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