Archive for the ‘Chart School’ Category

SP500 Wyckoff Review

Courtesy of Read the Ticker.

sp500-wyckoff-reviewReview of the SP500, pre Oct 2015, fire fighting the technical damage.

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NOTE: does allow users to load objects and text on charts, however some annotations are by a free third party image tool named

Investing Quote…

..”Your goals are to select only stocks that move soonest, fastest and farthest in bull or bear markets. Limited losses and let profits run.”..

Richard D Wyckoff

..“Don’t try to buy at the bottom and sell at the top. It can’t be done except by liars.”..

Bernard Baruch

…“People somehow think you must buy at the bottom and sell at the top to be successful in the market. That’s nonsense! The idea is to buy when the probability is greatest that the market is going to advance”…

Martin Zweig (The inspiration behind a number of Martin Zweig’s methods came, from Jesse Livermore).

..”It’s easier to fool people, than to convince them they have been fooled”..

Mark Twain

..”The financial markets generally are unpredictable. So that one has to have different scenarios… The idea that you can actually predict what’s going to happen contradicts my way of looking at the market.”..

George Soros

Minor Gains

Courtesy of Declan.

Things were looking a lot brighter in premarket, but in the end bulls were able to push markets into a higher close, even if volume was lighter than yesterday.

The S&P nicks a breakout of declining resistance from the September high, but hasn’t yet challenged declining resistance connecting August and September levels. Technicals hold on to their bearish outlook. Based on the table listed at the end of this article, the S&P would need to drop to 1,600 to register a 25% loss from highs.

The Nasdaq did well to finish where it started. The doji to follow on from yesterday’s gains suggests there will be further gains on Friday (but take nothing for granted!).

It had looked like the Russell 2000 was going to push down to touch provisional declining channel support, but it hasn’t done so yet. Technicals are all net bearish.

The Semiconductor Index also remains poised to break higher. It’s still stuck flush to declining resistance with the ‘bull trap’ still in play. Technicals are not as bearish as for lead indices.

Tomorrow#s job data is another opportunity to mix things up. August lows are important, but a new low would prove attractive for value buyers. Shorts are working with a short tether, and would need a good rally to reset the bear clock. Also, the move into October puts three consecutive months of bearish action into play, opening up an opportunity for a bearish rally.

You’ve now read my opinion, next read Douglas’ and Jani’s.

Key Global Equity Index Has Fallen Off The Precipice

Courtesy of Dana Lyons

On September 8, we posted a chart showing how a key worldwide equity index – the Global Dow – was “hanging on the precipice”. To refresh, the Global Dow is an equally-weighted index of the world’s 150 largest stocks. Therefore, while it may not directly be the target of a lot of money changing hands, it most certainly represents the stocks that see the most money trading hands. Thus, The Global Dow is a fairly important barometer of the state of the global large cap equity market.

The “precipice” that we referenced in the September 8 post was the UP trendline from the bull market bottom in 2009. Not surprisingly, the index did attempt to climb up off of the precipice in the weeks following the post. However, as we suggested, “another test of the precipice here at 2280 would not be surprising”. The Global Dow did return to test that area and is now officially off of the precipice – having fallen down off of it in the last few days, as the following charts illustrate.



Additionally, as the charts indicate, the post-2009 UP trendline also coincided with a cluster of important Fibonacci Retracement levels shown below.  Therefore, this breakdown wasn’t just about the trendline but a myriad of significant levels, making it even more consequential.

  • The 23.6% Fibonacci Retracement of the 2009-2014 Rally ~2291
  • The 38.2% Fibonacci Retracement of the 2011-2014 Rally ~2284
  • The 61.8% Fibonacci Retracement of the June 2013-2014 Rally ~2275

So what is the practical significance of this breakdown? In the immediate-term it opens up more downside as we wrote in the September 8 post:

Should the Global Dow fail to hang on the precipice here, the next major level of logical support would come in at the next sequence of Fibonacci Retracement levels in the 2050-2070 area, or another 10% lower.

However, more significant is the fact that this is one more in a rapidly growing list of examples of indexes around the globe that are breaking long-term UP trendlines and other significant levels of various magnitude. Each and every day, we are witnessing the ongoing global selloff inflict more and more damage to the post-2009 cyclical bull…
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Bulls Make Presence Felt

Courtesy of Declan.

It was a better day for bulls as markets registered an accumulation day with respectable gains. However, only one index, the Dow, made a test of resistance (200-MA on hourly) and was initially rebuffed.

The S&P registered nearly a 2% gain. The 20-day MA looks to be the next area of resistance as today marked a sharp break of declining resistance.

The Nasdaq kicked in a rally without having tested the August low. If this rally can mount a challenge of 4,900 (and break it), it will have the makings of a good Santa rally.

Likewise, the Russell 2000 has kicked a rally just a shade above potential channel support.

The other index to watch is the Semiconductor Index. It’s shaping a good reversal with today’s close nestled against declining resistance. The ‘bull trap’ won’t be negated until 631 is broken, but holding above 600 into next week would probably be enough to see a challenge and break of this level.

With ISM data tomorrow, and jobs data on Friday, there is plenty of potential hiccups or boosts to shape action before the weekend. Long term buyers will be looking for value while shorts will be reluctant to attack until a major resistance level is challenged.

You’ve now read my opinion, next read Douglas’ and Jani’s.

Modest Losses on Lighter Volume

Courtesy of Declan.

It wasn’t a day of carnage as yesterday, and with support coming into play for certain indices there is a chance bulls might be able to mount something here. Volume was down on yesterday, another sign sellers could be exhausting themselves out.

The Russell 2000, having exceeded its August, could be the first to mount a recovery. Keep an eye on relative performance to the S&P; an uptick here could be the cue for a rally back to channel resistance – a decent return.  Alternatively, fish with GTC buy orders down at channel support.

The S&P closed with a spinning top just above August’s swing low.  While technicals are in poor shape, price action may be able to offer more. Key will be holding 1,867.

The Nasdaq hasn’t yet pushed down towards the August low. Shorts will probably be looking to milk the last of this decline as the risk of a short covering surge for Large and Small Caps indices increases.

NYSE Breadth may also be forming a bullish divergence, although for this to be successful breadth will need to tick up soon.

Nasdaq breadth is close to a repeat of the 2011 bottom. Just Bullish Percents and Percentage of Stocks Above 200-day MA to confirm.

Long Term buyers can be looking to add to their positions as there is plenty of value across Large and Small Cap stocks. Short term, things are turning more neutral after bears had comfortably held control.

You’ve now read my opinion, next read Douglas’ and Jani’s.

U.S. Stocks Facing Their Biggest Test In 8 Years?


U.S. Stocks Facing Their Biggest Test In 8 Years?

Courtesy of Dana Lyons


Broad-based Value Line Composite testing mega-critical level.

The Value Line Geometric Composite (VLG) is an unweighted average of roughly 1700 U.S. stocks. This makes it, in our view, the most accurate index in instructing investors of the true state of the U.S. stock “market”. And since studies have shown that some 70%-80% of stocks go the way of the market, the VLG is our main focus among all the indexes. That is why on August 28, we highlighted the significance of the area in the mid-430′s on the VLG chart where the index held during the late August mini-crash.

To reiterate the significance of the mid-430′s level, it marks a confluence of Fibonacci Retracement levels drawn from the important lows since 2009 to the April high. Specifically, we find these 3 levels all within close proximity:

  • The 23.6% Fibonacci Retracement of the 2009-2015 Rally ~436
  • The 38.2% Fibonacci Retracement of the 2011-2015 Rally ~436
  • The 61.8% Fibonacci Retracement of the Rally from the 2013 Breakout Point to the April High ~433
  • Additionally, the 1000-day simple moving average (approximately, the 200-week moving average) lies at 435.

We have mentioned before that we have increased confidence in the validity of a chart level when multiple analyses line up nearby there. That is certainly the case here. Furthermore, our confidence is heightened when the level is tested – and it holds – as the Value Line Composite did in late August, bottoming at 439 on August 25. That validates the level as important as prices have shown they “respect” the level. Furthermore, as we stated in the August 28 post:

It also presents us with a line in the sand, should the index eventually go on to “test” the 430′s level (a development that would not at all surprise us). We have a reference point to generally orient us bullishly should the level hold or quickly recover a break – and bearishly should the level fail.

That brings us to today’s Chart Of The Day and post. The mid-430′s level…
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The Anatomy Of A Retesting Of The Low

Courtesy of Eric Bush at Gavekal Capital

The S&P 500 is now only about 1% off its 8/25 low. Have the market internals deteriorated as much as the headline price index has? Lets take a quick tour through our chart library to find out.

On 8/25, 17% of US stocks were trading below its 200-day moving average. As of yesterday, this series has dropped back to 19% after increasing to 33% on 9/17. Unfortunately, we haven’t seen a trend shift in momentum yet. Through yesterday, 33% of US stocks had its 50-day moving average trading above its 200-day moving average. On 8/25, 51% of stocks had its 50-day moving average trading above its 200-day moving average


Large declines in stocks are ticking up again but still below the 8/25 level. The number of stocks with a one-day 5% decline was 83 yesterday. On 8/25, there were 150 US stocks that declined by at least 5%. It’s hard to imagine that we went through a period in 2008 where we regularly were seeing 200-500 US stocks decline by 5% in a day.


The median stock performance over the past year is unchanged. Over the past 200-day, the median stock performance YTD is -8%. This is the same level as it was on 8/25 and is the worst YTD performance since 2009.



83% of US stocks are at least in a correction over the past 200 days. On 8/25, this spiked to 90%. The number of US stocks in a bear market has increased. 48% of US stocks are now in a bear market over the past 200 days compared to 43% on 8/25. While this has been painful for investors, far fewer stocks are in bear market today than were in a bear market in 2011 and 2008.

JPEG 6 - Copy


Finally, in a positive sign the number of stocks making new 200-day lows remains below the 8/25 high. On 8/25, 39% of US stocks were making new 200-day lows while “only” 31% made new 200-day lows yesterday. This will be an important internal indicator to keep an eye on as new highs in 200-day lows tend to mark the emotional peak in a market downturn. For example, on 8/8/2011…
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RTT browsing latest..

Courtesy of Read the Ticker.

rtt-browsing-latestPlease review a collection of WWW browsing results.

Date Found: Friday, 21 August 2015, 02:33:51 PM

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Comment: Dan Zanger Aug 12 2015, sees a very week market

Date Found: Saturday, 22 August 2015, 08:25:28 PM

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Comment: re balancing the SP500

Date Found: Wednesday, 26 August 2015, 02:32:30 PM

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Comment: Jim Sinclair-Silver Will Be Gold On Steroids In Coming Rally

Date Found: Thursday, 27 August 2015, 02:39:40 AM

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Comment: Smoke and Mirrors of Corporate Buybacks Behind the Market Crash

Date Found: Thursday, 27 August 2015, 03:01:24 PM

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Comment: VIX and bottoms!

Date Found: Thursday, 27 August 2015, 03:26:14 PM

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Comment: SP500 falls 10% in 4 days…that is a PANIC not a correction. Leverage blow up! Wait till supply dries up before accumulating.

Date Found: Friday, 28 August 2015, 02:28:36 AM

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Comment: NON Sub prime..$550 bn energy sector debt! worth…not much! POP…CRACKLE…POP

Date Found: Friday, 28 August 2015, 03:04:41 PM

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Comment: China has been selling US paper, to help support its stock market one assumes, support China is priority over supporting USA.

Date Found: Friday, 28 August 2015, 03:24:41 PM

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Comment: Take note of Jan 2000 red dot!

Date Found: Saturday, 29 August 2015, 04:21:00 AM

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Comment: Saudi sells down reserves to cover loss in crude revenues, China sells down reserves to cover loss in…
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Distribution Selling Takes Chunk Out of Markets

Courtesy of Declan.

No doubt who controlled market action today, and Bears weren’t stopping at August lows either. The Russell 2000 experienced the biggest hit, undercutting the August low. Next up is the October 2014 low.

In percentage terms, the Nasdaq took the largest hit. However, it remains some distance from the August low. Shorts may look to chase this down as other indices extend beyond August lows, but a recovery in other indices could set up a decent short covering rally.

The S&P finished with a MACD trigger strong ‘sell’ and is only a few points from lows. The rate of today’s selling suggests August lows won’t be much of a block. Although pre-market action may offer more of a guide; an open below the August low could be a cue for a rally.

Tomorrow may offer bulls a chance to finally push a squeeze. A short covering rally will be quick and sharp. Look to 50-day MAs as an upside target for a bounce.

You’ve now read my opinion, next read Douglas’ and Jani’s.

Wild End to Session

Courtesy of Declan.

It was a day of two extremes: bulls took the early advantage, but bears struck hard in the last couple of hours of trading.

The S&P rallied as far as its 50-day MA before bears pressured, ending with some shorts profit taking to return some of the losses. \The S&P is enjoying a sharp relative advantage against the Russell 2000, but the ‘spinning top’ candlestick is a 50:50 play.

The Nasdaq returned with all net bearish technicals along with distribution. The MACD and Stochastics offered fresh ‘sell’ triggers. Friday’s trading marked a bearish engulfing pattern, which often leads to follow through selling. There was also a relative performance loss for the Nasdaq against the S&P.

The Russell 2000 has been underperforming lead indices since early September, and this underperformance has left it working a fast-track retest of August lows. Bulls may look to attack this index first if further losses are delivered.

One of the better performers was the Semiconductor Index. It still has a long way to go to get out of its funk, but Friday was not the worst.

Market breadth is also reversing after an early bounce from oversold conditions. Will this create a bullish divergence relative to the Nasdaq? For this to happen, August lows would need to be taken out in the Parent Nasdaq, but comparable lows in breadth indices hold (or are best not challenged).

For Monday, watch pre-market for leads. A higher open may encourage sellers to make a second run. A lower open may offer a case for sellers exhaustion and set up a temporary – but trade worthy – bounce.

You’ve now read my opinion, next read Douglas’ and Jani’s.


Zero Hedge

How Bad Can This Get, And How Fast?

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Raul Ilargi Meijer via The Automatic Earth,

There’s so much negative real bad economic and financial news out there that it’s hard to choose a ‘favorite’, but I guess I’m going to have to go with what underlies and ‘structures’ it all, the IIF stating that for the first time since 1988 and the Reagan presidency, there’s more money flowing out of emerging markets than there’s flowing in. That is for sure a watershed moment.

And no, that trend is not going to be reversed either anytime soon. Emerging economies, even if they woul...

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Market News

News You Can Use From Phil's Stock World


Financial Markets and Economy

Taking Intelligent Risks: How To Stay In The Trading Game (Trader Feed)

You have to risk money to make money.  You have to make sure you don't risk so much money that you can lose your stake and go out of business as a trader.  Bet too little and you never make a good return on your capital.  Bet too much and you court career risks.  So much of trading success boils down to taking intelligent risks.

Here is a useful calculation tool that can tell you the probability of hitting a drawdown threshold.  


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Phil's Favorites

Trump vs. Fiorina vs. Obama on Isis; Fiorina and the "Law of Bad Ideas"

Finally, one of the top republican candidates said something intelligent about Syria while the dreadful Fiorina explained how we need to defend our,...yes, OUR territory in the middle east by engaging Russia in a war. Yeah, something like that. 

Courtesy of Mish.

Carly Fiorina Seeks No-Fly Zone

In the Fox interview show below, Republican presidential candidate Carly Fiorina says the US should enforce a no-fly zone in Syria, even if it means shooting down Russian aircraft.

Quote of the day: "Russian jets have been basically conducting dangerous and unpredictable maneuvers around our waters and our borders and our territory".

Can I have a definition of "our" territory please?


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Chart School

SP500 Wyckoff Review

Courtesy of Read the Ticker.

Review of the SP500, pre Oct 2015, fire fighting the technical damage.

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NOTE: does allow users to load objects and text on charts, however some annotations are by a free third party image tool named

Investing Quote...

.."Your goals are to select only stocks that move soonest, fastest and farthest in bull or bear markets. Limited losses and let profits run."..

Richard D Wyckoff

..“Don’t try to buy at the bottom and sell at the top. It can’t be done except by liars.”..


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Kimble Charting Solutions

Opportunity Friday…What would you do with these Opportunities?

Courtesy of Chris Kimble.

Opportunities are knocking at our door friends! I’ve been sharing the Power of the Pattern with customers for the past 20-years. In my humble opinion, some really nice opportunities (based on price, momentum and sentiment) are forming for investors around the world. Below is two of the dozens of rare patterns I am seeing, that I wanted to share with you today.

What would you do with this opportunity?


As shared above, this asset has fallen around 35% of late. The decline has taken it down to its 4-year rising channel support l...

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All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.

To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Swing trading portfolio - week of September 28th, 2015

Reminder: OpTrader is available to chat with Members, comments are found below each post.


This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...

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Sector Detector: No rate hike translates into heightened wall of worry

Reminder: Sabrient is available to chat with Members, comments are found below each post.

Courtesy of Sabrient Systems and Gradient Analytics

The Fed’s decision to not raise the fed funds rate at this time was ultimately taken by the market as a no-confidence vote on our economic health, which just added to the fear and uncertainty that was already present. Rather than cheering the decision, market participants took the initial euphoric rally as a selling opportunity, and the proverbial wall of worry grew a bit higher. Nevertheless, keep in mind that markets prefer to climb a wall of worry rather than ride a crowded bandwagon, and I continue to envision higher levels for the markets after further backing-and-filling and testing of support levels (perhaps even including the August lows).


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Some Hedge Funds "Hedged" During Stock Market Sell Off, Others Not As Risk Focused

By Mark Melin. Originally published at ValueWalk.

With the VIX index jumping 120 percent on a weekly basis, the most in its history, and with the index measuring volatility or "fear" up near 47 percent on the day, one might think professional investors might be concerned. While the sell off did surprise some, certain hedge fund managers have started to dip their toes in the water to buy stocks they have on their accumulation list, while other algorithmic strategies are actually prospering in this volatile but generally consistently trending market.

Stock market sell off surprises some while others were prepared and are hedged prospering

While so...

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Baxter's Spinoff

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

Baxter Int. (BAX) is splitting off its BioSciences division into a new company called Baxalta. Shares of Baxalta will be given as a tax-free dividend, in the ratio of one to one, to BAX holders on record on June 17, 2015. That means, if you want to receive the Baxalta dividend, you need to buy the stock this week (on or before June 12).

The Baxalta Spinoff

By Ilene with Trevor of Lowenthal Capital Partners and Paul Price

In its recent filing with the SEC, Baxter provides:

“This information statement is being ...

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Mapping The Market

An update on oil proxies

Courtesy of Jean-Luc Saillard

Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself. 


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Watch the Phil Davis Special on Money Talk on BNN TV!

Kim Parlee interviews Phil on Money Talk. Be sure to watch the replays if you missed the show live on Wednesday night (it was recorded on Monday). As usual, Phil provides an excellent program packed with macro analysis, important lessons and trading ideas. ~ Ilene


The replay is now available on BNN's website. For the three part series, click on the links below. 

Part 1 is here (discussing the macro outlook for the markets) Part 2 is here. (discussing our main trading strategies) Part 3 is here. (reviewing our pick of th...

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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

Thank you for you time!

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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