Market Update, Thursday June 30, 2011

The markets are moving higher and the question many are asking is if this move is for real and a new uptrend has begun. The chart below shows E-mini S&P 500 futures showing resistance at around 1321, if E-mini can move above this channel, I will be convinced that a new up-trend is in the make.

Market Update for Saturday, June 25, 2011

The markets are on a downtrend and no confirmation of a turn-around has been made yet. The Vix however, moved higher on Friday and the Put/Call ratio closed above 2, signaling that a bottom is near.

It looks to me that the market may find support again at around its 200 SMA (green line below) and it could make a double-bottom like it did at the beginning of December 2010 (shaded circle on the graph below).

As for my trades, I sold my UPRO holdings at 74.65, a 3% loss, a net loss of 0.1% so far. I am planning on entering UPRO again when the market gives a bull signal.
A key level to watch is the low made on March 16 at around 1249.

Part 2: Market Update for Saturday, June 18, 2011

Looking again at the chart of S&P 500, it seems another scenario could also develop. Since we haven't seen oversold on the daily chart, I feel we should also consider the level at which this could occur. I am not sure if a broadening top is developing in which we could go as low as 1233 which corresponds to the 38.2% fib retrace from 1011 to 1371.

After reaching this level, the S&P 500 would rally to around 1400 to complete the 5th wave.
We'll soon find out which scenario develops.

Market Update for Saturday, June 18, 2011

The S&P 500 bounced off its 200 Day Moving Average (green line) this week which was at around the 1258 level. Meanwhile the longer term upward trend line (red line) from the March 2009 low is also close to the 1258 level as well.

Most indicators appear to be oversold and the S&P 500 could bounce from here. MACD is trying to turn on the 4h chart; however, it hasn't turned on the daily chart. I'd wait for a turn on MACD daily to add to a long position here. My recommendation is to stay cash until then. Another thing to watch is the Dollar Index, its MACD on the daily chart is still positive; similarly, wait for a turn on it for confirmation.

Market Update for Saturday, June 11, 2011

The markets are down +/- 8% in the past month, and I have a feeling that the bottom hasn't been reached.
RSI hasn't reached oversold on the daily chart and what has me worried is that I don't see big enough spikes on the VIX yet, thus, it seems there is no fear in the market even at these low levels

As I posted on the June 4 update, it seems more clear now that 1261 is the next support area on SPX and even the 200 SMA seems to be the ultimate support; right now at around 1253. It seems to me that the market needs to reach this level to reach oversold conditions and create fear in investors before the next rally higher can begin.

If you are holding long positions and are not willing to cover yet, be prepare to loose at least 1.3% more. Hopefully, something similar to what happened the week of June 28, 2010 or the week of August 28, 2010, will repeat again this time.

Market Update for Saturday, June 4, 2011

The markets are scaring most longs. The S&P 500 seems in no-man's land as it has broken through support at the 100 SMA and the daily RSI hasn't reached oversold conditions.

Where are we headed? That's anyone's guess. I have read 2 technical sites that are hoping for support between the 1292 and 1295 level. Since I am still holding UPRO, I hope they are right. However, if the S&P 500 were to break solidly below the 1295 area this would dramatically increase the probability of a failed Inverse Head and Shoulders breakout which could lead to an eventual drop back to the 200 Day EMA at 1261 or the previous low at 1249. A trend-line on the weekly chart from the March 2009 low through previous lows, coincides with this value, so this scenario seems quite possible.

What could move the markets higher? On Tuesday, Fed Chairman Bernanke Speaks and usually when he speaks, the markets rebound; thus, I am hoping Monday we will see the low or a temporary low and the markets won't move much and on Tuesday after Ben speaks, the markets will begin moving higher. If the markets move higher and an opportunity arrives, I will sell my UPRO position.

Market Update for Wednesday, June 1, 2011

The markets sold off severely today. IMHO this was a healthy move. E-mini is almost at oversold levels on the 4-hour chart. I think tomorrow will hit the oversold level. SPX, is also close to reaching oversold but on the 1-hour chart.

I went long today and bought UPRO again at $77.7 I think I should have waited until tomorrow for the oversold level, but I don't want to miss the train and I feel this is a good entry price. Also, I am not able to be in front of the computer all day these days.

My recommendation is for you to go long tomorrow and buy UPRO, SSO or SPY; whichever you feel more comfortable trading. Even if the stock price moves lower than your buy price, hold on to your shares and wait. If you don't feel comfortable, place a stop loss order at 1% below your buy price on SPY, 2% below your buy price on SSO and 3% below your buy price on UPRO.