The markets powered higher again, and have definitely taken the bearish tone off the market for now. Below is the daily chart of the SP500. We have bearish divergences forming on the MACD and they are ready to cross and turn up. Expecting that follow through, we should expect an upward biased market.
Volume is not that impressive, so I've labelled the market with the common bearish Elliott Wave Count, just for viewing.
In contrast is the $VIX, which failed at resistance and has fallen back below the 50 day MA, and the MACD is rolling over.
JNK: I firmly believe that if the junk bond market is going to be buoyant, so will the stock market. JNK broke above resistance today. The MACD turned up and looks to support higher prices.
IBM: Looks like an impulse move higher. I also believe as goes IBM so goes the market. IBM should test it's upper band in the coming days.
Stocks We Are Watching:
BA and CAT: These two DOW components have similar charts with an inverse H&S pattern, and classic Bollinger Band interaction with the pattern. The left shoulder stopped before the lower band. Volume is light, and if I had to pick one to buy, its CAT.
EEM and EWY: Same as BA and CAT. If I had to pick one to buy its EEM.
BRCM and CTSH: Both have an ascending wedge pattern going. BRCM looks like a more bullish candidate with a pending breakout just over head. Both have improving volume.
SRS: This ETF is range bound, and has pulled back the past two days. I've drawn a potential cup, and if so, we should expect a handle to form. Just theory right now, but that's the type of bottoming pattern I can back the truck up on.
From My Trading Desk:
Today was another one of those days working away from a computer, so in the morning I closed the short on BIDU for a loss and closed the short on ABX for a gain. I noticed I had half my bearish positions on gold plays and the other half on tech stocks. I wanted to reduce that dynamic. I also wanted to reduce my over all positions to raise cash for the next trade.
We might enter a long side trade soon. I will probably go with a DOW component.
GLL: We still own it, and it is in no man's land.
Hope all is well.
J.D. Rosendahl, Rosey