Ian Woodward's Investing Blog

The Stock Market is gradually coming to a Tipping Point, either up or down.  Like Old Soldiers that never die but gently fade away, it is taking its own sweet time to cave in, and the count is Strike 2 and Ball 3!

We will surely know which way this Market will go before the week is out, but I said that last week.  We can point to Head and Shoulders in the making, but then again, it only needs another couple of days push to the upside like today and we we would be pushing through a double top, so it’s all a Hair Raising Experience:

1184 is once again intact on the S&P 500, and there is breathing room for the Bulls to hold the line:

The VIX swung into high gear last Tuesday on 4/27/2010 with a >5 point jump in one day, leave alone two which is the normal yardstick one sees when things are beginning to turn, so the Fear Factor cannot be discounted.

Yet, some Leaders are still showing resilience as exemplified by AAPL, which has regained the higher ground.  It now needs to breakout to be convincing in its Leadership to propel the rest of the JIRM leaders to New Highs:

Keep your Powder Dry.

Ian.

Don’t want to be that alarming, but we can be in for a Minor Correction next week to start with.

It’s in the Balance as the Bears have already had two shots across the bow, and yesterday was the first leg of the third shot.  Each time so far they have been thwarted , so we shall see if they break the Rally to the downside on Monday.

The next two charts point to the Leaders…when push comes to shove, always focus on the Leaders, and the most recognized of these is AAPL, so keep an eye on that one.  It had great Earnings and produced a substantial burst to the upside.  The question is whether it can hold at support or show signs of a correction to 8% and then 10% down as shown.  Alternatively, if it holds, it will be a good sign for Up, Up and Away.

And then there is the JIRM Index which I have been featuring of late…it showed strong signs of being tired on Friday, and ominously like testing the 50-day Moving Average:

The Rot has set in with the third Phoenix in ten days and that usually suggests we are heading down for at least an 8 to 9% correction on the S&P 500.  The NYSE Index is already below the BB Bandwidth, and the others do not have far more to go to join it to the downside, all currently below the middle band.

In fifty-five Trading Days we have gone from an Eureka to signal the start of a new Bloom to Boom as shown and now the question is do we now see strong signs of a Bust to come?

I have brought back a chart we haven’t seen in a long while as the Bears have been starved for all of 14 months as shown by the Ratio of the Total Dollar Volume between the QID and QLD.  It has reached its lowest readings and the question is do the Bears now have their turn at a feast after a famine for so long.

Keep your fingers crossed and your powder dry. 

Best Regards, Ian.

Maybe Hellicopter Ben came to the rescue today by announcing there would be no change in Interest Rates, or maybe it was a weak bounce from a badly oversold market, but the Banks were strong today with Goldman Sachs making the biggest gain…go figure!

Let’s see if my suggestion that  the Bears must get cracking by this weekend or this market is headed up again one more time comes true.  The Orange Line held:

It seems from the number of hits I had yesterday that many of you are enjoying the Bullseye picture which as you all know is the %B coming up through the Bandwidth and/or there is a big Kahuna which is a one day change in %B either to the upside or downside.  Here are a couple of tidbits for you again today:

Best Regards, Ian.

I had to stretch my Acronym a bit but Portugal, Institutions (ala GS) and Greece all hit the headlines today and that caused a “Really Big Shoe” to drop with a 2% decline today in most Market Indexes.  Let me not waste time with words, but show you the four pictures that sum up all our feelings for the day.   One more day like today and the Market Indexes will be below the Lower Bollinger Band, and you all know I don’t have to spell that out for you!  Seminar Attendees will enjoy the Last Chart.   The charts are well annotated so you draw your own conclusions:

Enjoy!  Best Regards,

Ian.

I couldn’t avoid a tongue in cheek headline for this blog note.  Everyone is aghast at the way this Stock Market Rally keeps sluffing off bad news and keeps trotting along the yellow brick road.  Sooner or later it will end, but there is only one way to behave – it’s YOUR stocks in YOUR Portfolio that matter.  This was an unusual week after the GS Caper, where the mood of Fear was soon tested…Fear for a day and a half, which dissolved as quickly as it appeared with the mood swinging back to recognizing many good Earnings Reports.   So the Bulls are still looking to a full moon.

We are back down to 16ish on the VIX, so that sudden hiccup never followed through, the Bears tried but no cigar:

So far, so good.  There are no Germs on the JIRM Index which has gained about 8% in the past month since it was generated, or about 2%/week, which includes the downdraft that occurred from the GS Caper, as these stocks were hit hard for two days.  Note that only two stocks are under water and not by much:

It sometimes pays to step back and see where we stand in the bigger picture.  The Nasdaq 100 (NDX) is already in the 2003 to 2007 Channel, and the Bulls hope it will stay there.  Whether it can push through to 2300 is another matter, but what does matter is when it is tested again on the downside at around 1825 or so:

Prolonging the theme suggests that the S&P 500 is already close to running out of steam or can push on to new heights at certainly 1365.  Wonders never cease, but we shall see if this Stock Market Rally has enough legs to last to 100% Gain!

By the looks of things, the Bears don’t yet have the fight en masse, and the Bulls continue to buy every dip.  Realize that the Large Players have the control, so play close to the vest, especially if this Market goes into a Climax Run as that will signal the Small Players have gone ga-ga.

Best Regards, Ian.