James´ Insight

Today´s Outlook

• Bullish %: 22.0
• Current reading is 106. There is a lot of caution on the market
• By closing below 1075 we have reentered a bear market

Weekly Outlook

End of week, end of month, end of quarter.

If they can’t get us back up now, then hold on to your volatility belts.

The pattern on the daily chart is a complex pullback in a downtrend and price IS in a position for failure. In my opinion everyone has gone to CASH and they await some answers. If it all goes bad they are safe, if they get good info they simply jump back in.

I’d say the odds are pretty good for further upside if price can get above that level early this week. Keep in mind that the open for the year is 1113.75 and with price at 1075 we are 38 points away from the open or 3%. That alone is incentive for the street to get its act together.

Also the Chicago Fed Activity report is due out on Monday premarket and in my opinion that is the KEY report above all others to watch. Is it coincidence that price is teetering on the edge just in front of the report?

Analysis

Due to the extended fear and panic over the EU refunding issue going into month end and due to the fact that the weekly chart will need a closing price below 1075 to establish a downtrend bias there will be no extended analysis today.

Trying to gauge fear ahead of a major event like the EU is pretty much a fools game.

Price has until FRIDAY to close back above 1075 or you can kiss this market goodbye for the next two years (unless we see some major interventions again of course).

It really doesn’t matter to us as trades, but it is bad for job holders, and that is my point:

NO MARKET = NO ECONOMY

65% of the buying comes from the upper 20% with wealth in the market, so I’ve held as positive outlooks as I can for weeks but price has the FINAL SAY and Friday is deadline.

Good luck with your trading!

James´ Insight

Today´s Outlook

• Bullish %: 22.0
• Current reading is 106. There is a lot of caution on the market
• By closing below 1075 we have reentered a bear market

During the night the market breaks a major support price at 1066 and that does not bode well for today. Why our market is down this much outside market hours while foreign markets are barely negative is not right. I think someone knows something.

Weekly Outlook

End of month, end of quarter, Monday.

If they can’t get us back up now, then hold on to your volatility belts.

The pattern on the daily chart is a complex pullback in a downtrend and price IS in a position for failure. In my opinion everyone has gone to CASH and they await some answers. If it all goes bad they are safe, if they get good info they simply jump back in.

I’d say the odds are pretty good for further upside if price can get above that level early this week. Keep in mind that the open for the year is 1113.75 and with price at 1075 we are 38 points away from the open or 3%. That alone is incentive for the street to get its act together.

Also the Chicago Fed Activity report is due out on Monday premarket and in my opinion that is the KEY report above all others to watch. Is it coincidence that price is teetering on the edge just in front of the report?

Analysis

So why won’t the market lift? Everything is positive on the macro side. Everything is positive except expectations. This is a game of confidence. The economy is in a nice growth curve and everyone is expecting doom and gloom because of the EU, housing, employment etc.

Where was the mindset when it was actually negative? This is what I call news lag and it gives the boys a chance to buy cheap. We are in a recovery but the mind is in serious news related lag.

On a directly related note the industry has lost 55 billion in funds. There is only one thing that attracts money and that is price. Funds are there in cash and on the side. Price attracts money. Everyone’s expectations are taking monies out at exactly the time big players are coming in! The big guys are not stupid, they will see the selling and they will buy the market cheap and then drive it higher while everyone wonders what happened.

I see a significant bounce coming, be patient, wait for the factors to line up and then take it. The last major hurdle here to me is refunding the EU and I sincerely doubt they’ll mess that one up. In the meantime I see the selling diminishing.

But if you say they are selling the rallies, then you’re right. Yesterday they did with an astounding 175M net volume, I bet that would scare a rabbit out of his home. I label it as misdirection. If you look at the bid it is gaining strength. If you look at the selling it is losing strength. After a 3 month rolling average that saw $55 billion dollars leave the market (that’s a lot) price is holding up remarkably well. After 3.8 billion (with a B) on May 6th the net volume yesterday was -185M (with an M), big difference.

No matter how I slice it if price cannot get over 1091 the weekly will continue to exert downward pressure. If you haven’t heard, then you should know that the market discounts 6 months out. I find that to be total rubbish with the studies I’ve made. If anything the market lags the recovery. That was one of the first industry myths I discovered to be untrue. And this recovery is underway, it is the most difficult to read of any recovery but once it takes hold and your expectations change, then hold your hats, because this one is going to take off.

For those of you that remember me screaming about 1133-1145 you might want to look at the daily chart and realize price rejected 1130. Unless price recaptures 1133 this rally will not take place. We currently have a W from May 17th to June 7th and we now see a possible V taking place on the weekly. That W-V is a reversal in process.

Bottom line: hard to be negative when the bid is improving and selling is diminishing!

Good luck with your trading!

James´ Insight

Today´s Outlook

• Bullish %: 21.6
• Current reading is 265. There is a lot of caution on the market
• By closing below 1075 we have reentered a bear market

Weekly Outlook

End of month, end of quarter, Monday.

If they can’t get us back up now, then hold on to your volatility belts.

The pattern on the daily chart is a complex pullback in a downtrend and price IS in a position for failure. In my opinion everyone has gone to CASH and they await some answers. If it all goes bad they are safe, if they get good info they simply jump back in.

I’d say the odds are pretty good for further upside if price can get above that level early this week. Keep in mind that the open for the year is 1113.75 and with price at 1075 we are 38 points away from the open or 3%. That alone is incentive for the street to get its act together.

Also the Chicago Fed Activity report is due out on Monday premarket and in my opinion that is the KEY report above all others to watch. Is it coincidence that price is teetering on the edge just in front of the report?

Analysis

The current pricing shows an incredibly difficult bottom formation. However due to the massive amount of bottom information, oversold, arms reading, adv/decl, cycle etc some further credit for a rally leg is due. There was NO decision at 1075 on Friday. Price closed at 1074.75 and to be honest, that is not a decision.

However the advance/decline is showing signs of improvement. Volume has shown buying. The cycle information is right at the extreme edge of a pullback. All the short term info like PT-1, contract open etc is good. Friday simply saw some stalling prior to the weekend. A simple look at Fridays chart shows V reversals everywhere.

July 1 is the refunding date for the EU and oddly enough banks lead on Friday with the XLF up 2.7%. It really does seem like they let fear rule while the real money bought the right stuff. Do you really believe that the EU and their banks will be allowed to fail on July 1?

With all that said price is near a failure point and if fear succeeds in taking prices down we might see a fast decline. I’d be very cautious about the way this bottom is forming.

Good luck with your trading!

James´ Insight

Today´s Outlook

• Bullish %: 17.8, this is not good, the trend needs to be reversed today
• Current reading is 265. There is a lot of caution on the market
• By closing below 1075 we have reentered a bear market

Today needs to close above 1075, otherwise we could see some serious sell volume coming in.

Weekly Outlook

We currently have a vix of 25 which is very good. We also have a trading range of 20 points which is good for alternating trading days within an uptrend.

I would normally expect a small pullback to 1100 or possibly even 1086 before continuing, but the 200 day sma is sitting at 1107 and we don’t want to break that in a rising trend. I would expect price to move forward and THEN pull back to reaffirm the 200.

The 200 dma is important and the move off of it should be large. The entire move up “should” hit 1160 before big time decisions come in. The 50 dsma is currently 1137. To be honest, I don’t see the doom and gloom others see.

China has seen a 25% crash in their markets. Could normalization being around the corner?

TIC data came in last week and sure enough money flows are coming back to the US. In my mind that is what we need for the markets to move higher.

Bottom line: 200 dsma HAS to hold or the whole thing RISKS falling apart. Progress is being made on the 9th standard deviation, the 200 dsma and the crash weeks low at 1107.

Do you blame anyone for being a bit gun shy? Time, since we broke back over 1103, is on our side but this first run is always nervous, expect a better response once this initial rally holds.

I’m naturally a positive person; you have to be to deal with the kind of negativity we find in the news all the time. So although I believe the market is designed to go UP, and it is, it is also about to face a critical weekly test at 1128. If we fail there and form a LH I’m also a realist as that failure will usher in selling. Just a heads up as price moves into a critical week.

Industrial production came in and still shows improvement.

Analysis

There are leading indicators of GDP that few people look at when the media has the reader convinced the sky is falling. Those indicators of GDP are:

Waste: 82% correlation

Metals: 79% correlation

Lumber: 73% correlation

Petroleum: 72% correlation

Motor Vehicles: 72% correlation

Total Freight: 72% correlation

Grain: 66% correlation

Chemicals: 65% correlation

Food: 49% correlation

Coal: 32% correlation

Currently the number one correlated item, waste, is screaming upturn, because the current number of freight cars carrying waste total 79,044 cars and that is up 44% from last year. Waste has not grown this fast since 1994 and if you look at a chart of the SPX you know that is just before the market took off. Let’s remember that one of the biggest ARMS index buy signals just triggered and price is in one of the most oversold conditions on record.

Let’s also remember that the refunding of the EU is due July 1 and everyone is scared to death of “liquidity crisis number two” even though the TED spread is currently coming down from 50.

The market is reacting out of fear and I admit that price is at the extreme limits of a pullback on the daily. Absolute extreme limit.

Again I admit that yesterday looks BAD and I won’t sugar coat this one. Price closed below 1075 or the 9th std deviation has ONE DAY left to reverse back above 1075 or a major sell is triggered. Price has final say, not the economist but any turn down may very well disappoint with numbers like rail traffic are currently providing.

The final solution to this seesaw is the Evolution chart which has consistently provided me with good information on where we are. The Limit to my patience is July 1 and I’m using that date because of the post to the refunding of EU debt.

As a last note please recall the $TRIN reading of 4 weeks ago that registered a massive exhaustion in selling. $TRIN is pretty reliable as well.

Good luck with your trading!