Charts I’m Watching: March 14, 2012

UPDATE:  2:20 PM

If I were Jamie Dimon, I would have pulled the same gag — announcing a stock buyback and dividend increase hours before the Fed was to announce the stress test results.  It gave JPM a shot in the arm, enabling a 7% ramp on the day.

Why was it such a good idea?  JPM was coming up on its .618 fib level, and more importantly was about to run smack dab into an important internal TL and a fan line off the Mar 09 lows that stopped the Oct 2011 rally in its tracks.

After the announcement, JPM cut through those trend lines like “buddah” — cruising up to the .786 where it’s currently taking a breather on its way to the .886 at 46.02. 

Only problem is, he forgot all about the bigger, badder fan line coming down off the Mar 2000 all-time high.  It’s currently lurking just overhead at…umm… a smidge over 46.

This is the puppy that stopped the 2000 run, the 2007 bull run and the 2011 bull run.  It’s possible it’ll be broken, but it’s gonna take more than a slick PR gag.

Stay tuned.


It’s pretty rare that VIX closes below its Bollinger Bands without a strong rebound over the following days.  Combined with the nice bounce we got off that long term trend line yesterday, I think these are very attractive levels at which to buy — whether for long term or just a rebound.

Meanwhile, SPX closed above its Bollinger Band and is closing in on its Crab target of 1401.53. 

Not to beat a dead horse, but the RSI is still back testing a broken major trend line, as well as bumping up against the red TL that shows the negative divergence.  For this back test to complete at the same time as we’re completing a bearish Crab pattern is significant.

RUT RSI has put in a little hook, indicating the back test is likely complete and the next move is down.

My only slight hesitation is that we never quite tagged the 838.15 Bat pattern .886, coming up 5-pts shy at 833.02.  If we got a strong intra-day push to 838 to correspond with SPX hitting 1401, the RSI’s would still have a clean back test on the day and we’d have a cleaner downside picture going forward.

The other possibility, because Friday is OPEX, is that  RUT lingers in this 830-838 range for the next three days, tagging that .886 Fib before starting down.

But, I should stress, harmonic patterns don’t require precise tags on their Point D.  Many, many patterns come up short or overshoot by a few points.  So, those who are bearishly inclined should trade accordingly.

More later.


Charts I’m Watching: March 14, 2012 — 10 Comments

  1. Kinda sad if one of the world's biggest banks being good to their shareholders means screwing over their customers and/or Americans in general.  Sounds like vampire squid envy.

  2. Totally off topic question which has been on my mind for some time. Volume has been light on the stock market. Every day at market close I see one large trade in the 'time and sales' window for various stocks. This trade is anywhere from say 3-16% of the day's TOTAL volume. Often times it is outside the bid/ask spread. That boggles my mind to think that 16% of MMM's daily volume occurs in a single tick…

    On the 13th MMM's total volume was 3,107,100 shares and at 16:01 there was a trade for 504,562 shares. (It was a market hours trade).

    Is that all the 'Market-On-Close' orders all lumped together ? Is that a market maker unloading his day's work ? It drives me crazy to see the battle over a stinking penny right up until close and then see a huge trade come through at close 5 or 7 cents higher than the last trade.


  3. At first it bothered me a little that JPM made their announcement yesterday during market hours. Perhaps in the future the banks could learn their fate at the same time the rest of the world does. That might help prevent some firms from taking advantage of the news.

    I think Jamie Dimon is a great CEO. He certainly seems to have his shareholders in mind. Not necessarily his customers or Americans in general. He might make a very good Treasury Secretary. I read his biography a year or so back – even then he was hinting it was time to leave JPM.

    From whom did the Fed purchase the 1.75 trillion assets (band debt, MBS and Treasury notes) which made up QE1. Was it primarily Fannie and Freddie or was it banks like JPM  ? If so – I think I'd prefer to see them repurchase stuff from the Fed before buying back their own stock and issuing dividends…

  4. That's the way the waves look to me, but…

    #1  I am not an Elliott Wave expert and
    #2  Those who are would tell you that sometimes things are not what they seem.

  5. 1399.42 is absolutely high enough… but it is OPEX.  Don't be surprised if there's one last little bump into Friday.  I'm already short, so it's all good…

    It'll be interesting to see if RUT holds 821 — the last little wave top.  If so, I can easily imagine putting in a higher low and ramping up a few more points to tag the 838-843 area.

  6. dollar is up and VIX is also waking up. Though we didn't tag 1401, but 1399.42 should be good enough for a REAL reversal, right? RUT does look esp weak today though