Category: Trading Articles

V-Shaped SPX rally

The unrelenting bull gallops on

The October and November rallies that were envisioned at the end of September have indeed occurred - evenly more strongly than most commentators expected - including myself. The market's remarkable ability to put together breathtaking rallies in a very short period of time hasn't changed. Many commentators have affectionately refer to these unending spikes higher as "V-Shaped rallies" given their visual similarity to the letter "V". They litter the charts since the advent of quantitative easing.

If you look at the strongest index, the NDX 100, the move is even more pronounced and strong. Not only did it "V-Shape" higher, it completed a very large and improbable bullish ABCD structure to the topside and made new highs to boot. If you were looking for action, the NDX 100 was the place to be in October. In fact, I dubbed fifteen stocks inside that index as the "Nifty Fifteen of 2015" - the primary drivers of this year's push higher (Links to the Nifty Fifteen videos are here, here and here).

NDX 100

Now the big question becomes, "Can this market trade even higher?" Will the new highs on the NDX 100 be followed by new highs on the NASDAQ, the S&P 500 and eventually the Russell 2000?

Of the three majors, certainly the NASDAQ looks to follow as it has scored two important victories. It traded back beyond the bearish retest and regenerate zone on the intermediate term time frame and secondly it has traded back over the breakdown bar.

NASDAQ Composite

The S&P 500 is a little less certain but it too has a good chance at seeing new highs now given the strength in the NDX 100 and the NASDAQ. It has two important bearish neoclassical technical items still to overcome though they are looking more and more like technicalities rather than impregnable barriers.

S&P 500

The bottom line is that the market once more, with the assistance of the generous offerings from the central bankers around the world, has rallied back as if no problem is too big to solve. The continued belief in their omnipotent stature remains and likely continues that way until a significant and lasting shock occurs that irrevocably shakes investors' confidence in them. Markets are always about confidence and doubt, fear and greed, hope and pessimism. This market is no different and, to many an investors' amazement, the doubt remains insufficient to seriously wound the bull, let alone kill him. It's going to take more time and dashed hopes it appears.


This article was original published on MarketWatch on Nov 20, 2015 12:21 p.m. ET

  • Written by LA Little

Category: Trading Articles

What a fine mess we have created

Looking back, everything seems clearer and sharply focused. Looking forward it seldom has the same clarity. With central bank policies for a about half a decade, it was pretty clear - just keep shoveling more money out there and drive debt prices to extreme levels. The consequences were clear in some places and murkier in others. Debt pushers would see their currencies devalue and a general rise in most financial assets – at least for a while - until the next country came along and did the same. Corporations - even countries - moved their risk curve out farther and farther as the debt laden policies forced decisions that otherwise would have never occurred. Heck, "if the money is free, then why not use it" was the attitude.

Read more: What a fine mess we have created

  • Written by LA Little

Category: Trading Articles

The big bounce meets big resistance

When we last shared thoughts, the market was looking over the abyss and considering the downside plunge. Back then there was a reasonably high probability that we would move higher, not lower despite the fact that it is likely a market dying a death by a thousand cuts. So now, after the big bounce the market finds itself facing big resistance.

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  • Written by LA Little

Category: Trading Articles

$Compq- 5155.79 target Update 11/21/15

We should hit 5155.79 today- see the following 16wk hourly chart.

Read more: $Compq- 5155.79 target Update 11/21/15

  • Written by Gary Caumont

Category: Trading Articles

The market is suffering a death by a thousand cuts

Way back in March of this year, the probabilities of a range trade at the highs looked quite probable and an article alerting to a roller coaster market that was taking shape was shared here. That up and down movement lasted for almost half a year until one week before the markets came crashing down, the probabilities of a larger fall were high enough to issue a direct warning. Now, five weeks into the downdraft and with the indexes poised to try and break lower still, there is enough evidence to suggest that even though lower prices are most likely still to come, it is unlikely they are going to come in a crash manner as many keep expecting. Instead, my neoclassical work suggested that it will come by way of a death by a thousand cuts type decline.

Read more: The market is suffering a death by a thousand cuts

  • Written by LA Little