Rebel Traders – Analysis Without The Hype

The action in the market today was driven mostly by the technical’s. That is, the end of day reversal was upon the channel support discussed over the past two days in the market videos.

On the hourly chart of the S&P 500 E-Mini’s we discussed the channel (green lines), and today that channel offered support towards the end of the day. Today’s rally into the close appears to be simply a technical bounce and nothing more.

I will cover this in much greater detail in the weekend video.

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Think back to January 9th when I provided three mystery charts. I asked the question ‘would you buy or sell these’. As you later learned in my market video, I had actually played a reverse psychology trick. The purpose of the mystery charts was to have you analyze them solely on a “technical” basis, void of all emotion.

And to make it much more interesting I inverted the charts. So if you were bullish on the mystery chart, then using an emotionless technical analysis you would be bearish on the same chart when flipped right side up.

Google was one of the mystery charts I showed back on January 9th. This is the chart I showed then:

Now if we use simple trend line analysis on that mystery chart it becomes a ‘technical buy’ as it was moving above a long down trend line.

So what I did was give you a mystery chart, that was inverted to further remove an emotional connection, and have you tell me would you buy or sell simply on a chart analysis basis.

Most of you responded that you would be a buyer of this chart. Now, simple logic here, if you would be a buyer with it was shown like it appears above, then you would have to be a seller when it is shown in its original from, shown below:

Again, the entire concept of the mystery chart quiz was to have you evaluate a stock chart solely on its pattern, not on your emotional connection with the company.

If I had simply put up a stock chart of Google and asked would you buy or sell then many individuals would base their decision, not on what the chart was saying, but instead on their view that Google could only go up and nothing bad could happen to them.

Tonight Google reported earnings, while the earnings were fair, it was simply not enough to justify the price and Google (GOOG) sold off in the after hours following their earnings statement.

If you were holding Google on the long side, and kept holding on in spite of what the chart was telling you only because you ‘believed in the company’, then you became another holder who is now trying to decide ‘now what do I do’?

Google chart as it stands tonight:

And in the after hours tonight:

Google is now nearly $51 dollars lower than where it was on the mystery chart where you would have sold it if you followed the chart, and left the emotions checked at the door.

Remember, sell on strength. Not when it becomes a ‘now what do I do’ situation.

NASDAQ 100 Index ($NDX)

As you are aware I have been watching very closely the Nasdaq 100 ($NDX) index. Today we have some significant skid marks on the charts as the index went off the track.

RUSSELL 2000 Index

I will have much more analysis of the charts in tonight’s market update video.

The charts I show below have been stripped of all identifiable information and made as generic as possible. Not knowing what the stock is, what the price is, or any other information other than a simple chart what would be your buy or sell inclination for each of the three charts shown?

By removing all identifiable information we are removing all bias. Without knowing the stock symbol you won’t be able to base your buy or sell based on a likeness or hatred to a particular company. It is just simple chart analysis in its most basic form.

If you figure out the stock symbol of any of the charts shown below please don’t let the cat out of the bag in your comments. I want to keep these charts anonymous until I reveal on Sunday what stocks they are.

The only information I can give is that each chart is a daily scale and the span is at least one year.

CHART 3

CHART 6

CHART 4

Tonight I discuss the 5 week trading range and what the other indicators are telling us. This video is a lesson in some common technical indicators, patterns, and divergences.

The coming week will be filled with adventure! FOMC on Wednesday and Op Ex on Friday. Not only that we are getting ever more close to the end of year and some large money managers are already communicating that they will “close shop”. A term used to indicated they will take their chips off the table and lock in the positions before the year ends.

This chart is the S&P 500 from the beginning of the secular bull market in 1982 up to the peak in 2007.

Observe how the S&P 500 is currently right at the 61% Fibonacci level at this time.

Veeeeery Interesting…

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S&P 500 Fibonacci Analysis From 1982 To 2007

Russell 2000 daily chart (RUT)

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Russell 2000 RUT Chart

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TLT Daily Chart

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TLT Daily Chart

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As discussed in last nights video update:

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Daily Chart:

SPX Daily Chart

Hourly Chart:

SPX Hourly Chart

Current analysis of the S&P 500 (cash) index.

At this moment the market is being held back by the down sloping trend line (1). That resistance level today is at 923.

Next resistance levels of particular importance are the mid peak (from July 1, shown with red horizontal dotted line). That level is 930. And the next is the long channel (blue lines) which today that resistance level is 939-940.

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SPX Chart

S&P 500 E-Mini Futures charts for Monday…

Tonight’s video wrap up can be view HERE

Note: I just had to have a little fun with the opening audio on the video this evening.