S&P 500 Intraday Bias, 10:00 AM

Negative, suggesting sell the rallies intraday.

S&P 500 Intraday Bias, 1:00 PM

The bias has weakened to neutral.

S&P 500 Intraday Bias, 10:00 AM

Positive, suggesting buy the dips intraday.

Interestingly, prices are trading more frequently in the 1150-1190 range, as predicted by market profile here.

S&P 500 Intraday Bias, 10:12 AM

No clear signal today.

S&P 500 Intraday Bias, 10:05 AM

Positive, suggesting buy the dips intraday.

Have bond prices peaked?

If so, just as in last summer, they peaked on the expected Fed news of treasury purchasing programs.

S&P 500 Intraday Bias, 10:00 AM

Negative, suggesting sell the rallies intraday.

Market Profile Says: Expect More Trading Between 1150-1190

Today, I asked myself, "Will the market spend more time trading between 1100 and 1230, or is it about to break out?" A technical method that aids in answering this question is a "Market Profile" chart. (One day, this method will probably be as run-of-the-mill as others.) In such charts, the y-axis is price and the x-axis is the frequency of how many times the market traded at that price for a given time interval, just as a bar chart can be from 1-min to quarterly, over a given period.

According to market profile, when prices are range bound, they usually spend the most time, i.e. have the highest frequency, around the center of the range, forming a sideways bell curve. It is not until this bell curve is complete that prices begin to break out to a new trading range. These charts are also fractal in nature, with smaller bell curves making up a portion of a greater curve.

I constructed a market profile chart of the last couple of months based on the range of prices for 30 minute time intervals. (There are software vendors for market profile, but I created this study on excel.) During this time period, prices have swayed between 1100 and 1230 several times. As you can see in the chart below, two minor bell curves have formed that are part of larger distribution in which the center area, which should have the highest frequency, has yet to fill. The conclusion from this chart is, more trading should occur between 1150-1190, the unfilled center of the distribution.

Now, a conclusion from one technical study is far, far from definitive. The reason I post this is to offer a perspective not as easily encounterable elsewhere on this financial blogosphere, especially now when a break below 1100 seems imminent.

S&P 500 Intraday Bias, 12:09 PM

The bias has strengthened to positive, suggesting buy the dips.

Bias explained.

S&P 500 Intraday Bias, 9:45 AM

Neutral, suggesting buying and selling pressure are about equal.

S&P 500 Intraday Bias, 10:03 AM

Negative, suggesting sell the rallies intraday.

(It is possible for the bias to be positive in a day like today.)

The Fat Lady

The chart posted is of the semiconductor index. It is inches from a textbook support area, that is, the previous highs that prices broke above. I believe whether it breaks or not will be serve as confirmation of what's to come.

S&P 500 Intraday Bias, 10:02 AM

Negative, suggesting sell the rallies intraday.

S&P 500 Intraday Bias, 10:00 AM

Negative, suggesting sell the rallies intraday.

S&P 500 Intraday Bias, 10:00 AM

Negative, suggesting the market will remain weak.

Master Key, Chapters I - IV

The principles thus far covered in the book are: states of being and circumstances, in some cases, come from within; the subconscious is a creative, powerful force that the conscious can control by directing it towards specific goals or desires; by that means, and by cultivating one's "within" anything can be attained as if by a birthright, a boundless power all people possess; discordant emotions, fear, anger, sadness, worry, should and can be eliminated from the self; there is a true self that can be what you will be.

The exercises have built upon each other, week by week; sit still, inhibit all thoughts, let go physically (relax), let go emotionally.

One unique, valuable thing about this book is that it focuses on being able to apply the principles it teaches.

Through the readings and exercises, I have definitely come to be more empowered. I have benefited most in applying the principle of directing the subconscious towards specific goals. In my case, conceiving creation solutions to issues. A small group has formed, for which I am grateful, and in which we share our experiences with a chapter and its exercise on a weekly basis.

S&P 500 Intraday Bias, 2:20 PM

The bias has weakened to neutral.

S&P Intraday Bias, 10:00 AM

(Very) positive, suggesting buy the dips intraday, and a strong trading session.

S&P Intraday Bias, 10:00 AM

Positive, suggesting buy the dips intraday.

S&P 500 Intraday Bias, 9:40 AM

Positive, suggesting buy the dips intraday.

S&P 500 Intraday Bias, 9:55 AM

Positive, in this context, suggesting the market will be strong today.

Semi Bullish

The semiconductor index was in positive territory the entire trading day, and closed up over 3%. The horizontal line in the chart is a bullish breakout level.


This chart is the ratio of the semiconductor index to consumer staples, a contrast of a hyper-sensitive, cyclical industry, with a defensive sector. A break above the trendline, and a first higher-low, higher-high in a long time may occur soon.


Above are the relative strength lines of consumer discretionary, technology, and transports, respectively, against the S&P 500. According to John Murphy's work on sector rotation, in that order, those sectors show relative strength as the economy moves from a late contraction to early expansion phase. The charts are following that script, suggesting we will see an uptick in the economy.

I am inclined to conclude that the next significant development is for the S&P 500 to reach its 200 day moving average, currently at 1283. Treasuries and Gold should correct.

S&P 500 Intraday Bias, 9:54 AM

Positive, suggesting buy the dips intraday.

Elliott Wave for Thought

Above are three identical charts, each showing a different Elliot Wave interpretation, "count."

The first count is impossible because, according to the rigid rules of Elliott Wave, wave-4 cannot overlap wave-1. The count is deceptive because for anyone bullish, the corrective waves 2 and 4 are pretty similar in nature.

Given that the first chart can be ruled out, we are left with two possibilities. The most likely is chart two, in which the bull market from 2009 to 2011 was a counter trend, a-b-c, that is part of a larger bear market than began in 2007.

The only valid count that is bullish is the third chart, in which this current correction, not being a wave-4, can overlap wave-1. This is possible by classifying this correction as sub-wave-ii of wave-3 (of a five wave advance.)

I don't necessarily believe in Elliott Wave, but this post is my best assessment--which I am very confidence is accurate--of the market according to the theory's principles.

S&P 500 Intraday Bias, 10:00 AM

Neutral, suggesting, in this context, that selling will be contained by the morning's low.

S&P 500 Intraday Bias, 10:05 AM

Negative, suggesting sell the rallies intraday.

S&P 500 Intraday Bias, 10:00 AM

Positive, suggesting buy the dips intraday.

Is ES 1175 a buy?

Things happen so quickly in this market. The drop from 1230 to 1175 over a two day span is a drop equivalent to the previous drop from 1190 to 1135. Moreover, 1175, hit today, fills a gap exactly. I have neither the courage, nor the preparation to buy, but I feel that this is worth pointing out. If a base forms around 1175 (on ES), that would build courage.

S&P 500 Intraday Bias, 10:00 AM

Negative, suggesting weakness will continue for the remainder of the trading session.

Update

Added: prices shot upward with the positive surprise from 10 AM's economic news. If the market gives up these gains today, I will presume that a new swing downward is beginning. If strength continues, I reaffirm my 1250-1260 target.

S&P 500 Intraday Bias, 10:00 AM

Negative, suggesting weakness will continue for the remainder of the day. I disagree, and believe today will close up.