Monthly Intraday Charts for SPY and SSEC: 2011-08

This is a monthly series of intra-day charts for S&P 500 (SPY) and Shanghai Index (SSEC) for July 2011.  


SPY

SSEC

Monthly Intraday Charts for SPY and SSEC: 2011-07

This is a monthly series of intra-day charts for S&P 500 (SPY) and Shanghai Index (SSEC) for July 2011.  

SPY

SSEC

Monthly Intraday Charts for SPY and SSEC: 2011-06

This is a monthly series of intra-day charts for S&P 500 (SPY) and Shanghai Index (SSEC) for June 2011.  

SPY

SSEC

Monthly Intraday Charts for SPY and SSEC: 2011-05

This is a monthly series of intra-day charts for S&P 500 (SPY) and Shanghai Index (SSEC) for May 2011

SPY

SSEC

Monthly Intraday Charts for SPY and SSEC: 2011-04

This is a monthly series of intra-day charts for S&P 500 (SPY) and Shanghai Index (SSEC) for April 2011

SPY

SSEC

Monthly Intraday Charts for SPY and SSEC: 2011-03

This is a monthly series of intra-day charts for S&P 500 (SPY) and Shanghai Index (SSEC) for March 2011

SPY

SSEC

Monthly Intraday Charts for SPY and SSEC: 2011-02

This is a monthly series of intra-day charts for S&P 500 (SPY) and Shanghai Index (SSEC) for Feb 2011

SPY

SSEC

Monthly Intraday Charts for SPY and SSEC: 2011-01

This is a monthly series of intra-day charts for S&P 500 (SPY) and Shanghai Index (SSEC)

SPY

SSEC

Monthly Intraday Charts for SPY and SSEC: 2010-11

This is a monthly series of intra-day charts for S&P 500 Spider ETF (SPY) and Shanghai

SPY

 Shanghai

XLF broke out and S&P 500 update

Today XLF broke out to the upside from 2-3 weeks of consolidation after Fed's QE2 announcement.  It looks that S&P 500 will break above April high by year end.  My previous prediction turned out to be incorrect.  Inflation trade is back.

Although big three indexes all broke out, as of Friday's close, they are close to price targets:
S&P closed at 1225, price target 1250
DJIA closed at 11444, price target 11700
NASDAQ closed at 2579, price target 2589

Monthly Intraday Charts for SPY and SSEC: 2010-10

This is a monthly series of intra-day charts for S&P 500 Spider ETF (SPY) and Shanghai

SPY

Shanghai

Monthly Intraday Charts for SPY and SSEC

This is a monthly series of intra-day charts for S&P 500 Spider ETF (SPY) and Shanghai

SPY

SSEC

Monthly Intraday Chart for 2010 August

This is a monthly series of intra-day charts for S&P 500 Spider ETF (SPY) and Shanghai

S&P 500 ETF (SPY)

Shanghai

A Few Warning Signals of a Pull Back

Despite late day bounce of stocks, here are a few warning signals for an immediate pull back of risk assets:

• VIX has built some footing on 200 DMA and reversed its downward course
• 30 and 10 year bond rallied today, and their yield dropped
• Crude Oil finished down today
• Shanghai index is consolidating
• European indexes dropped today

Study of 1998 and 2010 US Market Corrections

Studying 1998 correction using S&P 500.  The correction started July 20, 1998 at 1190.58, ended on Oct. 8th, at 923.32, the drop was 22.4%.  The correction lasted 80 calendar days.  The theme associated with the correction was Russian financial crisis and investors' flight to safety.  The correction was preceded by 2 years of bull market gain of 89% without a more than 10% correction.  The market rose from 626.65 on July 24, 1996 to 1184.1 on July 20, 1998 on closing basis.  After the correction, the market rose 29% in less than 2 months with 10 DMA as trend line.

Take a look at bull market from March 2009 to April 2010, in 13.5 months, S&P gained 80% from 667 on March 9, 2009 to 1217 on April 23, 2010 without more than 10% correction.  The theme with this correction was European debt crisis and investors' flight to safety.  So far, this correction looks like 1998 one.

US Stock Indexes broke down from head and shoulder neckline

Major US stock market indexes broke down from head and shoulder neckline today.

• S&P 500 H&S top is 1220, neck line is slightly downward tilted at 1042 area, so price target is 1042-(1220-1042) = 864, or 16% lower than today's close 1030
• NASDAQ H&S top is 2512, neck line is slightly upward tilted at 2120 area, so price target is 2120 - (2512-2120) = 1728, or 18% lower than today's close 2109

It is imminent now to take actions to protect your portfolio if you are long stock market.

S&P 500 Chart Analysis

The S&P 500 neck line of March 09 head and shoulder bottom was 950, indicating the price target being 1233, the market's intermediate top on April 26th was 1219.8, just a few points below the target.  Then we know the market violently crashed about 10% in next 2 weeks ended on 1110.88 on May 7th.  The question is whether this is end of rally or is it a deep correction? 

Signs supporting correction include:

• The rally started last March didn't experience any correction deeper than 10%, which opens up possibility of a 10%+ correction
• This correction may be similar to Jan correction in the fashion that it breaks rising wedge formation and forms a less upward sloping new rising wedge.  
• April 26th market top was very close to, but has not reached price target of inverse head and shoulder pattern
• VIX spiked too fast (almost 200% increase in 2 weeks) which is comparable to what market experienced in late 2008, however, US economy now is in much better form than that of late 2008
• As of April 27, Bull/Bear spread (Investor Intelligence bullish sentiment minus bearish sentiment) is reaching towards 40 danger zone, but has not yet arrived there yet. For more details, see here.

S&P 500 and NASDAQ Chart Analysis

S&P 500 is forming a viscious head and shoulder top pattern, with downward sloping neck line, and price target at around 1140.  We do see volume zoom up at the right side of the right shoulder which serves a confirmation of this formation.

Similarly NASDAQ is forming a head and shoulder pattern as well, different from S&P, its neck line is slightly upward sloping.  Its near term price target is around 2365 which is close to my price target of 2320 level.

Forecast of When This Correction will End based on History

Based on history, I predict this correction which started April 16th led by financials will end either on May 7th or May 14th, both are Fridays.

Ascending Wedge Formation Analysis

In the post bear market rally that began March 2009, major US market stock indexes have been rising in the pattern of ascending wedge formations.  A couple of wedges with less bullishly tilted angle can be drawn to confine variance stage of bullish runs of three major indexes.  For S&P 500, tipping point of past wedges have been reached, however, NASDAQ and DJIA failed to reach tipping points of past wedges.  This suggests that S&P will likely reach 1300 tipping point of the current wedge. 

S&P 500

NASDAQ

Dow Jones Industrial Average

2010/4/27 Update

Since the post was initially put up  on 4/21, the market went up a little, S&P 500 touched 1219.8 then broke down ~2.3% on 4/27, on the same day, VIX spiked 30%.  With the upper edge of this formation confirmed, if the lower edge holds, the apex tip of the rising wedge is a little bit over 1300 around September time frame.   Whether the lower edge will hold depends on where this correction will end.  One sign that this is a correction instead of THE top is that PPO on weekly chart is showing higher high.  

S&P 500's rising wedge formation as of 4/29

 

S&P 500 Chart with Bollinger Band

Here is an updated chart of NASDAQ's rising wedge formation (as of 4/29)

One interesting note about NASDAQ is if you look at the weekly chart with Bollinger Band overlay, Bollinger Band's parameters are 20,2, you will see that index has gone over-extended in a similar fashion as it did back in mid-September 2009.  At that time, it took 1.5 months for the index to trade sideways to allow Bollinger Band to catch up before it resume uptrend to gain around 300 points.  With the rally target around 2800, around 300 points away from current level, I expect either the index to trade sideways for 1.5 months or retrace at least 5% back to median of Bollinger Band before it resumes final rally to 2800.

Here is an updated chart of DJIA's rising wedge formation (as of 4/29)

DJIA chart with Bollinger Band