James´ Insight

Today´s Outlook

• S&P 500 e-minis: bullish above 1136.50, bearish below 1136.50
• Current reading is 442, lost momentum

Weekly Outlook

Some continuation would be expected to the downside.

Now, we have a couple of mitigating factors here:

1) the boys want a rally to lock in bonus and they need that price over the years open at 1113.75
2) price is sitting on the 200 dma which many institutional people look at
3) the low volume right now indicates an unwillingness to sell
4) the low volume is still higher than the lowest volume recorded (HL)
5) price has formed a LOW with a HIGHER LOW and HIGHER HIGH, this is classic bullish price action
6) in the very short term the DI on the daily gone sideways indicating a possible rollover but the daily BID is still 629 indicating someone is buying everything offered. There are two ways for a corrective move down to occur
a) actually move down or
b) move sideways.

I’m in the sideways camp until such time that price CLOSES below the highest low on the daily. It is not a stretch of the imagination to get a short burst down to the 1105 area. With the FOMC meeting we can easily get a fast burst and then a run right back up.

As slow as it is currently, don’t underestimate what the boys can do at the end of year. Bernanke wants the market up, the boys want it up, we have had an incredible five month reversal pattern form.
There is some severe choppiness indicated on the extremely long term cycle chart into the end of October, November looks like a run for the roses and December I believe “reality” is going to set in.

Analysis

The FED statement:

I thought I’d take a moment and talk about yesterday’s FED statement and it isn’t pretty. Deflation is a concern and the FED is openly saying it’s policies are not working as planned.

It also says the middle class is seeing a decline in assets and wealth, if anyone is surprised then you haven’t been reading the Newsleaks for long. Anyways, the future picture without employment for the middle class is bleak.

I agree with Thomas M. Hoenig who said that if we want normal again then the true costs need to be paid. Income needs to rise. Employment needs to rise. Taxes need to be completely revamped etc.

It’s a mess and the full weight of Social Security, foreign policy, domestic policy etc will come to bare in 2011. The EU continues to smoke and although the fires are out they can come back with vengeance. I believe we haven’t seen the last of it. But now, let’s get to the charts instead.

The charts:

We are now faced with the pull back to test TREND at 1127. As trend contains one candle that reaches down to 1104 I would venture to say that is the lower limit of the test.

Although we have a 123v Reversal pattern on the SP500; the Dow only shows 3 thrusts to a high with price being at a trend line. It is the Dow that contains the weight; no Dow no price travel. Cycle has posted a 442 read and that means a loss of momentum. If we have lost momentum at the point of breakout on the Dow then the retest of the SP500 should be underway.

If that test fails we will deal with it then.

Here is the plan: a successful test should trigger a resounding wave 3 rally up to 1200 or up to a 100 point run. Be ready.

Good luck with your trading!

James´ Insight

Today´s Outlook

• S&P 500 e-minis: bullish above 1132.25, bearish below 1132.25
• Current reading is 779

Weekly Outlook

Some continuation would be expected to the downside.

Now, we have a couple of mitigating factors here:

1) the boys want a rally to lock in bonus and they need that price over the years open at 1113.75
2) price is sitting on the 200 dma which many institutional people look at
3) the low volume right now indicates an unwillingness to sell
4) the low volume is still higher than the lowest volume recorded (HL)
5) price has formed a LOW with a HIGHER LOW and HIGHER HIGH, this is classic bullish price action
6) in the very short term the DI on the daily gone sideways indicating a possible rollover but the daily BID is still 629 indicating someone is buying everything offered. There are two ways for a corrective move down to occur
a) actually move down or
b) move sideways.

I’m in the sideways camp until such time that price CLOSES below the highest low on the daily. It is not a stretch of the imagination to get a short burst down to the 1105 area. With the FOMC meeting we can easily get a fast burst and then a run right back up.

As slow as it is currently, don’t underestimate what the boys can do at the end of year. Bernanke wants the market up, the boys want it up, we have had an incredible five month reversal pattern form.
There is some severe choppiness indicated on the extremely long term cycle chart into the end of October, November looks like a run for the roses and December I believe “reality” is going to set in.

Analysis

Probably one of the more important letters in recent memory because the pattern that has been forming for almost 6 months is complete on yesterday’s close. Unless this is an extremely rare moment, we should see a pullback to test trend and then see continuation up. It has been over a year since a pattern completed. Enjoy it while it lasts.

1127.50 is the ideal hold for price. The Dow needs to join in as its pattern is 3 thrusts to a high unlike the SP500’s 123v. This is a major concern. The Dow needs to thrust up and do it now to break that pattern.

Although a pullback to 1100-5 would have been ideal we don’t always get what we want when we want it.

Today should be a doji. The pattern being followed is run and consolidate for a week, run and consolidate for a week.

Good luck with your trading!

James´ Insight

Today´s Outlook

• S&P 500 e-minis: bullish above 1123.50, bearish below 1123.50
• Current reading is 629

Weekly Outlook

Some continuation would be expected to the downside.

Now, we have a couple of mitigating factors here:

1) the boys want a rally to lock in bonus and they need that price over the years open at 1113.75
2) price is sitting on the 200 dma which many institutional people look at
3) the low volume right now indicates an unwillingness to sell
4) the low volume is still higher than the lowest volume recorded (HL)
5) price has formed a LOW with a HIGHER LOW and HIGHER HIGH, this is classic bullish price action
6) in the very short term the DI on the daily gone sideways indicating a possible rollover but the daily BID is still 629 indicating someone is buying everything offered. There are two ways for a corrective move down to occur
a) actually move down or
b) move sideways.

I’m in the sideways camp until such time that price CLOSES below the highest low on the daily. It is not a stretch of the imagination to get a short burst down to the 1105 area. With the FOMC meeting we can easily get a fast burst and then a run right back up.

As slow as it is currently, don’t underestimate what the boys can do at the end of year. Bernanke wants the market up, the boys want it up, we have had an incredible five month reversal pattern form.
There is some severe choppiness indicated on the extremely long term cycle chart into the end of October, November looks like a run for the roses and December I believe “reality” is going to set in.

Analysis

For the last 18 months the market has survived challenges that are beyond the perfect storm. Through all of it prices have continued to do what current analytics would have suggested but in a rapid fire, spastic, impulsive manner. The latest challenge has been volume.

2010 was dubbed the year of “default”. 2011 will be the year of “reality”. The second half should see recovery but the market won’t recover until 2012 (in theory). Unlike 2010 that has seen price stay near the years open of 1113.75, 2011 will see price movement well beyond the years open.

I’m bringing all this up now and again because there is a change on the horizon that is a good change for the market regardless of the direction. Control is being returned to the human being. Fines are being levied against high frequency trading firms, the banks are out and the quants can’t find jobs.

This is good. This takes the market back to some basics. Friday was a prime example of selling into strength for example. In short the sharp, spastic moves are disappearing. Although the Fed and Treasury will use the computers to manage, they believe in slow and steady vs the banks wild and wacky.

Another item that has appeared and is positive is the market has now put in appropriate patterns that traders can SEE and ACT upon. As of Friday’s close we have a verified, old fashioned HL, HH. We used to call that a reversal. This is the first time since the panic that this has occurred.

Although we are overbought and are now due for another pullback another assault on Fridays high should be made. After the next low, which should be a second higher low, an assault on 1200 is in order. There are few steps in between of course, but that is what we’re looking at I believe.

And finally volumes are improving and show a higher low during last week. That is a good thing.

Good luck with your trading!

James´ Insight

Today´s Outlook

• S&P 500 e-minis: bullish above 1109, bearish below 1109
• Current reading is 578

Today is a Jewish holiday, after the morning it is probably over until Monday

We still need that pullback but they seem to want those stops first…

Weekly Outlook

First and foremost we are leaving a period of low volume so the first thing we want to see is higher volumes. If we do not see higher volumes this week then we need to start looking very hard at the market pulling back to 1090, 1075 and possibly 1052. Price is now at the point that volume is needed to push through overhead swing points and the midpoint for the year. Period. There is no other alternative.

Second we are still on a buy signal end of last week. However, I see important closes at 1099.25 and 1102, we do NOT want to see price below those levels.

Third, we are prepared to make trades in either direction. I say that now because the VXD just broke 20. For most of 2007, 2008, 2009 and 2010 the VXD has been above 20. Is the VXD signaling a change in direction? The VIX is at 21.99 just shy of 20.00. Being below 20 would signal bigger money to come into the market, especially given the bond bubble as discussed in previous Newsleaks.

Analysis

Our bid chart is showing 578 and it is the second time that the bid has fallen below 600 recently. This normally indicates a short term top. However we have stops just over head at 1127.50 to 1130 which would make a HH.

We have an unfilled gap at 1105 and a trend line breakout at 1100 which has not been tested. Breakouts get tested. It appears now that running the stops first and then coming down to the breakout test and gap is the order of the day.

What you need to watch is the volume and see if the volume is going back UP on this retest. That would be a good thing. It would also be good for the bid to reach 300 and then resume.

That’s the plan. Remember today is a Jewish holiday and everyone will take off early.
This past year has seen remarkable changes to financial regulation, events etc. A number of risk factors remain namely

a) Income for the middle class
b) Taxes for everyone and
c) Health care that is still not affordable.

These factors will play a larger role come November. For the time being I believe yesterday was the beginning of the rally into November. Granted some bumps along the way, especially in October but the goal now is 1200 +. Enjoy the weekend.

Good luck with your trading!

James´ Insight

Today´s Outlook

• S&P 500 e-minis: bullish above 1109, bearish below 1109
• Current reading is 801, high bid in momentum, we are very overbought now

Weekly Outlook

First and foremost we are leaving a period of low volume so the first thing we want to see is higher volumes. If we do not see higher volumes this week then we need to start looking very hard at the market pulling back to 1090, 1075 and possibly 1052. Price is now at the point that volume is needed to push through overhead swing points and the midpoint for the year. Period. There is no other alternative.

Second we are still on a buy signal end of last week. However, I see important closes at 1099.25 and 1102, we do NOT want to see price below those levels.

Third, we are prepared to make trades in either direction. I say that now because the VXD just broke 20. For most of 2007, 2008, 2009 and 2010 the VXD has been above 20. Is the VXD signaling a change in direction? The VIX is at 21.99 just shy of 20.00. Being below 20 would signal bigger money to come into the market, especially given the bond bubble as discussed in previous Newsleaks.

Analysis

We really need that pullback. Momentum is so high that it is very hard to overcome with the volumes we are seeing to the downside.

Vold saw a net 94k yesterday, normal would be 1.1 Million. We are seeing one tenth of normal volume. One tenth!!!

With the bid at a whopping 801 we should also be flying north at a rapid clip but no volume again. 1/10 isn’t going to make it in ANY investment/trading vehicle.

Yesterday saw nothing but distribution and divergence all day long, fortunately the chart said FLAT. It is what it is and after the close, it’s a short.

For today below 1115 should trigger some selling and below 1110 should trigger much more.

There is one MA that everyone looks at; the 200 day moving average. Despite all the other technicals that line today was defended to the max. The 200 is sitting at 1113.75 the years open. The stops are at 1127 and above. It is pretty obvious they want the stops above.

The two concerns going forward are:

a) The overbought nature of the market at a 801 daily bid and
b) The very low volume.

You just don’t see a rally on 1/10th volume. I grant you that no one wants to move until price exceeds 1127.50 but the volume is still abnormally low and the yellow flags are on the field. 1/10th volume at a 801 bid is a huge problem…

Good luck with your trading!

James´ Insight

Today´s Outlook

• S&P 500 e-minis: bullish above 1101, bearish below 1101
• Current reading is 777, high bid in momentum, but we are very overbought now

Weekly Outlook

First and foremost we are leaving a period of low volume so the first thing we want to see is higher volumes. If we do not see higher volumes this week then we need to start looking very hard at the market pulling back to 1090, 1075 and possibly 1052. Price is now at the point that volume is needed to push through overhead swing points and the midpoint for the year. Period. There is no other alternative.

Second we are still on a buy signal end of last week. However, I see important closes at 1099.25 and 1102, we do NOT want to see price below those levels.

Third, we are prepared to make trades in either direction. I say that now because the VXD just broke 20. For most of 2007, 2008, 2009 and 2010 the VXD has been above 20. Is the VXD signaling a change in direction? The VIX is at 21.99 just shy of 20.00. Being below 20 would signal bigger money to come into the market, especially given the bond bubble as discussed in previous Newsleaks.

Analysis

The market is simply backing and filling. A retrace down would be very healthy right now and then a resurgence of buying to attack 1127 is in order.

Breaking 1115.50 after the close put this into an attempted sell and we are looking for a downside target of 1101-1105.

We want the next break up over DI after the pullback.

This market is backing and filling right now, but it will take off.

Good luck with your trading!