The Price Action Lab Report – Monday, November 24, 2014 [Premium]

The Price Action Lab Report includes a market recap and premium analysis and it is delivered daily before the market open. The premium analysis focuses on high probability setups in ETFs and S&P 500 stocks. Click here for more details.

Market Recap – November 21, 2014

U.S. stock indexes rose on Friday due to an interest rate cut by China’s central bank. The S&P gained 0.52%, NASDAQ rose 0.24%, the Dow climbed 0.51% and the Russell 2000 added 0.14%.

Bond prices also rose with the 10-Year Note yield falling two basis points to 2.32%. Crude oil prices were firm with the spot price rising 0.47%. The US dollar rallied versus the Euro to $1.2391. Precious metals rose despite the dollar rally. In the spot market gold gained 0.63% and silver rose 1.20%.

Comment: The head of ECB was not convincing. He has promised cash several times in the past but all of them were just verbal interventions, a game he plays well. But the verbal intervention card is not good any longer. Actually, he cannot print any money without sterilization (equivalent amount taken off the market in the form of bond sales) because he will risk getting into legal problems with German courts. It’s all verbal intervention but it was enough to hit stops above the consolidation channel in the S&P 500. Then, China’s central bank joined the game and added to upward pressure while lifting US bonds, an asset it owns. US bonds and stocks rose. Despite the pressures from verbal and monetary policy interventions, profit taking hit the market at the open and the highs of the day were not seen again. It was not some retail investors talking profits, it was insiders. But one day is not enough and we have to see if this pattern repeats in the near future.

Short-term Technical and Quantitative Analysis

The short in SPLV hit its stop at the open for a loss of $0.52/share. There is a change in two pending setups and also a new setup. There are no open positions. The table below shows eight pending setups in a total of seven ETFs:

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Quantitative Analysis of the Gap Up Pattern in SPY on November 21, 2014

SPY gapped up on Friday but then closed lower than the open. The profit taking that took place after the open has prompted some to wonder whether this pattern is a bearish signal. Quant analysis shows that this pattern showed up frequently after the bottom of 2009 with an upward bias but there are some issues to consider.

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The Price Action Lab Report – Friday, November 21, 2014 [Premium]

The Price Action Lab Report includes a market recap and premium analysis and it is delivered daily before the market open. The premium analysis focuses on high probability setups in ETFs and S&P 500 stocks. Click here for more details.

Market Recap – November 20, 2014

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Expectation Divergence Amidst High Strength

Stock market strength is high and this fact cannot be denied. But there are certain important divergences. Could it be that this is a “weak rally” versus a “strong rally”? Dip buyers show up after almost every lower opening but could it be that they are late investors chasing prices?

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The Price Action Lab Report – Thursday, November 20, 2014 [Premium]

The Price Action Lab Report includes a market recap and premium analysis and it is delivered daily before the market open. The premium analysis focuses on high probability setups in ETFs and S&P 500 stocks. Click here for more details.

Market Recap – November 19, 2014

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