P&F Chart School

[TerpTrader]

Man, that was ugly last week.

The good news is we're off the low. And, if history is anything- we should see a nice pop back to the 875 range soon.

Right you are, sir. Closed at 876 today.
I didn't catch the ride this week though.
Looks pretty close to a bullish engulfing candle for today.
But there's still the longer term trendline it needs to get over.
We shall see.

I gots to make sense of these p/f charts....so they don't just look like etch-a-sketch. :blink:

 

[James48843]

Sorry- been out of state for a few days. Phoenix was nice and warm, a lot better than the wintery mix I am dealing with in the great lakes area now.

Today the chart shows a nice pop up. New Price objective is significant- it's showing a double top breakout, and an expectation of 1110.

View attachment 5208

Why this is significant: We are ALMOST at the 50 day moving average right now. (the 50 day is about 929). We've not broken through that 50 day moving average in a long, long time. Could it be that we have seen the bottom, at least for a while? Is Santa Claus making an early appearance after the bloodshed of the last two month? Well, if the P&F chart has anything to say about it, yes.

The P&F is indicating we are headed higher. Now, with all the bad news out there, continuing layoffs across industries, horrible jobs reports, etc, this shouldn't be happening. On the other hand, Obama keeps talking, and every time he holds a press conference, it seems that we get a positive reaction out of the market. I'll take what I can get.

We're at a critical point over the next day or two. IF we close above the 50 day moving average, it is very possible that money will come pouring in, and we'll have a strong run north to the 1100-1110 range.

Resistance levels to look for:

1. 929 is 50 day moving average. It will ether hold, and we go downward, or it will break and we move higher. Kepy point. This chart is saying more likely than not that we'll break it upward.

2. If that breaks, then 1030 is the next key level, where we intersect the bullish trend line. Again, if it stops there, it will be a hand move then downward.

3. If that were to break upward though, we're on to the price objective of 1110, which may change soon as well. the 1110 is a preliminary number only at this point.


On the other hand, if the rally fades out, and the 50 day moving average (929) holds, then we'll get profit taking kicking in, and could go back down severely.

Tomorrow is a key day to see which way we'll end up.

Cross fingers. This COULD signal a fundemental change in direction. It COULD be that we've bottomed, at least for a while.

Good luck.
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[James48843]

Technical reversal. We got a double bottom breakdown today. New bearish price objective is 830.

View attachment 5226​

It looks like a lot of this may be caused by two things today- outside influences of higher jobless nubmers, combined with the automaker bailout deal not looking like it's going to go through. Pessimism rules the dayas a result.

 

[James48843]

So the fed drops rates, and the S&P reacts.

Enough so that we're slightly above the 50 day moving average, and at the high end of recent trading.

And we get a technical reversal today, showing higher, and a new bullish price objective of 1020 to 1025 once again.

View attachment 5242​

Except that I don't believe it.

I think it's a techinical reaction to the rate drop, and even with 5% gain, it's still darn close to the high end of recent trading range here.

I am not convinced we've broken out yet. I am thinking that after people have a good night's sleep on it, they will realize that the fed just spent the last bullet here, and has no more rate drops left, and now will have to find other weapons in the fight to give CPR to the market.


Let's see what tomorrow brings.

CLEAR! (thumpka).

Good luck.

 

[hessian]

Hi James,
Very nice postings on these analyses. I just gotta add, it sure is making me dizzy (as I expect you as well). I also think after a good-nights sleep, folks will begin to think - what really are the broader (& longer) implications. My guess is also that this will not hold.
It sure seems IMO, more like a last nail in the coffin.
A bull-trap?
I think raising rates would have made more sense, along with a strong statement that everything is in-hand and under control - and this may have provided the same bounce (as a result, would have helped the US be more competitive). This just feels like simply desperation!
I'll be interested to see its effect overseas, e.g., Japan/carry-trade?? etc? :blink:

 

[James48843]

This just feels like simply desperation!

Yep.

I'll be interested to see its effect overseas, e.g., Japan/carry-trade?? etc? :blink:

Japan is now open. And it's a bit of a fizzle. Nikkei 300 up just 0.9%.

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[James48843]

See my account talk. I've moved my own today.

 

[James48843]

I'm still thinking 850 to 860 range is very, very likely (80% certain), with the strong possibility (50% certain) it could break down below that to the next level support. I see the next level support below that to be 820 range. And I am thinking that if that doesn't hold, then we're down (25% chance) into the 740 range and retesting that area. As I say, 850-860 is much more likely.

We'll see how today goes.

Remember- much of the moves is influenced by outside actions. The lack of action on the auto loans is having a very adverse affect. If the White House insists on bankruptcy, it could be even much, much worse ahead. three million more unemployed isn't going to help things.

We'll just have to see. This is what I am thinking this morning, anyway.

View attachment 5255​

 

[James48843]

Change in price objective today.

The breakdown in prices continues- now showing a double bottom breakdown, with a new bearish price objective of 840.

View attachment 5273
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I was thinking about jumping back into stocks today, but with the breakdown, I am going to wait another day, as I think we may be able to shave off a little more tomorrow.

As I said the other day, I am 80% certain of a range of 850-860. I am less certain we'll fall below that. I want to be in a position for the next cycle up, which I believe will be between Christmas and New Years, so I will very well likely move tomorrow back into stocks.

We are oscillating pretty good here on these cycles, so I am going to try and catch the wave. I just hope tomorrow isn't too late to catch the next cycle up. I think today is going to be pretty hard down.

Good luck to you, on whatever your decision is. Anyone buying today will be in a pretty good place- I am just taking the gamble that tomorrow will be a better buy than today, and I am only about 50/50 on that.



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[James48843]

Watching closely- and I may end up doing a 50% C/ 50% S when I do move again.

Have a great day.

 

[James48843]

Changed mind- I'm going in.

 

[airlift]

James,
Even with the pronounced oscillation these days, your charts and comments are very useful in making my decisions. Thank you, Merry Christmas and Happy Holifdays!

P.S.
After the SPX hit an intraday low of 860.10 on the 23, yesterday the intraday low was a higher 861.44. We closed positive at 865.42 on low volume, after approximately 5 down days. Hence, I think we might be starting to see a recovery to the upside through the end of December. Let's keep our fingers crossed!.

 

[James48843]

Well folks- this seems to be about as much of a Santa rally as we can expect, if the P&F chart is right. We're right now near the top of the continuing descent into hell, with a ceiling at 888 range (50 day moving average, according to Stockcharts.com).

Today we bump up a little. But the P&F chart still shows a bearish expectation of down to 810. I don't know when it is coming, but unless we've broken the back of the bear (highly unlikely, in my opinion), then we're about to head back into the abyss.

Here is today's chart:

View attachment 5319

Now, normally, in ANY OTHER YEAR, I would be thinking that I would let it ride in January, as January has traditionally been a very successful month.

But this chart has me itching to move to safety, and move now. It cries out of weakness. That's all that Santa could muster this year?

And it is making me nervous.

Santa?

Lump of coal ahead.

I am not sure, but I MAY be moving to G today. Let's see how it plays out between now and noon, and see where we go from there. I HATE to start a new month locked into G, but that MAY be where I end up.

Best of luck.
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[James48843]

Darn tought decision. We're at 884. I expect the peak today to be between 886 and 890. Then I think we'll head back downward.

Darn, darn, darn. It is HARD to decide whether to bail out right here, but I am thinking I HAVE to.

So I am going "G" today.

Best of luck.

 

[Guest2]

Good Luck James, I backed out abit myself for the same reasons you had.
That P&F Chart was painfully difficult to go against and I didn't like what
I saw. Everyone seems to be focusing on Employment Claims for next wk.
Maybe we'll see a better entry point soon as January is just around the
corner. I truly don't believe we'll miss a +10% day and even if we miss a
strong up day or two, we'll find prices just abit better in the near future.

 

[hessian]

Darn tought decision. We're at 884. I expect the peak today to be between 886 and 890. Then I think we'll head back downward.
Darn, darn, darn. It is HARD to decide whether to bail out right here, but I am thinking I HAVE to.
So I am going "G" today.
Best of luck.

James, again nice call. Nailed the 890 call on the button!
A song keeps ringing with me too - "Where do we go now" ?
...(perhaps a fitting tribute to end of 2008...)
http://www.youtube.com/watch?v=t-uLXTCBQQE
VR

 

[James48843]

James, again nice call. Nailed the 890 call on the button!
A song keeps ringing with me too - "Where do we go now" ?

Darn hard to know where we go next.

I keep looking at the charts, and they keep saying we're not done with this bear yet. I wonder about it on a daily basis now.

Something tells me Santa will continue tomorrow, but just a little, and then I think we pull the plug and head down for the first week of the new year. I may be entirely wrong, but that is what I see today. Then leveling out at slightly lower than where we are now, by the second week of January or so. But I think we MAY have seen the real bottom back in November. If we get a dip in the first or second week of Jan, I'm buying back in- based in part on what the P&F charts say to me then. We'll have to wait and see. Bears can be stubborn. But I'm still 16% better than the S&P 500, so I guess that's a major victory in this bloodshed.

I think we're perhaps three months away from the end of the nightmare. I really think come Jan 20th, there will be a reversal of fortune, as a new president gets a honeymoon.

There is still enough downward momentum going that it's not going to get fixed in the markets overnight, but I DO think it's not as bad as some have made it out to be. And yes, the falling price of gasoline will help.

Come february and march, we'll find a way to get past the worst of it, in my humble opinion, and then I see the spring being a whole new spring.

Greg mentioned it looked like I fund will be the fund for the "last month, best month" method for January. He may be right. We sneezed, and the rest of the world caught a cold. But I think the rest of the world may lead us out of these doldrums, and sooner than you think.

Let's clink a few glasses tomorrow night, say goodbye to 2008, and welcome in the new bull market of mid- 2009.


But then again, I am the eternal optimist.

In 2008, I was fully invested in the market on all but 38 days, on 14 trades. (38 days including weekends).

I managed to beat the S&P500 by over 16%. I like to take risk- and snipped a little here and there. So I guess that's victory.


Let's look forward to 2009 being a better year.

(Clink).

 

[James48843]

The P&F chart says we've had a change this morning in the P&F chart-

It's now showing a positive Bullish Price Objective of 970-

View attachment 5334

Technically, that change occurred because we got a double top breakout- but my gut tells me it's only taking place because we're in the last trading day of the year, and there is a Santa rally taking place.

I am cautious about this signal, and won't believe it for a few days.

But- it is there, so we have to acknowledge the technical signal.

Use the information however you like- I still think we're headed back down next week.

Happy New Year evreyone.

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[turbo23dog]

The S&P seems to be on a high speed elevator heading up all morning. Its 12:40 PM and nearing 920 at the moment. You still thinking next week will be down?

 

[James48843]

Well, we got a serious move up today, over 3%. And that resulted in a revision to the bullish price objective- now it's showing up to 1075.

I find that hard to believe- and this is why- Anything above 970 would break the red bearish resistance line that we've been running for months. When the value hits up against that area, it SHOULD run into resistance.

And I feel that the last couple days have simply been the late arriving Santa rally, which usually takes place around Christmas and New Years.

Now, that said, trading volume has been very, very light for the last week. Come next week, it will be back to business as usual. Jobless rate continues to be signficant. Earnings reports are not looking healthy. The economy has not suddenly become better. No, I fear we're just seeing some seasonal happy mood, which will more than likely evaporate soon.

So, technically, the P&F chart remains invested 100%. Personally, I am on the sidelines, until convinced otherwise. I will try and make sure that this year I move the P&F chart when the signals indicate a change. I was bad at keeping it in real time sync last year. My new year's resolution is to try and be better at keeping it up to date.

Here is the chart for today- with the bullish price objective of 1075 showing:

View attachment 5350

Anyway- that's the technical indicator today. Up to 1075 expected. We'll see if that bullish prediction holds through next week. My gut says no way.

But the pure technical indicator of the P&F chart says yes.

We'll know in a while.

Happy 2009 everyone!
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