Seeking Alpha

Price Headley, CFA's  Instablog

Price Headley, CFA
Send Message
Price Headley was inducted into the Traders' Hall of Fame in 2007 and is the founder of BigTrends.com, which provides investors with specific real-time stock and options strategies and investment education to profit from significant market trends. Price appears regularly on CNBC, Fox News, and... More
My company:
BigTrends
My blog:
BigTrends Blog
My book:
Big Trends in Trading: Strategies to Master Major Market Moves
View Price Headley, CFA's Instablogs on:
  • Week Ahead Market Outlook
    Stocks ended last week in the red – the first losing week in the last three, but the fifth loser in the last nine. Though not due for a complete implosion, stock remain overbought and ripe for a decent correction.

    S&P 500 & VIX Chart
    112009-spx-vix

    Had it not been for Friday’s 0.32% dip, the S&P 500 would have actually ended the week with a gain. Instead, the close of 1091.4 was 2.10 points under the prior Friday’s close, down 0.19%. Even if the index had closed higher though, the standing problem would no have been resolved.

    We plotted the arc-shaped support at resistance last week; they are still very much in play. We did have to adjust the upper one slightly higher to accommodate the slightly higher high of 1113.70 from Monday, but the zone still stands… the SPX is still hitting resistance at that line. Assuming the pattern repeats, the S&P 500 is still headed toward support around 1031.

    This time the bears have an ally though. The VIX finally brushed its lower 20 day Bollinger band (2 SDs) at 19.59, and pushed off of it to close at 22.19 on Friday. With no room to move lower and plenty of room to move higher, the VIX is another strike against the bulls.

    NASDAQ Composite Chart

    112009-nasdaq

    The NASDAQ closed even lower for the week, losing 21.84 points (-1.01%) to end Friday at 2146.04… the biggest loser among the major indices. While the NASDAQ’s version of the VIX (the VXN) isn’t pushing off its lower Bollinger band, there are still plenty of bearish clues for the chart.

    The biggest is the stochastic indicator at the bottom of the graph. Overbought? Yes, but more importantly, the composite is starting to correct that overbought condition – the evidence comes in the form of stochastic lines that are falling back under the 80 threshold. While stochastics is far from a perfect tool, we’ve seen the index peak and bottom in perfect sync with stochastics since September. The fact that the ebbs and flows also occur at the now-established (and diverging) support and resistance lines augments the recent run-in with the ceiling.

    Bottom line? We have to assume the NASDAQ is headed for the floor around 2000.

    DJIA Chart
    112009-dow-jones-industrial-average

    Nothing particularly new or significant here, though it’s worth noting the Dow ended the week with a slight gain. On the flipside, the Dow’s heaviest volume came on Thursday and Friday – the only two days the market lost ground last week. In fact, Friday’s volume was higher than Thursday’s. That’s a bearish sign, in that traders are really not interested in ‘taking them home’ over the weekend. Indirectly it points to low confidence and conviction.

    We’re looking for the Dow to mirror its counterparts and head back to support lines. For the blue chip index, that’s around 10,025, though there are a few support lines to choose from.

    Economic Calendar

    It was a very busy week in terms of economic data, and next week promises to be nearly as hectic.

    By and large the news was good, even if it didn’t push stocks upward. Retails sales were up, inventories were down, capacity utilization was up, and inflation was tempered. Normally that’s the kind of fodders the buyers respond to. And, eventually they will as long as those basic trends remain in place.

    As for next week, the biggies are Monday’s existing homes sales, followed by Case-Shiller, GDP and consumer confidence on Tuesday. Don’t worry too much about GDP, though the other two items could shake the market up a bit. New home sales on Friday will be a big one too.

    By the way, since we look at it in way too much micro (short-term) detail, here’s a longer-term look at capacity utilization to offset the knee-jerk reactions to this past week’s announcement. It’s been rising since hitting a multi-year low in June. That’s an outstanding long-term sign; most major bullish periods are accompanied by rising capacity utilization rates.

    Trade Well,
    Price Headley
    BigTrends.com
    1-800-244-8376

    Disclosure:  None

    Nov 23 9:36 AM | Link | Comment!
  • Market Outlook: Near Key Levels on SPX, DJIA, and VIX
    MARKET TIMING:
    STOCKS:
    Bullish (as of 10/08/09 close)
    GOLD:
    Bullish (as of 05/2/09 close)
    BONDS:
    Bearish (as of 10/16/09 close)


    The market data above comes from our BigTrends Market Timing, a systemized timing model developed by Price and our analysts.  All subscribers to our premium advisory programs receive the Market Timing each trading night.  In addition, it is available as a standalone subscription (with nightly charts and commentary) - call 1-800-244-8736 for information.

    As earnings season continues, we've reached some key levels on both the S&P 500 Index (SPX) (NYSEARCA:SPY) and Dow Jones Industrial Average (DJIA) (NYSEARCA:DIA). 1,100 on the SPX and 10,000 on the DJIA are levels that must hold, if we are to continue to rally to the upside.  Overall, we haven't been vastly impressed by the market's reaction to various earnings reports ... it looks like expectations may have been a bit high.

    Taking a look SPX Daily Chart below, you can see that we've had some trouble overtaking the 1,100 level this week.  Many are keying on the 1,100 to 1,150 area on the SPX as an important technical area and possible resistance.  The underlying trend does continue to look to be to the upside, however, as Percent R is strong ... and we've bounced after every market pullback in recent months.

    SPX Daily Chart
    wmo102109spxd

    The Dow Jones Industrial Average is also around a key level, one that many in the major media and "armchair" traders are watching:   10,000.  You can see in the following chart that overtaking 10k would put us back near the pre-October 2008 levels.  Weekly Percent R remains in strong territory on the DJIA, indicating the underlying trend is still bullish. 

    DJIA Weekly Chart
    wmo102109djiaw

    As far as volatility, we saw the CBOE Volatility Index (VIX) break down to new medium-term lows recently.  Today, the VIX nearly penetrated the 20 level on the downside, only to bounce higher.  It now looks as if we are in a 20 to 23 range on the VIX for the near-term, with upside contained in the 24/25 area.

    VIX Daily Chart
    wmo102109vixd


    Bottom Line:


    MARKET TIMING:

    STOCKS:
    Bullish (as of 10/08/09 close)
    GOLD:
    Bullish (as of 05/2/09 close)
    BONDS:
    Bearish (as of 10/16/09 close)


    Trade Well,
    Price Headley
    ,
    BigTrends.com
    1-800-244-8736

    Disclosure:  Currently in a long Gold stock option position for Options Shark subscribers.

    Oct 21 5:10 PM | Link | Comment!
  • Market Outlook - Tuesday's Bounceback Bodes Well For The Market
    As we move into the heart of August Option Expiration Week, the market has recovered on Tuesday about half of the losses incurred on Monday.  Many are watching the major index ETFs this week, such as the SPY (NYSEARCA:SPY) and QQQQ (QQQQ), which have very large open interest that will expire on Friday.  The 100 strike for the SPYders and particularly the 38 strike for the QQQQs may end up being significant as to where the indices will "pin" on Friday's close.  The QQQQ August 38 Put has over 512k open interest, which is more than twice as much as any other of its August options.

    We are back below the key levels of 1,000 on the S&P 500 (SPX) and 2,000 on the Nadaq Composite (COMP) -- basically we have somewhat waffled around these key technical areas recently.  There was a big move in the CBOE Volatility Index (VIX) yesterday, as it reached above 28 intra-day.  We mentioned last week that 28 looked like the short-term upside cap on the VIX, and that seems to the case, as we are moving lower today (see the following chart).

    VIX Daily Chart
    wmo081809vix

    Looking at the Nasdaq 100 (NDX) Daily Chart below, you can see that we basically had a classic Percent R bullish re-test on Monday, which seems to be confirmed today.  This is also similar on the other major index charts.  If you are using Daily Charts as your primary guideline, then today's snapback rally would seem to bode well for further upside.

    NDX Daily Chart
    wmo081809ndx

    Looking back at a multi-yeat Dow Jones Industrial Average (INDU) (NYSEARCA:DIA) chart below, you can see that the recovery still has some potential upside ... but we haven't really made much headway in the Monthly view.  Percent R is still below the 50 mid-level, and the INDU faces overhead resistance in the 10,000 to 11,000 area.  We could certainly rally to that area, which would bring Percent R closer to 50.  You can also see the relative volatility we have experienced, as the Bollinger Band Width Indicator at the bottom had reached very high levels.

    DJIA Monthly Chart
    wmo081809djia

    Bottom Line:  The market bouncing back from Monday's selloff appears to provide some short-term impetus for further upside.  Keep in mind that this in an Expiration Week, however ... which may bring with it increased volatility and the potential for stocks and indices to be drawn towards certain strikes with heavy open interest.

    Price Headley,
    BigTrends.com
    1-800-244-8736

    Disclosure:  None currently.

    Aug 18 4:06 PM | Link | Comment!
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.