Short Takes

Since we noted numerous weekly divergences were cleared in a bullish manner in this May 4 video, the S&P 500 has gained 52 points. After reiterating the bullish set-ups in this May 10 video, the S&P 500 added 32 points in the past five trading sessions.

Bullish Charts on Twitter: On Friday, we added a few links to bullish charts on Twitter (click here).

New Video Coming Sunday: We will be posting an updated video this weekend - look for a link here or on the CCM Twitter Feed.

In this week’s stock market video:

• Cyprus: new template?
• What is the VIX telling us about risk? (see 03:11 mark).
• European financials - divergence (05:09).
• Short-term VIX levels & risk management (06:22).
• What to look for in the bond market (07:51).
• No bid for Treasuries Monday (08:38).
• Risk-on vs. risk-off analysis (09:11).
• Risk-on stalled at resistance (10:11).

This week’s video looks at stock market performance following similar historical periods. DeMark charts, counts, and indicators are covered for the S&P 500 (SPY), transports (IYT), and small caps (IWM). The video closes with a look at recent consolidation using candlesticks.

VIDEO: Technical & DeMark Analysis

This week’s video illustrates how the short-term investment outlook changed between Thursday’s stock market close and Friday’s close. We examine all the major ETFs from an upside (resistance) and downside (support) perspective using DeMark charts and indicators. The tech ETF (QQQ) is covered as a proxy for many equity markets and sectors. At the 14:00 mark of the video, a summary ETF table is presented based on support and resistance.

The week’s video looks at DeMark exhaustion counts and indicators for the S&P 500 Index, Spain (EWP), and Italy (EWI). Traditional daily and weekly charts are reviewed for the S&P 500, Dow, and NASDAQ. As of the close on Friday, January 11, the weight of the evidence continues to support the bullish case, but as covered in the video, a few cracks are beginning to form in the bull’s armor. DeMark charts and indicators are proprietary tools from Market Studies, LLC.

The S&P 500 held at 1401 intraday Thursday. The range between 1393 and 1401 remains important. Above 1393, we will exercise some patience. Below 1393, a more defensive and bearish bias would be warranted.

To see a LARGER version of the CHART above click here.

Our level of concern is reflected in the fact that we did some very moderate selling Thursday (rather than buying the dip). We will keep an open mind and remain flexible in the coming days. More on Twitter (@CiovaccoCapital) during the day.

This week’s video contains: (a) S&P 500 daily DeMark at 01:40 mark, (b) S&P 500 weekly DeMark (04:11), (c) S&P 500 60-minute DeMark (06:45), (d) SPY/SH weekly (08:17), (e) SPY/IEF weekly (10:53), (f) Dow daily (14:52), (g) S&P 500 daily (15:36), (h) XLY/XLP weekly (18:59), (i) France EWQ DeMark daily (22:03), and (j) France EWQ DeMark weekly (23:07).

At the close on Thursday, the bias was bullish. However, we need to see resistance cleared. We are open to adding to our long positions if the hurdles below are crossed Friday.

Below is an updated version of the daily chart we posted a week ago. Despite Thursday’s gains, QQQ is still down 0.73% for the week (tech stocks) and TLT is up 0.84% (bonds). We cut back on QQQ last Friday and have not redeployed the capital yet.

The chart below of the S&P 500 was originally shown on December 3; the version below is as of the close on Thursday. As we noted at the 02:45 mark of Saturday’s video, the S&P 500 continues to have a questionable short-term risk-reward ratio. The market has stalled at the three intersecting trendlines shown below. Notice how the trendlines have acted as support (green arrows) and resistance (red arrows). With price below all three trendlines, they are offering multiple forms of resistance (see pink arrow). Monday through Thursday the S&P 500 has dropped 2 points (down to flat).

Little in the way of new information came to light on Monday. While the S&P 500 was weak as we anticipated, it remained above support at 1407, 1404, 1401, and 1400. As of Monday’s close, a push toward 1427 or 1447 cannot be ruled out. Should the bears gather some momentum, a decline toward 1360 is well within reason.

As we noted at the 02:45 mark of Saturday’s video, the S&P 500 continues to have a questionable short-term risk-reward ratio. The market has stalled at the three intersecting trendlines shown below. Notice how the trendlines have acted as support (green arrows) and resistance (red arrows). With price below all three trendlines, they are offering multiple forms of resistance (see pink arrow).