Round & Round & Round She Goes, Where She Lands........

8:16 PM EST

Nobody knows.  But, we can make a good guess or two!  In case you have not learned it, learn it now.  Never try to catch a falling knife!!  I made mention of this when the market broke to the downside and I hope everyone paid attention.  And now, we have broken the long term support illustrated by the 50 SMA on the weekly chart.  (That's the 50 WEEK SMA!)

Next stop DOW 12,000.  And I don't think we can hold there.  So be ready for a drop to DOW 11,750 or even lower.  Supports are as follows:

12,000 Psych level
11,750 the approx 100 week SMA
10,800-10,700 the approx 200 week SMA and also the approx retrace of 2011 bottom.

The VIX is over 25 and over all it's major daily moving averages.  It is suggesting that this fear now embracing the market is here to stay for a while, perhaps thru the summer ..... perhaps longer.

It's a time to cull the losers from the pack and prepare to get some great buys.  Good, solid companies are being taken down once again.  The opportunity will arise to buy them when the turn around is confirmed.  So start looking at the solid companies that you want to own long term.  Put them on your watch list and wait.  Wait like a big game hunter.  Hide in the bushes.  And when the time is right, pounce!  But for now, just do the prep work.  It will be some time before the turn around occurs.


CURRENT MARKET TRENDS
Short Term (Daily Chart) – Down
Medium Term (3 day chart) – Down
Long Term (Weekly Chart) – Down

The charts.

Express Elevator to the Twelfth Floor Please~

6:18 PM EST

I gave you everything you needed last week.  I mentioned the Greece insnaity.  I stated clearly that the VIX is elevated.  I even said "Dropping below this (the 100 SMA) will change everything and open the market to much more downside..............if we cannot hold the 100 SMA on the daily chart it is likely we could go as low as DOW 12,000 before seeing a change in direction".

Well, here we are.  Almost there, DOW 12,000.  This is a big psyche number.  And we may break below that as well.  Cross your fingers, as a close below 12,000 is very bad ju-ju.  That alone could take us all the way back to DOW 10,000.

Again, I won't re-hash the news.  Last weekend we knew the Greece issue was front and center with all the drama and spill over it implies.  And when we broke the 100 SMA on the DIA, I think I heard someone yell, "LOOK OUT BELOW!"  Yes, there was some good news on the economic front of the good ole USA.  But the insanity happening in Greece is making everyone so nervous that it meant nothing.  The Market tried to bounce a couple of times, but it was a no-go.  The Bears are hitting home runs and the Bulls seem to have left the playing field.

The only thing left is to wait patiently for a reversal and BUY, BUY, BUY.  There are some great stocks out there that have fallen for no other reason than the fear that Greece is causing.  When the reversal happens, it will be a good time to pick up a few bargains.  So get busy, reiview your fav's and more.  Find those bargains, and wait for the reversal.

Supports are DIA Daily Chart 200 SMA @ 121.81, then 120.00, and 118.00 after that.  Remember not to let the talking heads get you in a duther if we pierce DOW 12,000 intra day.  It takes a CLOSE below that number to incite another leg lower.

CURRENT MARKET TRENDS
Short Term (Daily Chart) – Down
Medium Term (3 day chart) – Down
Long Term (Weekly Chart) – Sideways with down Bias (Has not Broken the 50 SMA)

"You Just Keep Me Hanging On~  The Supremes - circa 1966

 

3:06 PM EST

This past week there has been no big sell off, no big bounce, no panic selling, no big rally.  The uncertainty seems to just ............ keep us hanging on~!  Click here for Music

 

There really is no need to re-hash all the news of the week.  There was some big news.  But the bad news did not cause a collapse, and the good news did not cause a rally.  And everything seemed so uncertain.  No one was sure if the next news bite would bring something to praise or tears.  The market likes certainty.  And there was little certainty to be found this week.  Greece, Europe. JP Morgan, unemployment, employment, blah, blah, blah, blah. 

 

Shades of Last Years "Slipping on the Greece"

 

I did want to note the news on Greece.  With all that has happened over the last few years, it seems the politicians of Greece still do not understand the dire circumstances of the country's economic situation.  Go figger!!  They are still fighting about accepting austerity measures, etc. etc.  I will be surprised if they manage to stay in the European Union.  If they do it will be a miracle.  And if they do not, it will be a disaster.  The country will go bankrupt and the people of Greece will suffer enormously.  The wave effects will have a global impact.

 

I only mention this to emphasize the intense degree of denial.  And to give a "heads up" to the situation in other countries including ours.  People, especially politicians it seems, are unable to grasp basic economic and budgeting concepts.  They seem unable to see the consequences of the decisions they make until things become cataclysmic.  And even then, as Greece's politicians and people  have illustrated, most simply "do not get it".  Where are the leaders who care about the whole rather than just themselves?  The one's that care about the country rather than just their re-election.  Just Sayin'  

 

Back to the market, it's madness, and the logic of the charts.  The VIX has been pushing higher, and barely managed a close below 20.  Remember, under 20 = low volatility = good.  Over 20 = increasing volatility = bad.  Not only is the VIX barely under 20 but it appears to have made a bottom and is above it's 50, 20 and 100 SMA~!!  OUCH!  (Chart posted below)

 

The DIA.  Daily chart is holding on by the skin of it's teeth!  Closed Friday at 128.18 and the 100 SMA is at 128.16  Whew!!  Dropping below this will change everything and open the market to much more downside.  Minor supports below are 126 and 124 with good support at 122 and major support at 120.  Yes, if we cannot hold the 100 SMA on the daily chart it is likely we could go as low as DOW 12,000 before seeing a change in direction.  What?  Huh?  Yes, seems that old adage "Sell in May and Go Away" might have some validity this year.   I will be pleasantly surprised if the DIA can hold the 100 SMA next week.

 

The 3 day and weekly charts just confirm the story the Daily Chart is showing.  The 3 day chart is reiterating the Daily's major support levels of 122 and 120.  And the Weekly telling us the best support is the 120 level.    Below are the charts and the Trend table for your review.  Enjoy!

   
CURRENT MARKET TRENDS
Short Term (Daily Chart) – Down
Medium Term (3 day chart) – Sideways and looking for a bounce.
Long Term (Weekly Chart) – Sideways
   

 

 

Jobs, Jobs, Jobs .....OR ....... Where did the Bulls Go, ooff, ooff, ooff  (Sing to the tune of "Who Let the Dogs Out")

8:08 PM EST

On last Sunday's commentary it was noted that the Bulls had returned and rallied price up and over the 50 SMA.  But it was also noted that things looked a bit weak, and that the burden of proof that this rally would continue was on the Bulls.  Yup, volume was noted to be on the decline as price moved up indicating fewer and fewer people willing to jump in at the rising prices.  Sadly, after a false breakout on Thursday May 3rd, the Bulls ran home leaving the Bears to lick their chops with glee!

Thursday the Bears began to take control.  But while it was a down day, some Bulls hoped for a turn around.  Then those dirty little reports about jobs came out on Friday.  And well, the Bears were chomping at the bit, just waiting for the opening bell .  When the bell went off,  "Fear Factor" began.  What?  No, different show.  This one's about being long and losing money!  The Bears went to work and chomped down on high prices all day.  One could almost hear the Bellamy Brothers (Trading Places, circa 1983) yelling "Sell! Sell! Sell!"

Not much else to say.  Monday will most likely be a continuation of Friday's dump.  And the 100 MA that coincides with the previous 2 lows should be a good support.  Better still could be the higher lows indicated by the arrows on the daily chart.  So the turn around could be about 129.50  Longs...... hold on to your hats, it could be a bumpy ride!

OK, a few charts below.  Bottom line is this.....  Support for the DIA area of 128 and Resistance at 132.50

CURRENT MARKET TRENDS
Short Term (Daily Chart) – Down
Medium Term (3 day chart) – Sideways Consolidation
Long Term (Weekly Chart) – Up

Surprise, Surprise, Surprise! ~Gomer Pyle, circa 1962


6:41 PM EST

It was another surprise this week.  Monday we tanked.......again.  And The rest of the week the market recovered.  We once again find ourselves over the daily 50 SMA.  A good thing to be sure, but the burden of proof that this market is still in an uptrend, is clearly on the Bulls.

Yes, last week when the market first dropped below the 50 SMA, everyone was looking for a deeper cut to the downside.  But the market rebounded.  Yet when I look at the volume over the last weeks it is clearly declining as prices move up.  What does that tell you?  Huh?  Excuse me?  Of course you know what that means!  ARGHHH!  OK, here's the 4-1-1.  There are fewer and fewer buyers willing to wade in as the price moves up.  Simple.  And you know what that means!  What!?  AAAAAAARGH!!  Ok, it means when the buyers dry up, as they seem likely to do, price will begin to drop again.  The big question is "drop how far?"  The Bulls need to keep price above the 50 SMA to keep this train on the upside tracks.

Yes, interspersed with all the mediocre data are some salient points, and some really good corporate earnings reports.  Can you say Apple?  Amazon?  Bang, Pow, Zowie! (Batman TV Show)  Or as Jackie Gleason might say in The Honeymooners ......... "Pow, Right to the moon Amazon.  Right to the Moon!"  Ok, yes yes, of course he said Alice, not Amazon.  Duh!   The point is that in spite of the mediocre data there are some really strong corporate earnings reports.  Something many analysts thought would not be present this earnings quarter.  Fooled them!

And yes, the knee jerk reactions of the market participants seems to have returned.  Up, Down, Europe, Amazon, China, Apple, Google, Talking heads.  The VIX jumped around a bit.  The market can't seem to pick a direction and stick with it.  But it's not like it was last year with wild swings of 300-400 points every day.  So it pays to keep your eye on the ball.

To the charts.  Those wonderful, brutally honest charts.  "Just the facts ma'am.  Just the facts." 

CURRENT MARKET TRENDS

Short Term (Daily Chart) – Cautiously Up

Medium Term (3 day chart) – 

Sideways Consolidation

Long Term (Weekly Chart) – 

Sideways Consolidation with a Bullish Bias

On a side note Google has again changed everything, making my job more difficult.  As soon as I get accustomed to one set up, they change it all..... creating hours of extra work.  Please Google.  Revert to the last set up and leave it alone for we poor schmucks!!


The Charts!

DIVE, DIVE, DIVE!

3:56 PM EST


Click here for Sound Effects  

We've taken a dive in the last week, but so far it's only a quick drop to periscope depth.  And yet, while traders scan the surface waters directional indicators, they "stand at the ready" to dive and plunge deeper if necessary to avoid those depth charge dropping destroyers.  So far we are still cruising just below the surface, but still .............

Easter weekend brought bad news.  Good Friday turned out not to be so good.  And even after pondering Friday's news everyone seemed ready to sell and run off Monday morning.  Trading triggers seemed to get hit in every direction.  And yet it was not a calamity by any means.  Volatility is up.  Volume is up, though nothing earth shattering.  The VIX jumped over it's 50 SMA and even broke the 20 level on Tuesday, but was turned back at the 100 SMA as if a door was slammed shut on it's rise.  The VIX is now stuck between the 50 SMA and the 100 SMA.

Surprisingly, the defensive, conservative DIA looks the worst of the three major indexes.  The SPY looks a bit better and the QQQ's even better!  Some would say it's due to AAPL.  Me, I just look at the charts, as they tell the story without regard to emotional influence.  The simple answer is that tech and the QQQ's have done much better over the last 8 months.  The August slump last year did not have the same profound impact on tech, hence it's chart looks better after this years run up.

Where are we headed?  Hard to tell with any degree of certainty.  The daily chart for the DIA is back to a consolidation mode under the 50 SMA.  And being under the 50 SMA is not a plus for the Bulls.  Price is even below last years high (see 3 day chart).  And on top of that this week's attempt to break back over the 50 SMA failed.  So the Bears have the cards for now.

Minor support is at 128, after which the 100 SMA comes into play at 125.76  (Yes, there is "rounder" support at 126).  So essentially it's a wait and see game next week.  China is going to let it's currency move a bit more, but I don't think that's a big market mover.  If the DIA closes below 128, there is a high probability that we will go down to the 126 level or the 100 SMA.  There's really not much in between to stop the fall.

The daily SPY look a bit better but is essentially in the same boat.  The QQQ's are still above the 50 SMA and hopefully can hold that support level of they break 66.

And don't forget Columbo, the world's greatest detective.  Huh?  What?  No way!  You don't remember what Columbo said?  OMG!  Ok, Ok, for the un-informed, the un-initiated, and those who have reached that certain age that is filled with forgetfulness.... here ya go.

Here's what Columbo always said when looking at a stock chart.  Oh, right....... crime scene.

"What's there now that wasn't there before?
  What was there before that isn't there now?
  And............. what's been moved?"

Remember that as you look at the charts below!!

Here's the charts and the trends.

CURRENT MARKET TRENDS
Short Term (Daily Chart) – Down
Medium Term (3 day chart) – Down
Long Term (Weekly Chart) – Up

 

The Kansas City Shuffle - Bruce Willis in the film "Lucky Number Slevin", Circa 2006

12:27 PM EST


Just what is the Kansas City Shuffle?  Really?  REALLY??  Oh, you never saw the movie.  Wow, so sorry to hear that.  You missed a great movie!  The title?  No, it's not a typo.  The title is actually "Lucky Number Slevin".  It is one of the best movies of the decade and filled with stars old and new.  Bruce Willis, Josh Harnett, Sir Ben Kingsley, Morgan Freeman, Lucy Liu.  If you missed this movie, get it and watch it.  It is a great movie with some of the best dialog I have ever heard!!

Ok, ok, ok.  Back to business.  The Kansas City Shuffle is simply this.......
They look right, and you........look left!!  

Links:
Movie Trailer
Movie Clip defining the Kansas City Shuffle
The Song "Kansas City Shuffle"


This past week it seems everone was shuffling, Kansas City Style.  Up, down, pullback, month-end window dressing, consolidating, month-end dumping for profits, etc. etc.  And most got it WRONG!  You see my loyal followers, the pundits and media maniacs have become so damned myopic in their view of the market that they cannot see past the next 5 minutes!!  And who can blame them?  After last year's news filled drama and volatility it's no surprise.

But last year the VIX was up in the 30's and 40's!!  Outrageous volatility!  And as we know (we do know this.....yes?) when the VIX is under 20, and especially under 18, investor confidence is high and volatility is in a normal range.  The fear in the market is not rampant.  And it is fear that causes volatility.  The VIX this week has been at a low of 14.14 and a high of 17.27.

Additionally  we have learned that five minutes does not a market make.  Rather let's look at the daily chart and how it fits into the three day chart, and how the three day chart fits into the weekly chart.  One can even look at how the weekly chart fits into the monthly chart.  Look at the relationships between them.  Compare. Think.  Reason.

Let's take a step back and look at the forest, not just one tree.
 
This week I heard the talking heads say.......
It's a forest of disaster tress and the market will collapse soon!
No, it's a market of up trees and the market is moving parabolically upward.
Nah, it's a forest of bad European trees.
No way, it is a forest of "the rally is over" trees.

It's a market of .......oh hell, you get my drift.  Remember the three blind men describing an elephant?  None of them were right and yet all of them were just stating their point of view.

So what's the real deal?  Let's look at the charts!  DUH!!  Take a minute and review the charts below.  Think for yourself.  What do you see?  What conclusions do you draw?  What is price doing?  Volume?  Were do you think the market is heading?  Think.  Ponder.

Then, and only then, read my conclusion below the charts.  Remember, always think for yourself first!  That is the MOST important lesson of the markets.  Yes, I went just a wee bit crazy with the charts!  But only so you'll wait before scrolling down for my thoughts.

Did you take a minute to think for yourself?  Or are you cheating yourslef and letting someone else think for you?  Remember the old quote......Fish for a man and feed him for a day.  Teach hime to fish and feed him for a lifetime.


I gave you enough annotation on the charts that you should already know my thoughts.  But here's my take and the Trends anyhow.

I see the following on the charts.......

1- The VIX is under 18.
2. The uptrend line on the DIA daily chart has been tested and survived.
3. Price is still above the 20 EMA.
4. Price is still above the 50 SMA.
5. We've been bouncing sideways the last 13 days between 132.50 and 130
6. Volume is on a slight decline, but the buyers have remained in control.
7. The SPY looks stronger than the DIA
8. The QQQ's are running faster than the SPY (perhaps too fast?)
9. The Russell 3000 looks similar to the SPY.


Everything points to only one conclusion for me.  The rally is intact.  How long it will last is anyone's
guess.  And with this last weeks consolidation, it only makes sense to pay closer attention to the charts
in the coming weeks.  But let's not be Chicken Little.  Things are looking good.  And while some pundits
are predicting the upcoming earnings season will be weak, we'll have to wait and see.  Just like life.  For
now, everything is up.  So be attentive, watch your stops as usual, dump any losers, and add to winners
on pullbacks.

CURRENT MARKET TRENDS
Short Term (Daily Chart) – Consolidating with UP Bias
Medium Term (3 day chart) –  Consolidating with UP Bias 
Long Term (Weekly Chart) – Consolidating with UP Bias