Russell 2000 Futures at key levels

Fib convergences here...however, we are in a strong uptrend. Treasuries are still short, therefore, my interpretation is that further upside would be attracted to the next fib convergence levels and resistance levels. Action there will be key.

Updated Market

GREAT sell signals on the market this AM...

As of 12:00 this is the view...got good bounce signals...predictive pivots point lower for the close

Update as of 12:50 Est:

Update as of 3:59 EST:

If anyone is interested...I would consider setting up an alert serivce based on the triggers in any of these charts...please let me know by contacting me through email or comments. If there is enough interest...I will put the work in or perhaps do a webinar type screen sharing session.

Looking for feedback...

Current Market Overview

Looks like one more push and then a roll over...should be a pretty good move. Predictive pivots in the indexes argue for selling into the close...These are indicated by the little Red lines on the right of each index. they are significantly below currnet prices...argues for downside this afternoon towards those levels... internal volume trends are not particularly good.

And here is the close: I posted the series of charts so you can see how well the systems track price...also the predictive pivots did indeed turn in to the magnet that I indicated above.

Market on Drugs? and updated look...

Two views of the market - Market On Bernake and Market NOT on Bernake

The market has been manipulated by our friends at the Fed. They are intent on bankrupting everyone - except their crony's. The way they manipulated the market is with overnight, highly leveraged futures. I have discussed this at length in previous posts. This has resulted in a vast amount of non traded prices. This makes the current prices illusionary. If you look at the two markets below...you will recognize that they are the same market and the same timeframe. Only one of the markets has removed the Fed from the equation. Guess which chart is easier to analyze? And look at the projections...Technically the Second chart is much more compelling and clear to read...I am interested in your thoughts...

Market Observations - Under the surface - not what it appears to be

Just like Bernake, if you look under the surface you can see that there is something masquerading as an impostor you always knew was lurking. Well, in my charts below you can see, this rally is not what it is cracked up to be. Additionally, we only need the box trades to close on both the ES and TF for the market to be set up for, at the least, a major pullback. Would be nice if the dollar could get into the 74.50 and below or above trendlines, confirming an unsustainable position in the markets.

Market Observations - Dollar Poised

The dollar is poised and ready...just below key resistance. Ironically, most are looking for a bounce...if the dollar does breakout...then we will need to be looking for a cascade lower. So far, the dollar has guided me very well through this current pattern. Right now, I favor a small bounce followed by a dollar breakout and an equities cascade lower. What this means is that immediate resistance may provide a convenient point for some dollar selling or consolidation...and we can not underestimate how minimal that may be. Once this resistance is broken the effect will be a strong rally for the dollar and heavy selling of inflation assets. SP 500 targets for me on this move will be 970 area with a hesitation at the 1016-1020 area.

EURO divergence has been and will likely continue to be a great trigger for trading and has revealed the dollar and market patterns prior to them occurring - sometimes by as much as 30 minutes. It is currnetly my primary trade setup vehicle. If there is no divergence between the EURO and the SP500 I do NOT do a trade.

The fractional reserve system is dead...and the impact of that will be an exploding dollar. Which is why we have to worry about the impending breakout on the dollar chart. To understand more about this subject please read the feature articles posted on the upper right on this blog.

Below is an unchanged old chart of the SP500 that I posted over the last few weeks.

Below is a very good chart from Matt Fraily for the UUP.

Below is an unchanged old chart of IWM that I posted on the 21st of September.

Below is a chart of Oil that I have been monitoring over the long-term. 

First resistance held...we have not yet made it to the upper resistance which is around 87 to 90...which is rather disappointing for the pattern. Depending on next week's action in the dollar, we will see if there is any upside potential remaining.

The Gold Equities GDX chart below this is from Matt at breakpointtrades.com and demonstrates that gold stocks are leading physical gold, as they usually do. If that is the case, any bounce for commodities will be muted.

Below is another chart from breakpointtrades.com of the SPX.

I do not love the count of the wave 4 as it is labelled. But I do think that we are putting in some sort of triangle or flat here for wave 4. This is appropriate alternation and may reflect what the dollar chart seems to indicate - which is that an upside breakout on the dollar will make equities want new lows before we get a sizable bounce.

above chartcourtesy of matt fraily, breakpointtrades.com

Russell 2000 Chart Revisited

Divergence is still there...Black candle worked for only ONE red candle. Now we are over shooting upper trend line resistance. Amazing and crazy...looks like a trap.

TRIN Divergence on Indexes...

Next High looks like a good place for the market o make up its mind...

Russell 2000 is lagging and has not been able to take out its highs.

Triangles setting up on the shorter timed frame chart for a high restest...Up/Down volume on Russell showing cracks.

If this plays out...will post if it does...so stay tuned.

Market Observations - Resistance and Black Candles

The Russell 2000 is an interesting index. It is comprised of a high concentration of energy and financial components. It is also represent speculative small cap companies, so you can gauge the market's risk appetite from it. Well, as you can see below, the Russell has to break its high. This is a difficult task given the strong resistance and overbought nature of this market. Additionally, the Russell has been lagging which adds to the difficulty but also demonstrates a tiring market overall. The Gap Up open with a close below the Open created a Black reversal candle. These are highly reliable signals especially when they occur at trend-line resistance with divergences. Something to keep an eye on.

If the market is going to reverse down or break resistance it has to happen imminently. There is no spare time. It is my impression that people are so tired of calling for a correction that most are looking up. While I recognize this possibility is not trivial...the downside case seem much better to me and upside seems quite limited.

US 30 year Treasuries - not a pretty chart...and not a good omen for the market. Clearly, Corporate Bonds and Treasuries have disconnected...The structure for the Corporate Bonds is very clear and it looks like the ABC pattern is complete. Look out below.

McClellan Oscillator had two small consolidation moves...Friday and today...this portends a large move of some sort is likely tomorrow. Either way you want to be on the right side of what ever that move turns out to be...and it seems likely to be down to me.

Russell 2000 Chart

Market Observations - Indexes at supports

This chart of the Russell 2000 Futures shows a major support at 595.4. After hours this level was touched. We should look for a bounce from these levels. If there is a break down from these levels (1039 on SPX and 589 on the Russell Futures) that would defiantly qualify as P3 type behavior. However, if we can bounce from here we may make a failed high and then take out support thereafter. We have a lot of unfilled gaps up to the 1077 area on the SP futures. I would like to see them filled. Also, there are a lot of good support levels shown on this chart as targets on the down side if we go that direction.

If there is a gap down on the open...watch for that gap to be bought.

I trade the TF futures and they are a very good momentum gauge for the markets. If they start showing downside outperformance....larger indexes will usually follow

Russell 2000 top vs IWM top?

We have a little divergence...IWM has hit it upper resistance...but $RUT cash still has a ways to go...interesting...

We are close...but how close?

Neck Lines Acknowledged

Some Possible Patterns

All of these charts show possible head and shoulders patterns with RSI testing 50. A failure of the RSI likely means a test of the HS neckline...

If overnight futures were to take us down as they did just after they reopened on the TF to below the 612 area for the cash index (RUT) then we may just be waking up to these patterns breaking down on the open. On the other hand, these trend lines themselves may be bounce points, so, if they are not broken we could get our next bounce there.

Again, we should hold the upper trend line on the wedge shown in my previous post and make an attempt up. I think a lot of this depends on what is happening with all that money market cash. If they are done reallocating it then I would say the probability of a significant pullback, if not top are greatly increased.

However, right now anything could happen and a blow off type scenario seems like the most painful way for the market to go...and given this market you can not take that for granted.

In any case, it does not seem like upside in the market is that substantial...and short and sweet would be most welcome.

Market Observations - Optimism and Fear

Below, I show a chart of the Russell 2000. This index has broken over the top its upper trend line in what looks like a parabolic throw over. At the same time VIX closed positive and has failed to close below support...this is a significant non-confirmation to the throw over prices that we are seeing in the indexes.

The fear and extreme optimism (92% bulls) are not painting a clean picture for the bulls. Clearly what is happening is that the bears are blowing up out of shorts and giving up and longs are over extending and pushing the cash reserves to near 0. This means there will be very few buyers when we start moving down...

I am looking for a this throw over to reach some sort of emotional extreme imminently. Clearly the diagonal that most have been watching is not playing out. The action today shortens the end of P2, in my opinion. Other patterns, including a diagonal, would likely last longer.

Keep in mind that this action is most definitely NOT bull market action. In bull markets, panic buying does not often occur...additionally, patterns allow for consolidation and testing. The only testing going on with this market is highs...this is representative of advanced countertrend type activity. Bears are at wits end and Bulls can't get in quick enough or risk missing the bull market.

I am imagining that this will also cause a spike in Gold and capitulation in the dollar...due to this impression, I have exited most of the dollar contracts that I bought when $DXY was 76.7.

Market Observations

Below is a chart with all the critical trend lines for the SP500. Additionally, the projection of the optimal turn date for Primary wave 2 or B (depending on nomenclature)...

The irony is that the bottom was at 666 and the turn date starts 9/11/09...this is indicated by the magenta line on the chart. If that were to be the relationship that were to occur which does not seem unlikely then its truly an astounding coincidence. I referred to these two data points in some previous posts.

Also, keep in mind that earnings estimates for the third quarter at $14 for the SP500. That works out to a P/E of 75. This is an astounding number especially when earnings have significant risk of coming in much lower than that. Earnings expectations for this past quarter were cut by nearly 50% already. Companies can beat those lowered expections...but that does not fix the fact that earnings are low and going lower.

Below is a chart of the NDX.  We are in a serious resistance zone here...Two rising wedges at once. Perhaps we get a throw over and then fall through the bottom of the wedge.

Below is XLF, head and shoulders pattern continues to be valid. Financials have not been participating in the rally. Maybe, it more of a short squeeze in general since most of the financial shorts have been decimated well before now...Seems like we have to progress through the whole market squeezing every sector until its rung dry.

The RUT has a confluence of resistance above...seems like the next few days may get interesting. RUT has has had an especially strong rally. I wonder what the crash will be like?

Market update

Nasdaq unable to take out highs so far, SP and YM not confirming highs for Russell and EMD.

Breadth 1.85.

Great Chart of the Russell 2000 Futures

No Comments needed here...I have not updated this chart for a month at least.

We could still get one more throwover to the upside...then the pattern would be extremely high probability.