly

NASDAQ 100

NASDAQ COMP

BULLISH PERCENT - NASDAQ

Indices review

Let's make a weekly wrap up reviewing main indices to update previous post on this.

SOX review

RUSSELL 2000 review:

DJ transports review.

DJ industrials

XMI review:

Review II

Let's continue with some reviews.

Very interesting set up at the Dow. Thoug many are wating for 10000+, there are some concerns to bear in mind.


Regarding currecies, our RSI setup is giving signal again:

Review I

Hi everybody,
Finally today I could make some spare time to review charts and do some postings. I hope you heard the message from the Market yesterday :), I believe it might have been the beginning of an interesting move.

Let's see some findings to clarify our play for next week:


Major market index facing thick resistance:

Major market index close up view:

NASDAQ Comp: broke trend line, with flat OBV and declining Mc Os.















Russell 2000 also presents a clear divergence just below a potential double top.

SOX more divergences at the potential IT top.

To bounce or not to bounce...

First of all, we see that the main (mid term) trend is still bearish which means that the strongest moves will be to the downside but we can see some signs of exhaustion and a probable bounce for the VST, after which we expect lower prices.

Here are the reasons that favors the possibility of a bounce

It is more clear at Nasdaq: We see how it found support at previous resistances + it made a hollow red candle ( increases possibilities of ST reversal) + divergence with OBV which is VST bullish. The "only" factor missing is a more pronounced reversal at the McOs which would reveal internals are also improving.




Anyway, regarding mkt internals we can see the following chart which do show more clues about a VST bounce:



At the ES we can also see how the price was contained by the orange lower channel and it respected the FIB retracement (red line) which is VST bullish.
Again, Mc Os is not yet confirming the bounce and this is the main reason not to be sure about it.



The main obstacle for the potential bounce is the 1026 area (previous resistance) which already stopped the bullish reaction on Friday. If taken out, then the path is cleared until 1039-45 area.



DJ Industrials also respected 2009 bullish trend line and important 38% Fib retracement


Similar picture at Major Market Index, 2009 trend line respected and previous resistance now became support.


Last but not least we had the confirmation of this mid term bearish trend at bonds as we were anticipating. TNX did make lower lows and lower highs in the last weeks and now it found support for the VST IMO.





P/C ratios are non conclusive but still showing quite high (fadable bearish sentiment) values

Weekly wrap up

I am seeing overall strength at equities markets thus played mostly from the long side.

We did have some surprises like late sell offs and weakness at EURUSD and Techs.
Another factor to watch is bonds behavior (see chart). They plunged on Friday after weakening for several days. As we can see they have been rising since March hand in hand with equities so if this correlation is about to continue we should see one of this two: a quick recovery in bonds (unlikely) or a bearish move in equities.



Sum up: Main trend is still bullish. I believe up trend will continue in the short term. A good accomplishment for bulls would be a daily close above ES1008. Anyway, some signs require attention as they can be early indicators of a meaningful pullback in the short term ( EURUSD, Semis, Bonds).

Edit: Oil performance can also give us some clues. I will post some charts on it shortly.