Banker's Corner: BofA to Charge Monthly $5 Fee for Debit Cards

In what will be common from the major US banks in the near future:  BofA to Charge Monthly $5 Fee for Debit Cards

Bank of America plans to introduce a $5 monthly debit card usage fee for many of its account holders beginning early next year, the company said on Thursday.

The largest U.S. bank by assets is implementing the fee to recoup lost revenue due to new industry regulations introduced since the 2008 financial crisis limiting overdraft and other fees.

"The economics of offering a debit card have changed," said Bank of America spokeswoman Anne Pace.

Bank of America [BAC 6.35 0.19 (+3.08%) ] is the latest large U.S. bank to introduce a regular monthly fee for debit card use, as new limits on overdraft and other penalty fees have pushed banks to introduce wider, monthly account maintenance fees.

Pace said customers expect certain features for their accounts, like overdraft and fraud protection, and the fee will offset some of those bank costs.

She declined to say how much the bank expects to earn through these fees or how many customers will be affected.

Customers who use the debit card for purchases will be assessed the fee. It will be waived for the bank's premium or platinum privileges accounts tied to the Merrill Lynch brokerage.

The fee will not be charged for using the card to access the bank's ATMs, Pace said.

The fee will be introduced early next year.

The solution for prudent money saving people is to pick a new bank.  In a deleveraging environment with low net income margins, the only way the major banks can improve earnings is to cut cost and charge more fees!

This is not just a Bof A issue, both Wells Fargo and Citibank are testing similar plans for debit cards.

For the past 20 years I have banked at 2 different community banks.  The first had 6 branches and my current bank has 3 branches.  In both cases, the service was great and it cost me zero!

Community banks usually have very low minimum balances to get free monthly checking and they usually do not charge you to use your debit card.

There are plenty of very nice and safe small to regional banks where you can get great and friendly service and lower costs than the major banks.  It has worked great for me and I highly recommend it.

Hope all is well.

J.D. Rosendahl, Rosey

Stock Charts: Market Goes on Mr. Toad's Wild Ride!

That had to be one of the most interesting days of the year.  Once again we got the big gap up and failure.  This time though the market rallied to finish the day.

$SPX 15 Minute:  The price structure down from the high a couple days ago looks abcish (zig zag), so maybe we finished abc of B up!  A push above green b would be initial confirmation.  In this view I would expect tomorrow to be an up day because B looks done.

$SPX 60 Minute:  If the 15 minute chart is correctly labelled the two most likely wave structures are the following:  The first is wave C to finish ABC up! 

The alternative I have is that it's 5 waves up and not ABC.  If that is the case it might look like the following where 5 waves up are wave C of a very large ABC pattern.

$SPX Daily:  Below are the blue lines for wave C of ABC, and the black line would be the target of 5 waves up of C of a much large finish to this correctional structure.  In either case, the MACD must turn up soon!

IBM:  The stock continues to walk up the upper BB, and the BBs are still widening.  If there's one stock that suggests the market should bounce it's the strength in IBM and the few blue chips like it.  Plenty of room on the RSI to support a test of the prior high.

AAPL:  The stock is one of the most interesting charts, not only on the daily chart below, but it's weekly and monthly charts are quite interesting as well.  Price in the past would fall to blue support lines and then make a smaller advance creating an ending diagonal.  Is AAPL getting tired?  We have divergences in place, but we cannot rule out another push higher.  A breach of the up trend line should be bearish.

 My Watch List: 

AMZN, WFM, COST, CMG, RL:  I've had all of these up recently as bearish trading ideas and I've shorted 4 of the 5 recently.  They still reflect potential for the bearish trade, however, they all have finished a 6-7 day period that could be an ABC pattern highlighted in blue lines.  Another push up might be needed to finish.

In all 5, the MACD on the daily is heading lower, but I would like to either see price break down and confirm, or price push a new high and roll over.

COH and TIF Weekly Non Log:  It was not a nice day for the high end retailers.  And I have weekly charts up to show a potential ABC pattern.  Break a trend line and push down to another trend line for wave A, then back test the prior tend line for wave B.  If the stock market has another push lower eventually, we should see these sell off into wave C and in both cases that could be the 200 day MA.

From My Trading Desk:  Today was a very active day.  Early in the day we had a small gain on RL and we closed that short because the market popped very hard.  Yes, a little panic covering to protect a gain.

As the market began to fade we scalped a big gain by shorting a 150% position on AMZN, we scalped a gain on WFM and a scapl on RL.  And we closed our short on CMG.  All very nice gains. 

We did enter a half short on WFM and filled an old short on COH to full.  The net of the day were lots of gains, and even though we added some shorts we closed down far more positions, and raised cash quite substantially. 

Tomorrow is week/month/quarter end.  I will try to take the day off trading, but it will be interesting to see how we finish the week and month for the longer term charts.

Happy Trading.

J.D. Rosendahl, Rosey

Just Scratching the Surface: Nine American Cities Going Broke

A very interesting highlight of the most problematic municipalities in the country:  Nine American Cities Going Broke

9. Camden, NJ

Credit rating: Ba2
2009 revenues: $181,257,000
2009 debt: $103,284,000
Median household income: $25,418

Camden suffers from high unemployment, high poverty, and a weak tax base. The city’s median household income is less than half that of the national median income and is the lowest of all the municipalities on this list. Moody’s notes that “more than half of Camden’s real estate is tax-exempt, hampering already weak tax collections.” The city has had a speculative grade credit rating since 1998. Three out of the past five Camden mayors have been sent to prison for corruption, the most recent in 2001.

LOL:  3 of the last 5 mayors have done jail time for corruption!  Maybe Camden is getting what they deserve! 

While they need to get off the tax exempt real estate issue, they will never have the economic base to support the kind of tax revenues they need to work out of the existing hole they have dug themselves into.  There's just too much poverty, and you can't squeeze blood from a turnip!

Whether they want to admit it or not, they are bankrupt!  Morally and fiscally.

8. Strafford County, NH

Credit rating: Ba2
2009 revenues: $36,204,000
2009 debt: $23,866,000
Median household income: $58,363

Strafford County’s low rating is largely due to a money-losing nursing home, on which the county spends two-fifths of its budget. Just under 85% of the patients at the Riverside Rest Home are eligible for Medicaid, yet state reimbursements to the county continue to decrease, according to Moody’s. Between 2004 and 2009, the nursing home lost $36 million. The county does not expect to recover much of the money it used to cover these deficits.

40% of their budget goes to a money losing nursing home?  This might be one of the dumbest things I've read in a while.  They should start with drastic changes or closing the nursing home, it's the only way they will know what their real budgetary issues are on an on going basis, but at least cure the big drag.

7. Riverdale, IL

Credit rating: Ba2
2009 revenues: $8,358,000
2009 debt: $9,350,000
Median household income: $40,659

Riverdale has run operational deficits for a number of consecutive years, driven primarily by a reduction in the amount the village relies on debt financing. “The village funded itself by borrowing money from its sewer and water funds, and now carries an operating fund balance of -52.1% of revenues.” The city, like many others on this list, is extremely small, with a population of just over 14,000.

Small cities like this remind me of Central Falls, RI where they have already filed muni bankruptcy.  Small cities typically have fewer options to solve severe deficits.  This could be a BK candidate in the near future.

6. Salem, NJ

Credit rating: Ba3
2009 revenues: $7,059,000
2009 debt: $10,098,000
Median household income: $28,397
Salem guaranteed bonds issued to finance an office building downtown. The city planned to pay for the bonds with revenues earned from leasing office space in the building. However, revenue fell short of what was projected when construction delays caused lease payments delays. “The project’s debt service reserve fund has been drawn down numerous times,” Moody’s reports. “Once the reserve fund has been exhausted, the city is obligated to pay debt service for the life of the bonds.”

This is exactly why we need to shrink government at every level and get them out of the business of being in business.  They guaranteed bonds issued to finance a building, of which they planned to pay for the bonds with revenues earned from leasing the office space, which didn't pan out as expected.  Idiots!

Once the reserve is used they are required to pay debt service for life!!!  What idiot in government signed off on this deal?  Does any tax pay expect this to be what their elected officials are working on with their tax dollars?

5. Detroit, MI

Credit rating: Ba3
2009 revenues: $1,280,791,000
2009 debt: $2,449,480,000
Median household income: $29,447

Detroit has suffered worse from the recession than almost any other U.S. city. The effects of the city’s economic situation are reflected in its credit rating. Many of Detroit’s biggest companies, such as General Motors and Chrysler, declared bankruptcy, placing “significant pressure” on the city, according to Moody’s. Detroit relies on the auto industry for its tax base, and the industry’s contraction has hurt the city immensely. The city became a “habitual note borrower,” relying on investors to close budget gaps.

If there's a major city in America that typifies deflation, it has to be Detroit.  You have a city that has been shrinking in total population for years, their mostly singular industry (auto manufacturers) has been on the ropes, high unemployment, and some of the most deflated real estate anywhere. 

The idiots who run this city keep borrowing more and more when they are essentially bankrupt, whether they want to admit it or not.  Of the big cities in the U.S. like Houston or Oakland that could end up in bankruptcy, Detroit is high on my list as a potential first to go BK.

4. Harrison, NJ

Credit rating: Ba3
2009 revenues: $32,763,000
2009 debt: $92,613,000
Median household income: $49,596

Harrison “issued a significant amount of debt to foster redevelopment, and continues to collect substantially less revenue from those developments than projected,” Moody’s explains. One of the largest projects is the $200 million Red Bull Arena, which was opened in March 2010 and cost the city $39 million in debt but has yet failed to have the expected returns. To help solve its debt problem, the city, which has a population of 13,620, plans to fire some police officers and firefighters.

They can fire staff all they want, but they might be too small to over come their issues.  Like central Falls, RI, they are a BK candidate fore sure!

3. Jefferson County, AL

Credit rating: Caa1
2009 revenues: $309,440,000
2009 debt: $1,337,233,000
Median household income: $44,718

Jefferson County’s debt, which is the second largest on this list, comes from a $3.2 billion overhaul of the county’s sewer system as well as a series of risky, controversial bond deals meant to help the county pay for the sewer work. A number of city officials have been sent to jail on corruption charges linked to the project. “The county defaulted on almost $3.5 million in 2008 — the biggest default in municipal history,” according to Moody’s. Worse still, this year, the Alabama Supreme Court invalidated the county’s occupational tax, which accounted for one quarter of the county’s total revenues.

Ah, one of my favorite muni stories in the country.  Recently they have negotiated a sizable haircut for bond holders coupled with higher sewer rate fees in an attempt to solve their issues  I like to think of their plan as a short sale and avoiding muni BK for now.  Will it work or just buy them more time before they have to file BK? 

2. Pontiac, MI

Credit rating: Caa1
2009 revenues: $46,183,000
2009 debt: $99,115,000
Median household income: $32,199

The source of Pontiac’s troubles is similar to that of Detroit’s. General Motors, which went bankrupt during the recession, is the city’s largest employer and taxpayer. The city has been in receivership since 2009. Also in 2009, the city sold its Silverdome stadium, which cost over $55 million to build, for $583,000. Such concessions have not been enough to raise the city’s rating.

A similar story to Detroit.  The city is in receivership, but once again we see a city making an investment with the tax payers money, in this case it's the Silverdome stadium for $55 million, which they later sold for peanuts.  The stadium is not why this city is broke, but it's a sign that our local leaders have no business being in the business of business with the tax payer's money.

1. Central Falls, RI

Credit rating: Caa1
2009 revenues: $17,601,000
2009 debt: $18,753,000
Median household income: $33,520

In August 2011, Central Falls declared bankruptcy largely because of the city’s pension plan, which promised $80 million in retirement benefits. According to the New York Times, the “pension fund will probably run out of money in October, giving Central Falls the distinction of becoming the second municipality in the United States to exhaust its pension fund, after Prichard, Ala.” This $80 million is approximately five times the city’s general fund budget.

Central Falls could be the guiding light for many small cities and townships the next few years.  These smaller cities have less career politicians, less pressure from unions, and much fewer options to solve deficit issues.  They also have less time than bigger cities who have more gimmicks and access to debt.

Central Falls could also be a leading indicator for the pension problem in this county.  Most public pensions are under funded and yet the corresponding municipality is broke.  Something in this equation has to give, the math dictates it just like Central Falls, RI.


The Problems at Hand:

Unions:  they continue to flex their finance strength over local and state leaders to guide solutions away from long term functional solutions.

Denial:  leaders are in complete denial.  The size and shape of the kind of economic bubble and for what duration needed to cure municipal tax revenues and budgets is simply not going to happen.  In fact, just the opposite could happen, another 2008 could intensify budgetary issues at the worst possible time: 2012 and 2013.

Gimmicks:  We've seen too many leaders use accounting gimmicks, asset sales, and other tricks to hide from the public the true on going money in and money out issues. 

Short term thinking:  There has yet to be a municipality that I've seen or read about that is dealing with their issues with a 3-5-10 year plan.  They keep trying to fix this year's pot hole!


Just Scratching the Surface

I really enjoyed reading about these 9 munis going broke, but they are really just scratching the surface.  They highlighted Pontiac and Detroit, but I image most munis in Michigan are in severe budgetary hell.  No where in this report did they highlight any of the many cities in California, and there has to be some that are as equally bad, albeit lagging in time.  They did not highlight Houston.


2012-2013

If we do not get a robust improvement in the Main Street economy soon, the financial pressures facing the muni world in 2012 and 2013 should increase.

And let me say it:  That's a good thing.  The pressure should force more definitive solutions.  If we have to pay people less, let's do it.  If we have to cut benefits, let do it.  If we have to reduce the head count, let's do it.  Government everywhere is too big and too burdensome on the public's money.

And, if we have to file muni BK, oh by all means let's do it and get to the solution much quicker than the past 3-5 years.

Hope all is well.

J.D. Rosendahl, Rosey

Stock Charts: Market Rolls Over

$SXP 60 Minute:  I've been pretty ardent in the thought of expecting a new low for this leg down.  Today's roll over brings that into focus.  I have my view below, which is probably the most bearish view.  Wave IV is done, and we now have wave i and ii of V finished.  If my view is correct we are into wave iii, and if that is the case, I would expect the markets to gap down tomorrow, which is classic wave 3 behavior.  Wave iii should push below the last low, then wave iv to back test that level, then wave v of V to follow.  This could all take a couple more weeks.

Note:  My Elliott Wave view is not my primary tool for trading right now.  Mostly because of the constant back and forth the past several weeks, there are too many potential wave counts.  My general concept is a sell off, then a sideways over lapping pattern, then we should expect another push lower to at least build divergences reflecting a potential bottom.

$SPX Daily:  Below is a more tame idea, which is a wedge pattern for wave V down.  This requires a different top for wave IV and probably a higher low to finish this move than my primary view above.  In this case expect a lot more back and forth to continue.

AAPL:  A little more downside today and the MACD is ripe to support price falling to at least the uptrend line at $385.

IBM:  Another day where IBM was up strong but finished weak.  Even just a push to the lower wedge line would have a negative impact on Mr. Market.

$VIX:  Today was very interesting on this chart.  First, the MACD turned up after drifting sideways and it's now in position to support this moving higher if so needed.  Second, the price fall of the past 3 days might have served as some kind of handle to launch higher.  I still like the idea of this making a new high with the market moving into a new lower.

The Risk Chart:  Even this has a wedge pattern, then break down and back test, followed by today's roll over with the RSI and MACD poised to move lower.

IYR and JNK:  Virtually the same chart.  Pattern formed, then break down, then back test and today might have been the start of the move down into a new low.

My Watch List:

WFM and COST:  They really have the same chart with minor differences.  Price is moving in an up channel.  Both are close to a price and MACD roll over.  Below the bottom channel line is the first trigger.

RL:  Broadening wedge with a throw over finish?  If so, this should reverse in the near future.  Below the blue uptrend line is the first trigger.

CMG:  Divergences in place and price is trying to push lower.  If AAPL and the market are to trade lower I think this could get to the lower BB or the uptrend line.

KO:  I still have my short on this one from a few days ago.  Ending diagonal with break down and back test.  Today we reversed hard and the expectation is to reverse the pattern completely, which takes us to the green line.

From My Trading Desk:  Today we took a half short on RL.

Tomorrow is going to be interesting.  The market needs to gap higher and run to keep the bearish views from happening.  In that light, it seems like very good news from Europe is required before the market opens tomorrow.

Outside of that, individual charts look horrible with few exceptions like IBM.  The market is still in No Man's Land.  Do we finally sell off or does the macro news save the next couple days (month/quarter end)?

It will also be interesting to see how the market finishes the week and month, it directly impacts the weekly and monthly technicals

Happy Trading

J.D. Rosendahl, Rosey

Municipal Hell Will Continue

A very nice report came out today, and while it's a touch on the obvious side for anyone who can add 2 + 2 and get 4, it does highlight the state of the muni world:  National League of Cities reports worsening finances for local budgets

The nation’s cities are facing what one expert says are the most difficult budget-balancing decisions in decades.

The annual survey by the National League of Cities projects a fifth straight year of decreasing municipal revenue, driven by declining property tax revenue from the struggling housing market, slow consumer spending and high employment.

"Dire" was how one expert described the plight of municipalities.

 
I would say we passed the state of dire a year or two ago.  5 straight years of declining revenues is boxing in muni leaders.  They have lived on accounting gimmicks, more debt, reduced services and then layoffs. 

Real estate deflation is causing a long term issue that muni leaders have tried to fix with short term solutions, and thus no real ground has been gained in the deficit battle.

Time is running out and the prior options have done little to fix budgets.  Soon, leaders will have to turn to more aggressive pay and benefit cuts, higher taxes and/or the dreaded bankruptcy.  The math over the next 2-3 years dictates a more aggressive and long term solution.

Noting that cities have laid off workers, cut services and delayed or canceled projects, the survey says that cities will be confronted with declines or slow growth in future property tax collections, not just in 2011 but most likely through 2012 and 2013, forcing further reductions.

Tax revenues will remain weak because real estate values and real estate tax revenues will remain weak.  What no one seems to want to consider is if we get another 2008 type economy in 2012 or 2013 with higher unemployment or lower consumer sales, that would impact tax revenues further and cause a widening in deficits.

"Cities have known that they are going to need to deal with these issues for the last several years.... What we don't know is what the end is going to be,'' said Michael A. Pagano, dean of the College of Urban Planning and Public Affairs at the University of Illinois at Chicago.

City finance officers has hoped that the worst was over. But "given where economic conditions lie, that seems to be very unclear," said Christopher Hoene, director of the league's Center for Research and Innovation.

The survey’s release comes as the league has called for passage of President Obama’s jobs bill.

The $447-billion measure would increase spending on roads and other infrastructure and help keep teachers, police and firefighters on the job, among other things, but faces strong resistance in the Republican-controlled House.

Cities ended fiscal year 2012 with the largest year-to-year reductions in general fund revenue and expenditures in the 26-year history of the survey, according to the report. (www.nlc.org/cityfiscalconditions2011)

"Revenue and spending shifts in 2010 and 2011 portray a worsening fiscal picture for America’s cities," the report says. "With a national economic recovery that has been weak or stalled, and taking into account a lag between economic shifts and the effects for city budgets, it seems very likely that cities will confront further revenue declines and cuts in city spending in 2012."

About 57% of city finance officers reported that their cities are less able to meet fiscal needs than last year, but that figure is down from 87% last year.

"The biggest question for cities lies in the uncertainty about the health of the national economy,’’ Hoene said in a statement. "If regional housing markets, unemployment and consumer confidence struggle, city revenues will continue to lag, city leaders will face more cuts, and those decisions will act as a drag on the national economy."

A Deflationary Risk

The municipal deficit issue is one of my 8 risks of deflation.  To correct muni deficits we are learning the very tough decisions that layoffs, lower salaries and benefits, higher taxes or bankruptcy will need to come about in a more definitive manner.

In any of those solutions or combinations there of, the impact on the greater economy is significant.  We either pay people less or tax everyone more.  The net is less net income working through the economy!  That's the math behind any solution other than a bubble economy or a federal bail out.

Hope all is well.

J.D. Rosendahl, Rosey

Stock Charts: Market Fails to Hang Onto Big Day

$SPX 15 Minute:  Yesterday I said the bullish counter view would be for the market to gap and run all day.  Almost, but the market faded towards the end.

$SPX:  The market failed right at minor resistance.  The market continues to do an excellent job of disguising itself.  Even with today's rally, I'm still in the camp that thinks we need one new low before we bottom.  If so, then the market should reverse sometime in the enxt couple days with the MACD rolling over on this time frame.

$SPX Daily:  That candlestick doesn't look bullish but the MACD is trying to turn up.  Price is in No Man's Land.

$VIX:  Still wedge bound.

IBM: Rallied but failed at the top wedge trend line.  This has to push higher if the market is going higher.

AAPL:  Ooops, on an up day this failed to gain.  In fact, market favorites like AMZN, PCLN, and CMG also posted losses.  This is trying to set in divergences with the MACD rolling over.  Do we test that blue uptrend line tomorrow?  If so, the market could roll over.

$CPC EMA 5 Daily:  It's consolidating a lot like the $VIX with no clues yet on the break out direction!

My Watch List:  All of my trading ideas are aggressive, but in this market, what isn't?

AMZN:  Price failing at the over head trend line.  Now we have a divergence on the RSI with the MACD trying to roll over.

CMG:  Divergences in place and price failed today and the MACD is on the verge of turning down.

WFM:  Price is still above the prior peak and in the up channel.  A break below $67 with the MACD turning down might be a nice short trigger.

CGEN:  I had this up last week with the idea the bottom is in this stock.  We have a back test of the down trend line and it's trying to push higher.  The MACD is not utrning down and may support price pushing higher.

From My Trading Desk:  Today we took a little short on CMG and added a little to our long on CGEN.

I'm still keeping it light because Mr. Market is too bipolar and too driven by the news of the day from Europe.

Happy Trading.

J.D. Rosendahl, Rosey

Tuesday Grab Bag: Meredith Whitney, Housing, and Consumer Confidence

Time’s Up Meredith Whitney, Muni Prediction Was Wrong

Just about a year ago today, rumors started to circulate in the sometimes sleepy and boring world of municipal finance.

The gist of the story was that a highly influential analyst was about to release a bombshell negative report. For portfolio managers running non-taxable bond funds, this was exciting.

Within asset management firms, these guys are way down in the social hierarchy; they normally sit in non-descript offices next to money market portfolio managers, chatting about things like duration, credit quality, and interest rate forecasts.

Wrong or Early? 

I'll go with early.  Predicting what and when in markets or anything for that matter are two totally different sides of the brain.  I think she's dead right on what, but predicting when requires a PHD in political and social behavior.  Unless we get a bubble economy or federal support to bail out municipal budgets, it's just a matter of when she's right.


UPDATE 1-U.S. home prices unchanged in July - Case Shiller

U.S. home prices were unchanged on average in July in a sign that the weak housing market could be stabilizing, a survey showed on Tuesday. The S&P/Case Shiller composite index of single-family homes in 20 metropolitan areas was unchanged from a month earlier when adjusted for seasonal factors. Economists expected the seasonally-adjusted series to rise 0.1 percent. Prices declined 4.1 percent from July 2010. A weak jobs markets and a heavy load of household debt are helping keep Americans from buying homes despite historically low mortgage rates. Economists expect the sector will remain weak for years to come but the long slide in house prices since 2008 could be in sight. The Case Shiller 20 cities index is down about 31 percent from its peak in 2006. "You are quite close to some equilibrium between supply and demand," said Cary Leahey, an economist at Decision Economics in New York.

Housing? 

I highly doubt we've reached a long term equilibrium.  There's just too much shadow inventory, a new round of big bank foreclosure activity, and pressure on the high end market from lower loan limits for conventional loan amounts.

Housing has essentially been up for the past 4 months, but down year over year in values.  The recent dead cat bounce might be spring buying that got pushed into the summer months because it was very wet this year during the spring.



Consumers' confidence remains weak in September  

NEW YORK - Consumers' confidence in the U.S. economy remained weak in September after dropping to a post-recession low in the month before as Americans continued to worry about high unemployment and low wages.

People were spooked last month over a downgrade of U.S. long-term debt, renewed concerns about the health of European banks and wild stock market wings. And not much has changed since then. The stock market is still volatile. And worries about the economy in the U.S. and Europe persist.

As a result, The Conference Board, a private research group, said Tuesday that its Consumer Confidence Index was at 45.4 in September. The number is slightly above the revised reading in August of 45.2, which was the lowest since April 2009. A reading of above 90 indicates the economy is on solid footing.

"The pessimism that shrouded consumers last month has spilled over into September," said Lynn Franco, director of The Conference Board Consumer Research Center in a statement.

 
The one thing we have had plenty of the past couple months is uncertainty on just about everything, so it's no surprise confidence has plummeted.  The question is will lower confidence remain weak and impact the economy or has the consumer over reacted to global events?

Hope all is well.

J.D. Rosendahl, Rosey

Stock Charts: The Market is Back Above the Neckline!

$SPX 15 Minute:  The market almost fills the gap.  It's over bought on this time frame and price structure would need to gap up and run tomorrow to turn the structure bullish looking.  It's still too over lapping for me!

$SPX 60 Minute:  Price is now above the neckline.  It's going to be interesting to see what price structure unfolds the next couple days.

On this chart we see price has pushed past the first retracement level and heading for the 50% retracement level, which would fill the gap.

$SPX Daily:  If there's something more bullish going on then I expect, then we should look for the market to gap up and run all day tomorrow.  That's not my view, but the counter bullish view I would be looking for.

IBM:  Sunday I said the MACD was not rolling over, and that in deed supported a push up in IBM, which looks unfinished.  If IBM is going higher, that could be a catalyst for the market.

My Watch List:  While I expected the markets to grind higher towards the neckline in a back test, I did not expect the strength of today's push above it.  IBM was very supportive today, and even AAPL which tried to sell off came back and supported the market most of the day. 

I'd like to take another day or two off here because Mr. Market is doing a great job of disguising itself.  I'd like to see a little better confirmation of price structure and direction before I get excited about new charts.

From My Trading Desk:  When the market was at the lows of the day, WYNN was down quite a lot.  We used that opportunity to close our short.  We had a position that was 150% of normal and the intraday chart looked over sold, so we took a nice gainer off the table and raised cash.

Friday's low might have been the bottom, but I'm still in the camp that wants to see a new low on the SPX on divergences.  While I wait for better confirmation, I will keep the trading light.

Happy Trading.

J.D. Rosendahl, Rosey

Stock Charts: Friday Looked Like an Inside Day

$SPX 5 Minute:  I'm showing the 5 minute chart to highlight the price structure from the bottom doesn't look impulsive.  It might not be done grinding higher, but so far it by no means looks bullish in structure.

$SPX Daily:  The green and red lines below are the most common expectation.  It's a push below the neckline and a back test of the neckline.  Again, if we get above the neckline at 1,150-55, then a different structure might be unfolding.
 

$SPX Daily:  Friday's price looks like an inside day.  Price is stuck between support lines and the neckline as resistance.

$NDX:  We should keep on eye on this one, as it represents risk off!  Will it reverse from the uptrend line and sell off or not? 

JNK and IYR:  Both broke down from their patterns.  I'm watching to see if we get a new price low on a divergence.  Nothing looks bullish here either.

IBM:  Notice the MACD is not rolling over.  It will be interesting to see what IBM does next week, it directly impacts the market.  It's in no man's land.

AAPL:  Like IBM, it will interesting to see what AAPL does next week.  Does price bounce or is it getting tired?

$VIX:  Stuck on the top wedge line!

My Watch List:  I have a few bearish trades going for now, so I'd like to see how Monday unfolds.
From My Trading Desk:  We had no trades as expected on Friday!

If we take the technical charts so common in the market right now, price of everything should fall.  The market based on the pattern has a target of near 1,000 to 1,035ish on the SP500.  However, Mr. Market has done an excellent job of disguising itself the past few months.  I do not expect that to change, so we need to be alert for alternative structures and/or changes. 

Happy Trading.

J.D. Rosendahl, Rosey