A trading range between 2100 and 2040 has developed. The money flows generated by the ECB’s QE seems to be finding its way into the US markets.

The US Dollar has rallied out of a previous short position.
Bonds are trending down in price (up in yield).
Crude is in a long trade.
The metals: Copper is selling off, but the Gold is in an uptrend.

S&P 500_ futures.

Monthly – 2189 is the next target up. Trade pressures remain up. Volume is bullish.

Weekly – The next target up is 2254. A confirmation of a short needs a weekly close below 2040. Trade pressures are up. Volume has changed to neutral from bearish.

Daily –  the long cycle trade is still short from 2062 with a target of 1985.
Trade pressures are up. Volume is bullish. Stops on the longer cycle trade are at the 2110 pivot highs.

A short cycle trade is long from 2087 with a 2104 target, which is the top of the trading range mentioned above. 

Earnings season has begun. The market will react to the specific company reports. GE was up 11% on friday but the market averages didn’t respond to this Blue chip move.  Be alert around this 2100 area.

 

Of the three major economic regions, the US, the Eurozone, and China (Asia); China and the Eurozone have had nice market moves over these last two weeks.  The dollar had risen which gave those export economies a perceived pricing advantage. Declining oil prices gave all energy users a cost benefit.

The rising dollar was the result of currency flows to the US, probably a result of the ECB decision to engage in a form of QE.  The Euro currency declined in value making the European equity market attractive. (see the FEZ) which caused some of the funds to flow back to the Euro.

S&P 500_

Monthly – Trade pressures are up. Volume is bullish. The next target up is 2189.

Weekly – Trade Pressures are up. Volume is bearish. Upside targets are 2255. A short would be confirmed with a weekly close below 2040.

Daily – The trade is short from 2062. The next target down is 1986. The action is sideways with no momentum. Trade pressures are up. Volume is bullish. So tight stops are in order.

Stops are at the old 2110 highs.

Energy sector is a big percentage of the index. Buyers seem to be taking new positions, perhaps some bottom fishing?

Monthly  – Trade pressures remain up. Volume has returned to bullish from bearish. The next target up is 2189.

Weekly – have tested the 2040 short entry for five weeks but no close below yet. Trade pressures are up. Volume has changed to neutral from bullish. The next target up is 2254.

Daily – 2062 is one cycle’s short entry and 2067 is a shorter cycle long entry. These offsetting cycles can describe a new pivot point for the market. The market moves sideways until a new direction gets resolved. Trade pressures are neutral but about to go positive. Volume is bearish.

A breakdown of the 2030 lows would signal lower. Time cycles are completing in the third week of April. After that expect upward time pressures.

The Dollar moves dominate the trades. As the European ECB buys sovereign bonds, that new cash moves to safety. That “safety” is the dollar and dollar denominated assets which are reflective of the US economic improvements relative to the other global economies.  It is important to understand that these QE purchases don’t add new money to the economy, not here in the US and not in the Eurozone. They simply purchase otherwise ill-liquid government assets for cash (reserves), in a “swap”.  The net result is to manage interest rates.  But this new cash will seek safety; perhaps the “safety” described above.

Copper and gold are trending up which may mean a repostioning of money to prepare for economic resurgence. Treasury Bonds are up reflecting the delay in the FED raising rates. The Dollar is down and the Euro is up for both reasons.

S&P 500_

Monthly – adjusted upside target is now 2189. Trade pressures are up. Volume is bullish.

Weekly – Upside target is 2254. The 2040 short entry was tested but not triggered. 2040 remains as a confirmation of the daily move down. Trade pressures are up. Volume has turned back to bullish from bearish.

Daily – The trade thru 2067 triggered the long entry for the resumption of the January cycle long trade.  The next target is 2137.  Trade pressures are up. Volume is bullish.

A close below the 2060 short entry would signal lower again.

S&P 500_  Switching to the June contract. Levels will be adjusted.

The prior weeks short entry prices on the Daily levels has been confirmed by the Weekly short entry trigger.

Monthly – Trade pressures remain up. Volume is bullish but declining. the next target up remains 2191.

Weekly – Trade pressures are up. Volume turned bearish this last week. The weekly short entry of 2048 was triggered. the next target down is 1935.

Daily – Two cycles at work. The short entry at the 2080 entry has traded down to the first target of 2037. The next target down is 1991.
The slightly longer cycle short entry of 2060 was triggered during this last week and has a next target down of 1961, which also coincides with the 200 day moving average.

Need a close above 2067 to signal a new move up.

Appears to be a choppy market while waiting for the FED announcements mid week.

US stocks have had a nice multi-year run. The FED’s QE efforts have held interest rates down for an extended period. These lower interest rates have contributed to the rise in US equity prices.  The European Central Bank, The ECB, is now implementing their version of QE which has caused the euro currency  to drop and will in time make the European companies more competitive as they restructure their balance sheets with cheaper debt. So, the international money flows will quite naturally move in that direction.

We had produced the short entry levels that would be likely to signal a new move down in the S&P 500 index. They have been met.

S&P 500_

Monthly – Still in an uptrend. Trade pressures are up. Volume is bullish. Next target up is 2191.

Weekly – Also remaining in an uptrend, but the volume has turned neural and showing some distribution. A close below 2048 would signal a new move down.

Daily – Trade pressures are down. Volume is bearish. The trade is short from the 2089 entry price. The 2044 target has been met with the March 10th drop in price below the 80 day Moving average and is now acting as support.  The next target down is 1999 and the 200 day moving average at 1989.  This 200 day moving average will be a significant support level.  If it fails, then the October lows are the most likely levels to target on the down side.

However, until price closes below the 1969 pivot low, the market is still in the long trade in the December cycle. Need a close above 2067 to signal a resumption of this long trade.

New highs again!

Money flows came back into the dollar resulting in another rally in the Treasuries and the equity markets.  ( A demand for the monopoly currency increases price. Which may mean the issuer, the US Federal Reserve, needs to increase supply of dollars.)

Copper made a nice move to it’s first target. Crude and Natural gas are still in a long trade, but looking weaker. Both the dollar and the 30 Yr Treasury are in a short trade. However, the dollar is holding up and will need some downside catalyst. The 30 year has completed a retracement down and is searching for the next short cycle trade entry. Gold and silver are in a short trade.

S&P-

Monthly –
Bullish volume came back in, but only half of the prior months bearish volume. Trade pressures remain up. The next target up is 2191.

Weekly –
closed just 4 points below the 2112 target. Trade pressures are up. Volume has dropped significantly and is now neutral. A close below 2045 would signal lower.

Daily –
The October cycle remains in the long trade with a 2144 upside target. March 6th is the end of the time cycle and it’s downward pressures. Volume is bullish. Trade pressures are up, but turning down. Price will cause the MACD to turn down with a close below 2104.

A further close below 2089 will signal a new move lower and could test the 2000 level.

Carter Worth on Friday’s CNBC Option Station suggests the S&P could have a correction to 1820 – some 90 S&P points or down about 10% from current levels.  That percentage seems dramatic but it is not unusual for any given year in the markets. That projected move would take the market down to the 2014 October lows.

So, let’s see what our analysis says. Copper is in a long trade. Gold and Silver are in a short trade. Crude Oil and Nat Gas are each in a long trade. The Dollar (DX) and the 30yr T-Bonds are pulling back from highs.

S&P_

Monthly – Trade pressures are up. The next target up is 2191. Volume is bearish. Need a close below 1889 to start a monthly short cycle.

Weekly – Trade pressures are up. Volume is bullish. The next target up is 2112. Need a close below 2039 to start a new weekly short and, if triggered, that would project a 1814 downside target.

Daily – Trade pressures are up. Volume is bullish. Price has broken up and out of the old 2014 highs. The next target up is 2144.

2080 is the stop and the signal for a possible Daily short. If that short entry materializes, the full move down would take the market to the 1990 level.

So, Mr. Worth is projecting the possible.

New highs this last week. Changes in the Eurozone growth prospects and perhaps a cessation of hostilities in the Ukraine increase economic confidences.

Monthly – 2191 remains the upside target. Trade pressures are up. Monthly net volume was bearish.

Weekly – the weekly short entry was triggered at 2016 two weeks ago, but the trade above the highs will cancel that short trade. The next target up is 2112. Trade pressures are up but not as much as price, so be wary of this move. Volume is bullish.

Daily – in the long trade from the 2036 long entry. The next target up is 2097, then 2144. Some new bullish volume came in last Friday. Trade pressures are up. Volume is bullish.

a close below 2067 would signal lower. Use that level as a stop.

The US dollar is at highs, but pulling back. Crude Oil is coming off the recent lows and in a new long trade. Treasuries are in a short trade. The Euro futures are approaching a buy signal. S&P Futures are in a downtrend on the daily trade.

Monthly S&P – The upside target is 2191. Trade pressures are up. Volume has turned bearish for the first time in more than a year.

Weekly S&P – has met the 2088 weekly target and has turned down. the upside target of 2112 remains. The 2016 short signal was triggered. the next target down is 1904. Trade pressures are up. Volume has turned bullish from the prior week’s bearish.  Very choppy, but trending downward.

Daily S&P  – Feb 17th is the end of this downward time pressures . Trend is down. Trade pressures have turned up. Volume is bullish.

The trade is short from the 2041 entry. Price did move down near the first target of 1964. Price is now in a retracement up from that target and is at the 2066 upside short cycle target.  The 80 day moving average seems to be support for the moment.  But a failure would likely take the market down to the 1944 target and the 200 day MA.