Here's a very strong futures chart. It gives the impression that things are headed way up today. It is on a 20 minute delay - at the point this chart was captured, the S&P futures were at 1014 (our yearly high the other day was 1018). So I go to the kitchen to get some coffee, etc., I come back out 5 minutes later, and there were bad jobless and retail sales reports released and suddenly the S&P futures were down at 1007.
So instead of this awesome upward trending futures market ready to blow past the Valley of Death and challenge the yearly high right at the open, we're back down right at the 1007 entry to the Valley of Death, looking upward. Suddenly wasn't as strong as it looked 5 minutes before :-(.
All I had to do was say yesterday that FAS was no longer en fuego, than it then went out and turned in a 5.3% day (yes, that's all it takes). And in that glorious pre-jobless report futures world it was already up another 5.5% - then it dropped back to up only 3.5%. SIGH.
OK - let's look at some charts:
S&P 500 - 15 Minute Chart - 4 Days
Looking at Wednesday's price action - there was that big gain in the first 30 minutes. Things then pretty much cruised in a tightish range between 1005 and 1009 until the Fed 2:15 announcement (you can see all the quiet bars throughout the afternoon and then suddenly they started moving as if they had a jolt (7 bars before the day's end), initially dropped, then took off up to 1013 just before 3 before dropping back a bit just before the close. Basically, prices hit a the Fibonacci 38.2 Retracement again, and fell back again.
If today was to be a down day, then there would be the distinct possibility of a double top, which combined with the fact that it occured at an important Fib Tracement area would be a very strong argument that that was it. The high futures this morning gave hope that the double top would be avoided and the Fib 38.2 Retracement left behind. The idea behind the Fib Retracements is that the market will most likely reverse at the specific Fib ratios - if the S&P made it through the 38.2 area, the next danger areas wouldn't be until the 50.0% (just above S&P 1100) and 61.8% (above 1200). So, theoretically, if we make it convincingly past the Valley of Death 1007-1014 area, the bulls should be able to grind out another 100 points on the S&P (that's 10% in S&P terms, 30%+ in FAS terms). At 8:29 am, that looked a distinct possibility - at 8:31 am that possibility is looking problematic.
Here's the Daily Chart:
S&P 500 - Daily Chart - 3 Months
For all the hoopla of the Fed announcement yesterday, none of my technical indicator situations that I've been concerned with have been resolved. The 50ma (blue line) still hasn't crossed over the 200 (yellow dashed line). The MACD-H is still diverging - still headed down and is now just barely in positive territory. The only positives were that prices managed to bounce back up off support at the 13ma. And volume was up a smidgen over the previous day and barely above the 45 vol ma. I ask you - if the big boys had thought that yesterday's Fed announcement was such a big deal - and that the markets were headed higher, they would have jumped in bigtime and really pushed prices and volume up way more after 2:15 than they did. If they thought that the S&P was going up another 10%, they would have wanted in while prices were still cheaper than they will be. They wouldn't have taken profits after 3pm the way they did.
So, in spite of the excitement, we're still pretty much where we were earlier this week. The indicators are still suggesting a downward move, there is still a lot of resistance and the Valley of Death right ahead. Nothing's really changed - and really won't until this area is cleared. The danger is, that there have been 2 attempts already (and don't forget, each new attempt has a lower MACD-H [inditia of forward bullish momentum] than the previous one - so each attempt becomes harder) and quite often a failed 3rd attempt is psychologically devastating to the market and will portend a major downward move.
So this is really approaching put up or shut up time for the market. And it should be resolved in the next day or two. Damn those bad retail reports. But does anybody really expect at this point in time that the market can make a solid upward move based upon good economic reports? That I think is where reality trumps wishful thinking. And at some point, unless those economic reports become actually good, as opposed to the chimera (I've been waiting all week to use that word) of beating lowered "expectations", you'd really have to wonder what else the bulls have to make their case upon.
So, today, into the Valley of Death. Good luck!