Technically Speaking, Market Analysis and Theory

"Don't fight the Fed." Is that the answer. Let's look at some charts. 

SP500 (daily) with multiple moving averages...Dave Landry style. Stocks fell sharply with "daylight" between price and the descending averages. The ETF made a "bow tie" cross down in late February with a recent bounce. 

The declining MA50 (not shown) is about 292. 

When we look at the "Gann 3 day charts" we see that most recently there were three days of higher lows and higher highs, a gap down and then another three day positive run. 

The SPY peaked around 338 and fell to about 218...120 points. We're at about the .382 retracement off the lows and the fifty percent retrace would be about 278. 

Ergo, recent action is constructive by multiple metrics, including a higher low at about 244 and a higher high.

The Dow Industrials recently made new highs. 

Yet, the Dow Transports aren't playing in the same sandbox. 

Never intended as investment advice.

"The game isn't supposed to be easy" and Howard Marks' new book, Mastering the Market Cycle, doesn't claim it is.

What the book does is lay out the forces that drive prices higher (or lower) and suggest we maintain vigilant about the reality of cycles. 

He notes that asset prices would be less volatile if viewed from the prism of fundamentals (cash flow and earnings) and are vulnerable to our human frailty viewing optimism and risk.

There's no joy in markets recently. 

SPY, weekly...price peaked at about 292

- Defining series of lower highs and lower lows

- Declining multiple moving averages

- RSI14 getting toward potential extreme

Gann Square of Nine. Four turns (360 degrees from the high) brings us to a potential decision point (228). 

Year-to-date the SPY is down 12 percent. 

Point-and-figure charts illustrate the distance from price breakdown. 

Bullish percent NYSE stocks. Bear confirmed.

"A man distracted is a man defeated." - David Mamet, in Redbelt

Our job hasn't changed. Control risk. See the market as it is. Do what it does. 

The 'quick look' shows key elements above the MA200, little in the way of contraction (NR7) and the Ten-year on the rise with resulting response in rate sensitive stocks (e.g. XHB).

SPY broke through the declining MA5 (top right panel), breaking the hearts of the bearishly inclined.

The TNX broke the down trendline.

Michael Useem's The Leadership Moment asks four questions:

What went well?

What went poorly?

What can we do better? 

What enduring lessons emerge?

SPY continues to do nothing wrong. Today, it gapped up but didn't run. Price remains above well-watched, upsloping averages. 

It wasn't as sanguine for the four-letter words as the Russell 2000 fell over a percent on increasing volume. The "worst case" July lows wouldn't exactly be catastrophic.

Inadequate preparation is never an excuse. Ultimately, we decide based on our process, the blend of fundamentals, technicals, psychology, and asset allocation. 

The SPY PnF chart shows price back near resistance. 

The Dow Industrials PnF chart showed a recent rally off the double-bottom breakdown at 24600. 

If we start with a Ciovacco weekly chart, price is sandwiched between the rising MA3 and MA5 weekly charts.

Posts have been few and far between. Why? 

SPY weekly chart with Ciovacco moving averages. We seek tools that will bulletproof our portfolios. Valuation doesn't provide short-term answers. Technical tools tell a mixed story (again) with lower highs and higher lows. 

If you bounced in off the April lows, then you feel smart. If January's strength sucked you in, then you aren't 'whole' just hopeful.

Markets haven't been as much negative as indifferent. 

Look at a few Ciovacco weekly charts...with 3 and 5 period averages, examining the price structure. 

SPY  price > MA3 > MA5 (bullish). Should we care about distribution volume? Do rising rates and rising dollar matter? 

Ten-year yield. Price > MA3 > MA5, positive MACD. Rising rates. 

US dollar, price > MA3 > MA5. MACD positive. No dollar squalor. 

HMMJ (Horizons Medical Marijuana), price > MA3 > MA5.

"It's not supposed to be easy." 

SPY weekly, Ciovacco Chart. Price leading MA3 leading MA5, but with a reversal candle. Caution but hardly proven reversal. 

VIX only mildly below MA10

Mamis-Meisler breadth oscillator. No downcross. 

Horizons Medical Marijuana Life Sciences, a marker for marijuana stock trading. Price right around the MA20, but nothing 'easy'. MACD zero cross. Long selected medical marijuana equities. 

Good trading and great risk management to all.

Educational use only.