S&P 2014-03-27

BarroMetrics Views: S&P 2014-03-27

We are starting to see signs of a decoupling of the belief in the FED and US Stock Market health. Admittedly preliminary signs but they are worth noting.

Figure 1 shows 3 events.

  1. Number 1 was a retest of the breakout on good volume and range. The down move was not in a response to any external news. In this run up, we have tended to see down moves on stirred by some ‘bad’ news.
  2. Number 2 were two consecutive days of one-time frame markets. Steidlmayer used to say that ‘trend days (one-time frame) are not good continuation days unless they are the start of a move’.
  3. Number 3 was another  trend day down after an anemic rally (inside day) on March 25.

So, we are seeing weakness, despite Yellen comments of support and reassurances, without any news catalyst. Perhaps US Stocks are returning to the ‘old normal’? As I said early days yet, but I am seeing some warning signs of risk returning to the S&P.

In the meantime, the key will be the support level at 1841.00. A bearish conviction close below it will suggest a test of 1745 to 1741. A successful test should result in a new high.

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FIGURE 1 S&P Cash

5 thoughts on “S&P 2014-03-27”

  1. Dear Ray,
    could not quite understand two consecutive days of one time frame market…. Pls elaborate..

    Regards,
    Manish

  2. Hi Manish

    In traditional Market Profile, there are two types of directional days, slow trend day and double distribution trend day.

    Trend days (directional days) tend to exhaust the controlling party (buyer or seller). As a result, there is generally, at least, a pause day before the move continues.

    Where there are two or more consecutive trend days, it signals that the controlling party is particularly strong – this usually happens at the start of a trending move.

    For an intro into Steidlmayer types of days see: http://tuckerreport.com/articles/market-profile-a-primer/

  3. Thanks for the explanation. I am not familiar with market profile concepts. I will read up whatever i can find.

    Regards,
    Manish

  4. Hi Ray

    We have had 2 consecutive trend days down since point 3 on your chart, and yesterday’s big trend day which, unless we get another equally huge bullish day up tonight, will result in a pretty bearish setup in the weekly chart. Would you consider this to be a “expanding terminal” pattern in the 18D, which forecasts a change in trend for the, *gasp*, 13W TREND? Which could potentially lead to a line turn in the 12M to retest the breakout point at 1576?

  5. Hi Joshua

    Apologies for tardy reply.

    I don’t like the Expanding Terminal on the 18-d; wave 1 is a trifle small relative to the other waves.

    My preferred scenario is in this week’s newsletter.

    The end result of the two scenarios are the same.

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