In the 60 min. chart for SPY we see a new and logical target for the current down-leg. Also, for the first time in months equities are putting in a new lower high in support of new lower highs in the momentum indicators. In every previous instance on this chart (certainly of 'this' degree) where the momentum indicators had put in a new lower high, they were accompanied by a new higher high in equities. In other words, in previous cases equities had just chugged ever higher in defiance of the slowing momentum and negative divergences. That is no longer the case!
|SPY - 60 minute - Click here for a live and updating version. [EDIT: a lot of time has passed since this chart was first presented. Here's how it looks as of Sept. 17th, 2012.]|
The production of negative divergences in a powerful up-leg is typical of course. BUT when the momentum indicators and price both put in a lower high at the same time... the entire dynamic has changed. The market is headed lower. The target identified by Chairman also lines up pretty well with some of the wave counts out there. Mind you, there's nothing saying that the gap at SPY 133 has to arrest the decline... and perhaps it won't since at that level it won't have even retraced the leg up from the November lows by as much as 38.2% (a most common fib level). For all we know we're about to see the market get going in a serious wave 3 downward. That's not a prediction because I just don't know what will happen once price gets down into that gap area. All we know is that all indications are suggesting that equities are heading lower and that the gap at SPY 133 is most likely a minimum target.
Here's one other chart of SPY that I had posted exactly one month ago in the I Dreamed About A Little Bear post. It was regarding the air pockets beneath the market and they too will almost assuredly come into play in the coming weeks as well:
|SPY - Daily - Click here for a live and updating version.|
Here's a great chart (below) and a great accompanying article courtesy of Chris Ebert of Zentrader.ca. I'm happy to report that I know one of the principles of Zentrader, Jeff Pierce, from my more active days on Seeking Alpha. We never did have a 'great deal' of interaction but he's a great guy and a 'team player' type of contributor. I particularly like the types of things Jeff looks at and the angles of attack he uses in the analysis game. They're very refreshing compared to the 'standard' that most of us seem to be locked into. This is a very interesting study, one which I admit I am not familiar with. Great information contained in Chris' article entitled The Death Of the Bull Is Near.
|Long Call/Married Put Index (LCMPI)- Courtesy of Christopher Ebert at Zentrader.ca. That site is located in the blog roll over there on the right side bar. Be sure to watch for updates as that site is pretty active.|
Let's not forget the weekly chart (below) from the piece called "Exponential Decay". Click the links below it to see a handful of foreign markets as they line up with the S&P. So far, the analysis about the exponential decay is not at all out of line. That could change with a rally of course, but so far so good...
|In this chart, we 'respect' the July 1 lows that occurred in 2009 and 2010. If that occurs again in 2012, the S&P would be on the white 'clone' line at 1140. Click here for a live and updating chart showing some foreign markets. And here to see those foreign markets in candlestick form instead.|
One last note.... Chairman, congratulations on your new baby girl. She's a knock-out beauty that one!