Before the Open (Dec 14)

Posted on by Jason Leavitt

Good morning. Happy Wednesday.
The Asian/Pacific markets closed mostly down, but there were no 1% losers. Europe is currently mostly down. Belgium, France and Germany are down more than 1%. Futures here in the States point towards a flat open for the cash market.

The dollar is up. Oil and copper are down. Gold and silver are down too.
A big issue for the market is the dollar. For many months the market and dollar have moved opposite each other, and right now the dollar is moving up with force. It doesn’t matter if the dollar is only moving up because the euro is moving down or if it actually deserves to be moving up. The fact is it’s moving up, so commodities are getting hit hard and the market is struggling. Here’s the daily chart.

Also hovering over the market is the situation in Europe. Wall St. wants a solution all at once; it wants closure. Europe doesn’t operate like that; things in Europe take longer, so we’re gonna have to continue in an environment where news lingers.
Don’t over trade. Don’t chop your account. We’re not getting many good pitches to swing at, so it’d be wise to stand here with the bat on our shoulders. More after the open.
headlines at Yahoo Finance
headlines at MarketWatch
today’s upgrades/downgrades
this week’s Earnings
this week’s Economic Numbers

0 thoughts on “Before the Open (Dec 14)”

  1. Since the Fibo areas have been acting well of late as both support & resistance, I’m going to remain focused on SPX 1213 (.500) & 1200 (.618) today. Also, the weekly chart shows the Bollinger Band midpoint at 1200. It appears we’ll see 1213 tested early and then perhaps 1200 at some point today or before the week is over, as a guess.
    If the Euro is a leading indicator, 1200 may not survive. But I’m beginning to think that maybe U.S. markets will not follow the Euro in lockstep as has been the case for months now. I’m looking for bullish divergences to become more evident in the SPX hourly momentum indicators as a sign of at least a temporary bottom. However, the daily MACD and Stoch look bearish. Jason, as usual, offers sound advice. Long or short, a tight stop loss, and proper size trades are the way to trade, IMO.

  3. By the way (if anyone cares), I’ve re-examined the EW hourly chart from the SPX 1158 low. It’s better, IMO, to label the end of minor wave 1 (or minor wave “a”) 1266 on DEC 5th, followed by a smaller “abc” down to DEC 9th low, followed by an “x” wave ending on the DEC 12th high, and followed by smaller wave “a” ending on the DEC 12th low with smaller wave “b” ending at yesterday’s high. Smaller wave “c” is now in progress made up of a 5 wave decline anticipated to end in the Fibo retrace area of 1200-1213. This would ideally complete a “double zig-zag” (abc x abc) pattern for minor wave 2 (or minor wave “b”).
    A drop to 1200 or lower, would lead me to favor labeling the correction since 1266 as a “b” wave (not wave 2). The rally, if it happens, would be a wave “c” targeting 1300-1330 and would most likely occur in 5 waves. We’ll see.

    1. I don’t get the labeling. I wish you’d differentiate between UP and Down. When you say, “Wave 1” I don’t know if you mean Wave1 up or Wave1 down. It’s a foreign language to me. Speaking of Foreign, the EUR/USD looks to be bottoming. Also, Jason, if you don’t know why the EUR/USD and SPX are in lockstep then when will you be sure they aren’t? It’d be nice to know the drivers.

      1. RichE – if you take SPX 1158 low, you can count 5 waves UP (I’ll spare the details) to 1266 for a completed minor wave 1 (or you could label it minor wave “a” as an alternative). From 1266, I count an 3 wave (abc) DOWN into 1232ish (actually on DEC 8th), followed by an UP move to 1258ish (wave “x” on DEC 9th – not DEC 12th) and then small wave “a” on DEC 12th DOWN to 1227ish, small wave “b” UP to yesterday’s high of 1250ish. Since yesterday’s high, I’m counting the DOWN move in progress as a 3 wave decline so far of what I believe will be 5 waves DOWN to complete small wave “c” of the 2nd “abc” decline. That would complete the “double zig-zag”, i.e. “abc x abc” for either the minor wave 2 (or minor wave b). Please remember, that I’m counting SPX CASH – not the futures contract.

  4. i allways like ur labels ,Pete
    even though i dont allways see them ur way
    in good times going into end dec would be bullish
    but after opts ex and book closure will the instos want to hold on into jan
    santa has been swampt with calls for hidiouse bear suits from the instos for their xmas party—no calls for dow 13000 shirts

  5. To follow up and complete my last post on EW analysis. If we are in a 5 wave downside sequence to complete smaller wave “c” (and end the corrective “double zig-zag” pattern), today’s low could be the end of wave 3 (on the hourly chart)and we would now bounce into a sideways congestion (wave 4) prior to a final wave 5 decline to a new low testing 1200+/- that would complete the corrective pattern.
    I’d be tempted to short a wave 4 rally to the 1220-1225 area on a downside reversal from that level, looking for a new low on down to 1200+/-.

  6. ndx today appears the weakest to short
    longer term i see a lot of rounding tops and some h/s
    even some that could be considered reverse h/s-s
    so i will stay short term whilst waiting for longer term confirmations

  11. I’ll be interested to see if the noon hour can spark a rally for my anticipated small wave 4 of what so far appears to be an ongoing wave 3 decline from yesterday’s PM.

    1. Got it thanks, but… here you mention ‘wave 4’. Is that up or down? Are all wave 4’s down?
      I would like all EW’ests to standardized their labeling. Is wave 1 up or down, of a major trend or correction or ABC? As I see it there are three wave categories; major, intermediate, and ABC. Major being multiyear/month/week and market sentiment is known. Intermediate being multimonth/week/day these are the Wave 1, 2,3, etc. ABC’s are testing the value, correcting the value, or Jim Cramer is jacking with the system.

      1. RichE – it’s very difficult to answer your questions in this space. I would suggest you google a site that discusses EW in basic introductory form and you’ll be better able to follow what I’m saying.

      2. Wave 4 would go up to sideways from wave 3 (today’s low at 1210ish). So I’m looking for wave 4 to terminate in 1216-1220 area, which is where we’re at now.

  13. Pete, Rich, and anyone else posting on this blog. I know that some of you are very smart and excellent traders. However, in your posts, you do not specify in what chart time frame you are looking at charts.
    I day trade 2-4 minute charts on the ES mini futures. Day traders trade various types of charts including Volume charts.
    Pete, you wrote:
    “Since the Fibo areas have been acting well of late as both support & resistance, I’m going to remain focused on SPX 1213 (.500) & 1200 (.618) today. Also, the weekly chart shows the Bollinger Band midpoint at 1200. It appears we’ll see 1213 tested early and then perhaps 1200 at some point today or before the week is over, as a guess.”
    Although you specify the weekly chart in part of this post, I have NO idea if your Fib areas are for a daily, weekly, minute or whatever chart.
    So, if you could PLEASE specify what chart time frame you are looking at.
    Thank you,
    Kezha

  14. The rally from intraday low of 1210ish is corrective so far, IMO and would fall in the wave 4 category I’m looking for into resistance at 1216-1220 or perhaps 1225. i’m looking for signs of momentum loss and a reversal pattern to get short.

        1. Yippy! More standards. 1d1m is a 1 day 1 minute; 60d60m is 60 days 60 minutes. I generally use that notation if posting something that is specific to a time frame.

  16. there are many reasons for a currency correlation
    the biggest financial hub in the galacy is london–its also the go between for the arab world—ie oil can harry and commodities
    and bonds and deals in euros–the euro is inverse to the usd–most commodities are payed in usd–thus central banks currency swaps to pay in usds
    then there is the yeild factor—–money follows yeild and the ecb just cut interest rates to 1%—soon the euro may qualify as a carry trade currency and take over from usd and jpy
    the weakness in euro is really the cut in rates which came almost after the bankrupt europe banks had repatreate money from overseas ,but still have to sell many more assets—THEY ARE INSOLVENT—-more hidden debts than assets
    maybe this doesnt explain it to well but its all im going to write
    im still waiting for some more bulls to reload short

  17. I don’t want to get too fine here, but if you have a 1 minute chart, we may be seeing a head & shoulder top forming (at least on the 1 minute chart I’m looking at). If we break down, it would become the reversal pattern I’m looking for and give me a place to reference as an exit point if I’m wrong on my 1218 short position.

  19. On a 4 minute chart, that is a pretty strong trend line starting at 11:04 CST and confirmed at noon CST. Until that breaks, I am not looking at any short here.

  21. I’m seeing what I think are clear downside patterns, but I’m covering 1 short position if we get into 1213-1215 and I ‘ll hold the remaining short position.

  24. The smaller wave 4 I’ve discussed may have ended at 1220ish or cold still be evolving into a somewhat larger intraday sideways pattern (a triangle?). If a bounce fails at 1215ish again, however, I’ll add a second short position again.

  25. EUR/USD 60d60m: It’s going down. If the SPX is still connected then no Santa Rally! Unless it’s the Santa from Futurama. I see a blood bath coming. They want free market principles to solve the problem. Good old supply and demand. Ok, so what’s the demand for insolvency?
    BTW: I’m short ESH2 at 1207 and it looks like it’ll be good for a long time. GF here. Going Christmas shopping.
    “He knows when you are sleeping
    He knows when you’re on the can
    If he sees you he’ll blast your ass from here to Pakistan!
    Oh, you better not breathe
    You better not move
    You’re better off dead I’m telling you dude
    Santa Claus is gunning you down!”

  27. With 3PM approaching I not inclined to add short positions so I’ll look for a place to cover my remaining short position unless downside momentum picks up again.

  28. I’ve covered my remaining short position at SPX 1212. At this point my thought is that small wave 4 (of my expected 5 waves DOWN from yesterday’s 1250ish)may still be in progress since just before noon today. If we should see a rally get above 1220 before we reach much lower than 1210, then today’s afternoon selloff could have been wave 5 DOWN completing the pattern. I just don’t think that’s likely, however.

    2. Aussie Jay – perhaps I do post too much and your comment may echo what others are thinking.
      My only purpose is to share my trading style with the thought that it may prove helpful to others. During my trading experience, others took the time to share their thoughts with me in some detail which proved very helpful. Anyone can post on a site that they went long or short, but what help is it if they don’t give the thought process behind their position? Anyway, I’ll take your comment as a “constructive” criticism and refrain from posting so much in the future.

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