SPX Pullbacks Are Volumeless, Stay the CourseTraders have seen this before, and it continues to play out as the global economic climate breaks down. Although these pullbacks in the SPX are often lofty and swift, it is important to realize volume is the most import factor when considering the validity of a pullback.
Here , we can see that the move in SPY is volumeless. The entire squeeze from the Feb. 11 low has seen volume under the 20-day average. On balance volume is not supporting this move.
Next, when deciphering a mere pullback following a steep decline or an inflection point, think what is the "smart money" doing?
Simple. They've been selling to the dumb money for the last five weeks . Corporate buybacks continue to be the only demand in US equities.
Fundamentally, the index is highly expensive versus historical valuations. At a 21.79 P/E, the SPX is over 5 points over its mean. It's over 11 points higher that the "sweet spot." Shiller P/E, which tracks 10 years of inflation-adjusted earnings, is at 24.98 (also, historically expensive outside a recession).
Furthermore, earnings are, indeed, rolling over (along with the business cycle) while real earnings growth is cratering at -14.5 percent. Last time that happen, the US saw a recession in the early-90s, the recession following the tech bubble and the 2008 financial crisis.
See that here !
Aside from there lack of conviction with permabulls being scooped up in buyback fever, the index is about 160 points of its most recent low. Yesterday, price action closed at daily resistance at 1,978 and near the 50% Fib. level from this years epic start.
If it can close above these two levels, the next level that is key is 2,020. If bulls overtake this level a potential retest of 2,071 is probable.
However, this is how I believe it will go as the dollar continues to strengthen and the Fed continues to be out of place:
A bear market scenario like those that followed the tech bubble and financial crisis would put the SPX near 1,078.
This year, we've also seen SocGen's Albert Edwards forecast a potential 75% decline for the broader index.
17 months ago, I published a chart showing a whopping 71% potential decline in SPY from then current levels .
Granted, this was merely based on historical references and calculation, but interesting nontheless.
Will you get a chair when the music stops?
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JPM
The Dimon Bottom Hype Is OverCNBC has loved to refer the recent pullback in the SPX as the "Dimon Bottom" because CEO Jamie Dimon purchased roughly $26 million worth of JPM shares. However, it's not looking for those wanting to hold to believe in the recovery dream.
Whether investors want to believe it or not, the U.S. economic cycle is rolling over; and, considering the very high correlation to the SPX, J.P. Morgan shares will unlikely be saved.
Since 2014, I been warning of potential headwinds from energy exposure in U.S. banks. It may not cripple the sixth-largest bank in the world, but death by 1,000 cuts won't be any better for shareholders.
On Tuesday, JPM reported a 20 percent decline in trading revenues, as well as a $500 million increase in provisions (up 60 percent) due to their energy exposure. Fee revenues were down 25 percent.
Technically, the weekly chart is showing more downside is to come. Traders are watching a 20-weekly bearish convergence with the 50- and 72-weekly EMA. Price action is, also, currently below the 200-weekly EMA.
The inability to show support above this level and challenge $59.60 could poise further stress on shares.
Near-term, we'll see price action test the trend/price demand between $52.30-$53.50. A close below $52.30 would open up $48.3 and trend lower to $43.74.
If looking at Fib. retracements, a close underneath Aug 24, 2015 Black Monday low, 1.618 Fib. extension would stand at $37.54. This would be my target for Q2-17.
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Possible Head & Shoulders breakoutLooks like our favorite investment bank may be have even more of a down swing in store. This head and shoulders pattern looks pretty well defined. The current candle however is sitting on a support level around 170 but if that is breached then 150-152 may be in store. as the next stop.
Consolidation inside the PRZ - Butterfly completion near X BAC Bearish Bat pattern is still valid as the price consolidates inside the PRZ, below two broken uptrend lines.
As the markets await Yellen and the Fed, Financials are stuck and that clearly being reflected in BAC's chart.
If the price will attempt to rally and test the X zone (18.5$) it will complete a small Butterfly pattern that will add chances that we will see bearish reversal in BAC and a move towards 16.5$-17$
R/R shown in the chart (for two scenarios)
Tomer, The MarketZone
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DOW JONES OVERVIEW: JPM TESTING MACRO UPTRENDSJPMorgan is testing its macro uptrend, after successfully testing its 10-year uptrend, currently price tires to reestablish its 5-year uptrend.
Recently price has bounced up from the 10-year uptrend border, marked by 1st standard deviation from 10-year mean (at 57)
Currently price is trading around its 5-year uptrend border, marked by upper 1st st deviation from 5-year mean (at 62)
The tests are aligned with short term risk.
Failure below 10-year uptrend border will initiate also a downtrend on 1-year basis (price falling below 1st standard deviation from 1-year (264-day) mean), while failure below 5-year uptrend border indicates a downtrend on quarterly basis (price below 1st standard deviation from quarterly (66-day) mean) - which is happening now...
(LIVE TEST) - STEVE PRIMO #8 SETUPS (Day 2)Day 2 - Seems like an important day for these stocks.
Most stocks here are wound in a some sort of patterns.. This Strategy #8 trigger today can take signal a technical breakout. Watch out for the market...
SPY Lagging behind QQQ lagging behind IWM.
- Nimble and selective are the words i want to remind again.
JP Morgan Chase & Co Weekly (22/2014) Chart Technical AnalysisThe JP Morgan (JPM) weekly chart shows the following signs:
JPM from the price of $31.77 has completed a long phase until the $60 an now it makes some consolidations between $53 & $60. As you can see on the diagram it corrected until it reached the top of KUMO from where it reacted upwards. A critical day is 17.05.2014 that the company will anounce the earnings until 6/2014 and that will define the next trend
Technicaly, RSI is neutral and MACD signal line is trying to turn upwards. So my suggestion is wait and see except if the price get out of the consolidation channel.