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John Mylant
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Residing in Colorado Springs, Colorado. Has been trading and coaching using a self-developed option trading system for 10 years. Philosophically conservative, accurately trades weekly options with a strong risk management approach. Well sought after by investors around the world, he teaches a... More
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  • ETF SPY: A Lot Of Earnings This Week Will Dictate Direction

    Technically Speaking

    RSI-I have written about my observations of negative divergence taking place with the RSI indicator and the MACD indicator for the last three weeks, but now I am noticing consolidation as we have higher lows and lower highs and the stock continues to move up. This is a new (click to enlarge)observation to me so I'm not quite sure how it's going to play out so I intend to watch it. If the stock continues to move up I can understand why because this last move before it had a little backup didn't even hit above the oversold position so it's still has strength.

    MACD-The MACD indicator almost looks like it is in a bullish consolidation pattern as it continues have higher lows and lower highs. This is an interesting observation since the RSI indicator is doing the same thing but the stock continues to move up it will be interesting to watch this pattern and see how it plays out.

    Bollinger Bands-It appears that the aggressive bullish move this week has the stock pushing through the upper band and on Friday it finally pulled back a little bit. Being at the top of the band, I wouldn't be surprised if the stock pulled back now but I believe the earnings reports this week may dictate whether the stock continues to move up along the upper band or bounces back to either the middle or lower band.

    In Summary-Even though I have written about continued weakness in the move of the S&P 500, I still see strength in this move and I am interested to see how it plays out because the formation and watching is new to me. It looks like the indicators are consolidating with a strong bullish emphasis while stock continues to move up. I'm not sure if this means the stock is going to move sideways for a little bit and then continue up or if it's just going to move sideways and then go down. I will be interested in seeing how this plays out.

    Current Events

    It has taken less than four months for the S&P to surpass year-end 2013 targets of about two-thirds of the strategists polled by Thomson Reuters in December. Of 47 analysts surveyed, 30 of them expected to see this year end at a level already exceeded by the index.

    "The only thing that happens now is do we start to see something in the company earnings reports - these are really important because that is where the rubber meets the road," said Gordon Charlop, managing director at Rosenblatt Securities in New York.

    Next week 74 S&P companies are expected to report results, across a wide swath of sectors. Financials dominate the week, including reports from American Express Co (AXP.N), Goldman Sachs (GS.N), Bank of America (BAC.N) and Citigroup Inc (C.N).

    Cyprus

    In approving a 10 billion euro package, Europeans called on Cyprus to find an additional 6 billion euros to cover what is now a larger funding hole. In other words, it now needs to generate a total of 13 billion euros. This is a huge amount for a country the size of Cyprus, even after it goes after uninsured deposits in local bank accounts.

    All this confirms what I argued a week ago - namely, that "anyone even remotely familiar with the details of the Cypriot program realizes that the country is a long way away from what [a Troika official claimed to be] "a durable and fully financed solution," let alone a sustainable path towards recovery."

    Despite losing control of both growth and funding dimensions, European officials are yet to find the courage to recognize publicly what must be crystal clear to them in private (and was evident to others a week ago): "Key assumptions of the program are outdated if not totally obsolete."

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: SPY
    Apr 13 9:28 AM | Link | Comment!
  • ETF SPY: Are We Done Moving Bullishly?

    (click to enlarge)

    Technically Speaking

    RSI- the RSI indicator continues to reveal a negative divergence this recent low though did not move lower than the last on we saw so I'll keep my position the same that I believe were going to continue to see weakness in the movement of the stock based upon what I see in this indicator.

    MACD- as with the RSI indicator, the MACD is also showing a negative divergence and this strengthens the whole concept of a in the movement of the markets. When both these indicators are mirroring the same divergence is usually good indicator of weakness. Even though weakness is showing, there is no sign that the stock is going to have a complete turnaround yet because it still looks very strong and momentum is strong.

    Bollinger Band- I believe we have identified the end of the third leg of the bullish move for the S&P 500. This last leg, or this last move down is what showed it. Where do we go from here? I would be surprised if the stock didn't start moving sideways now for a period of time, it looks to strong to just reverse.

    Summary- I am of the opinion that the SPY is going to slow down because I have been able to identify three legs of the bullish trend. I can't say for sure the stock is going to turn around and now become bearish, because momentum appears to be pretty strong. But I do believe a continued upward movement may have to wait and the very best I see in the near future is the stock moving in a sideways trading channel and this may be the beginning see as one.

    Current Events

    While Wall Street pared much of its early losses by market close, all three major indices still ended in the red for the week. But now it's on to next week, when corporate earnings will be in keen focus yet again as Alcoa gets things moving on Monday after the bell.

    This time around we're coming off the fiscal cliff," Peterson noted. That could mean that estimates could continue to be conservative.

    With overall sector trends in mind, Vanguard Telecom Services ETF (VOX) and Consumer Discretionary Select Sector SPDR (XLY) are expected to see an upward trend, while Energy Select Sector SPDR (XLE), Industrial Select Sector SPDR (XLI) are expected to take a hit.

    Economy

    American employers hired at the weakest pace in nine months in March, a sign tax hikes that kicked in early this year as part of Washington's austerity drive could be stealing momentum from the economy.

    March's slowdown in job growth could make policymakers at the Federal Reserve more confident about continuing a bond-buying stimulus program. Prior advances in the labor market recovery had fueled discussion at the central bank over whether to dial back the purchases, perhaps as soon as this summer.

    The construction sector added 18,000 jobs, reinforcing the view that a recovery in the housing sector has become entrenched. Separate reports on Friday also gave upbeat signals. The U.S. trade gap narrowed in February due to rising exports and falling crude oil imports, while U.S. consumer credit that month recorded its biggest increase in half a year.

    Some economists cautioned against reading too much into the report, though the data nonetheless raised questions over whether the strong hiring seen in the winter actually meant the economy had shifted into a higher gear.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: SPY
    Apr 06 11:27 AM | Link | Comment!
  • ETF SPY: Watch Earnings Season For Influence

    Technically Speaking (SPY)

    RSI- even though even though I believe a slow down is coming soon in the markets, the RSI indicator continues to remain well above the 50 line and in bullish territory and appears like it's going to continue to move up. It looks like the stock has finished moving sideways off the outer Bollinger band and will now journey up again like it has been doing.

    MACD-the MACD continues its sideways journey far above its zero line with no well-defined high point or top that I look for to move down when I think a trend change is coming. Back in the end of January I see the stock high point but it hasn't moved down that far everything is still very bullish.

    Bollinger Bands-after moving sideways off the outer Bollinger bands I was waiting to see what the stock would do. As it touched the middle band and it started to move up again which shows me that it hasn't lost any strength. If I believe a slowdown is coming there were no signs given this week that it will be happening soon.

    Conclusions- because of the season coming up I'm still aware of weakness to could occur in the stocks move up. But at this point I see no signs in the charts that it is ready to give up its journey. So far it is still very bullish and doesn't look like it's ready to stop.

    Current Events

    After flirting with an all-time high for three weeks, the S&P 500 (SPX) posted its best closing level in history. But some strategists say Thursday's record could be a harbinger that the stock market rally is running out of steam.

    The increase in volatility we've seen is far more likely to be the sign of a short-term top" than the trend of investors buying on dips. If that volatility persists, then you would need to worry about an intermediate top.

    Speculator positions show a preference for holding long positions. Mike O'Rourke, chief market strategist at Jones Trading, noted that long positions account for more than 65 percent of speculative positions in futures contracts, a point at which rallies can be overextended.

    Cyprus will remain in focus after the government was forced to accept a stringent European Union rescue package to avert default. In a positive sign, there were no runs by depositors on banks after they reopened under tight controls on Thursday.

    Presently, the economy continues in the slow growth stage but the looming threat of a slowdown is ever present before us. With the low expectations corporate profits also continue to improve this is going to be a big factor in this first quarter to see how they perform.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: SPY
    Mar 31 8:14 AM | Link | Comment!
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