What Time is It?

Hi, I’m pebblewriter and I’m a chart geek.  With that confession out of the way, I have to apologize.  While some of my fellow chart geeks would love nothing more than twenty pages on the correlation between stocks and the core temperatures of migratory nematodes, others just want to know where the market’s heading today.

In broker school in the last century, they cautioned us that when someone asks what time it is, they’re probably not asking how a watch works.  I will attempt to be more mindful of both audiences going forward and stifle my Faulknerian tendencies.

I went long at yesterday’s bounce off the dashed, red channel line yesterday (1331ish), but with the understanding that a break of the trend line will likely send SPX down to test the big purple rising channel line — currently around 1316.  I raised my stops a bit from 1324 to 1329.

I’m cautious about laying out these “rules” as gospel.  They’re not.  Quite often, when my evil plans aren’t coming together, I’ll search around for some corroborating evidence (well, first I’ll reach for some Oreos, depending on how badly I blew it.)  Bottom line, I sometimes change my mind  and give the markets a little more breathing room than I originally planned.

Stops are a wonderful thing, but they’re often just a (necessary) substitute for common sense and clarity of thinking.  Market makers are very prone to pushing markets around just enough to screw all the investors with stops (in all the logical places) before allowing a more sensible move to develop.

So, if you want to have some context to what’s going on, read more than just the headlines — mine or anyone else’s.  Sometimes it helps to know how the watch works.  We’ll both sleep better.

There are no shortage of reasons for the market to crash here and now, plunging to below zero and not surfacing again until it pops out in Tian’anmen.  But, I see more and more groundwork being laid for QE.  Witness this story in last night’s NY Times.

I think we’re fast approaching the “pull out all the stops” stage of the market where careers are at stake in New York, London, Tokyo, Hong Kong, Singapore, Shanghai, Paris, Frankfurt, Sydney and Amsterdam — not to mention DC and a few other key capitols.

more in a few…

UPDATE:  2:00 PM

We’re getting a decent bounce here.  The key, as always, is where we close.

I was asked below about AAPL.  The short answer is yes, I watch it just about every day.  No other volatile stock has as much sway in the markets. If the market is able to rally on a day when AAPL is tanking, for instance, it says a lot about the market’s inner strength.

Here’s the heat map TOS produced for NDX at 10am this morning:

I had a feeling we were in for something big last week when AAPL failed to extend the rising wedge (accented in yellow) and break through the latest white channel line off the April highs.And, rarely has AAPL’s RSI chart been clearer.  Note the dashed red line running across the top of the latest peak, and the white channel lines that caught the downside this morning.

More later.


What Time is It? — 8 Comments

  1. Hey PW, quick question on how you drew the rising wedge.  I re-created your chart, and when I make a parallel line to your right-side yellow line, I can form a channel connecting the all time high to the 7/26/11 high, and the 3/10/09 low.  If it were my chart, I probably would have gone with that channel, and that would have put Apple near the bottom of the channel before they reported, which would have resulted in a different read than a predicted breakdown.  

    So my question is, how’d you decide on making it a wedge instead of a channel, especially since the 2 drawings have opposite forecasts. 

    Thanks man.  

  2. hey Michael, i know the pattern we were following broke a few days ago – does that include the time frame pattern? i am curious, is 7/31 still in play for seeing the 1389-1404 range?  (and then the potential drop from there)  from an intuitive sense that feels like a good possibility if Euro rumors rally the market, take down the $, Aug 1 Ben does not make an explicit printing, and then it all fizzles abroad and we are left with a spike in vol, $, and tanking of S&P.  thoughts?  

    • Hey Brett,  those are exactly the questions I’m working on right now.  The timing was a lot easier from 1380 than it is now from 1350.  The last two cross channel journeys gained 64 points in 5 days and 46 points in 5 days.  So, it’s certainly doable.   The bigger question for me is “what happens after that?”  Look for a post in an hour or so.

  3. wouldn’t it be they are pushing the market on the brink just to get what they want ? some nice QE next week and a nice rally to 1460 before it goes all kaput. I was not expecting QE now, but I am starting to wonder…it might be almost the time to jump in with both feet. red or black, place your bets.  Anyone here who has Bernanke as an uncle 🙂

  4. Hello PW, I don’t remember if I have a seen an Apple chart from you.  (You might have one).   Somehow, Apple has a huge influence in SPX and Nasdaq, except Dow  (or someone says Apple IS the market)

    That’s why sometimes Dow is red, while SPX and Nasdaq are green.   Or the other around. Dow is green, whille SPX and Nasdaq are red.

    When you look at SPX, do you take Apple as part of consideration?