We have a very good day considered as the best one-day rally for this year and the internals are showing it:
>> Uvol/Dvol Performance: drive.google.com/file/d/0B9dBZPXNckXYcGZ...
The upside momentum generated is basically the best there is as far as the intraday chart data can provide. Far better than momentums generated during the incredibly strong vertical rally, that never had happened since 1928, that started from the October 15 bottom.
It is an incredible tape if not in the backdrop of the FOMC meeting. Which made it much less incredible but not something to be ignored as we are presumably still in an uptrend on the medium-term to long-term basis if not the short-term. Could this be the start of the mini-irrational exuberance I have been half-expecting most likely nobody could possibly know until at least more than half of the potential rally has already transpired.
Meaning is that momentum spike ups tend to support the trending rally while spike downs tend to become a curse for the bears that buy the dip bulls should grab. And this is a huge upside spike!
>> SnP500 Daily TA: drive.google.com/file/d/0B9dBZPXNckXYY1N...
>> Spx ma Interplay: drive.google.com/file/d/0B9dBZPXNckXYMW1...
>> GDow Daily: drive.google.com/file/d/0B9dBZPXNckXYalB...
For TA traders; today is their first great chance to get back into the saddle as SnP500 closed above the 50ma.
The 100ma for SnP500 proved the most prolific and dependable support for more than a year. There is no reason to doubt it now. Of course there is no such thing as perfect when it comes to the stock markets and this is the first opportunity to test the 100ma again whether it will work like wonder. Or it might give a pass in order for the 200ma to prove itself. Ping pong is never a predictable game on the ping per pong basis. What many seasoned traders and investors know is that the 200ma was a reliable support during bull runs.
GDow is a potential Inverted and Shoulders for TA traders but the vertical drop simply is too vertical it is almost a folly to expect another rally is going to happen so soon without forming at least a minor lower low. To be conservative, a bounce toward the minor support (now as a minor resistance) is what should be expected. If it succeeds on that type of strong bounce then pass the ball back to the bears and let's see if they can score again to the downside or not.
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Russia's gambit seems to be working and the ruble was able to make a bounce with RSX rallying for two days. RSX seems capable to support this two days rally on the 15-min intraday chart for a minor i-ii-iii-iv-v rally that should last perhaps another day to finalize before an a-b-c pullback down should happen.
Crude oil also found some support yesterday albeit highly questionable as to sustainability even on the very short-term basis since the pattern is an a-b-c up on the 15min chart. Two day's bounce could just be it and it can keep going down for the next 3 to 5 trading days (if not longer) before a bigger multi-days bounce should happen.
>> SnP500 Intraday EWA: drive.google.com/file/d/0B9dBZPXNckXYMTN...
For the SnP500 EWA it is not that simple since the pattern still favors the downside on the 60min chart. A rally that suddenly retraces more than 61.8% of the impulsive iii-rd wave is the only way I know that can invalidate the completion of the i-ii-iii-iv-v run down or to result in a truncated v-th wave as early as possible. Either way, the 90% probability remains 90% until proven wrong.
Thus, this is the very first time in about 3 years that a fully qualified impulsive run down, that can lead into another bear market correction comparable to that of May/Oct 2011 - or worse, can happen if the i-ii-iii-iv-v come into full fruition.
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Trading Strategies:
Many times TA and EWA can help each other but this time it is very hard to determine which one to be given weight considering the massive spike in the Uvol vs. Dvol and SnP500 closing above the 50ma which can trigger a buying frenzy tomorrow (assuming SnP500 does not go down right at the open). A very short-term exuberance rally cannot be far behind right after the FOMC meeting that is being interpreted bullish by many analysts and traders. When the herd starts going one way better not go against a stampede until they reached a wall (or the cliff).
>> SnP500 Monthly Confluence of Resistances: drive.google.com/file/d/0B9dBZPXNckXYelh...
2138 to 2145 very tight range remains the potential wall on the monthly chart. High probability SnP500 will rally toward that 'not so big wall' as it already achieves significant 'Escape Velocity'. The cliff is of course if the SnP500 broke hard below maximum run rate on the intraday chart and keeps going down resulting in a Spiral Meltdown in which case the better trading strategy is to keep waiting until it hits the ground.
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These are the strategies I can think of:
1.) For those who are not well versed with trading the intraday charts, it is very obvious buying early tomorrow if a rally happens with some allowances to the downside - as the intraday patterns still favors the downside and a minor rally early in the morning might happen before the v-th down follows. But then, as I have indicated; it is not easy to give weight either to a very short-term exuberance rally or the v-the wave down.
2.) For intraday traders; perhaps buying half position if SnP500 rallies early tomorrow morning is the better strategy in order not to feel being left behind just in case the markets became exuberant. Then wait for either a v-th wave down if exuberance does not happen or an a-b-c down for the next half if a very strong intraday rally actually happens. If Spx decides to go down early tomorrow, then evaluate whether it is actually a v-th down or an a-b-c down. At any rate, the 1.62x run rate can be used as a hard stop loss just in case SnP500 just keeps plunging. If the v-th proved to be just an ordinary over-extended run, then it will suddenly jump back up and better to chase it as fast as you can since an over-extended v-th will cause a very fast retrace of the whole v-th down in short order. Note that a potential Inverted Head and Shoulders might form if the v-th failed to reach the nominal target or if the iv-th up goes a little bit higher.
This is definitely not an easy trade for those who might want precision entry since there are simply far too many variables to consider in light of the post FOMC meeting. Just keep in mind that in majority of cases v ~ i when the iii-rd becomes extended which is applicable to this particular case.
* Note that I highlighted the two contrasting analyses for the year-end. They said that January was/is the barometer for the whole year. Since January 2014 is a red month then the whole year should end in red too and December 2014 must be a huge red month to make the whole year red this time around. Right now December is still red while the whole 11-1/2 months is still very green.
Others said the red year was achieved last October when SnP500 became negative toward the October 15 bottom = = = then the January effect has already been served. I don't know if that is true or not. As far as I can see on the monthly chart these were the red Januaries:
1.) January 2010 = green December = green year;
2.) 2009 = green December and green year;
3.) 2008 = green December but a slaughter year;
4.) 2005 = tiny red December but a green year;
5.) 2001 = red December and a very bad year;
6.) 2000 = tiny red December and tiny red year;
7.) 1992 = tiny green December and tiny green year;
8.) 1990 = green December and tiny red year;
9.) 1984 = green December and breakeven year;
10.) 1982 = green December and green year.
Ten red Januaries and no definitive trend.
Thus, better to play the 92% probability for a Santa Claus Rally which usually starts at October or November bottoms toward February to May tops in many cases for those who prefer swing trading rather than the more specific 2 to 3 weeks rally many prefer to daytrade.
Thus, for those who bought in October 20 for either a swing trade or a medium-term trade, the better course of action is just to keep nursing their trades until maturity based on the weekly charts published last Oct 17 instablog. Note that SnP500 and Compq swing trade nominal targets have already been achieved before this early December downturn happened. That was why I kept insisting to sell at least some swing trade positions near the trendline resistance as partial profit taking procedure just-in-case a trend reversal happens.
This December run down is of course better suited for daytraders who prefer to buy on th dips and this is supposed to be the last daytrade for this year. So far, I have 6 or 7 very successful daytrades and 5 to 8 failed trades some of which made tiny profits others small losses. I am not particularly interested in counting successes and failures as long as my trading account keeps making reasonable amount of profits commensurate with the efforts expended.
** For me: Am still holding half of SSO and YM swing trade bought last Oct 15 together with TNA as the medium-term trade.