Analysis in this report is based on Auction Market Principles. The “Market Profile” graph is a useful tool in this type of analysis, but it is a means to an end not the end in itself. There will often be more bar charts that profile charts in this report. The particular graph artifact is not important; what is important is to view the market through the lens of Auction Market Principles.
This report is designed first and foremost to be educational, to point out “low hanging” fruit and to give Key Reference Areas in markets being highlighted.
Alexander Trading Group May Course Schedule (Live Webinars)
The next Member Webinar will be early August…To Be Announced….
Note:
Sunday night the “circus” begins and will run through the US Fed announcements and press conference on Wednesday. There will be lots of high-wire acts and clowns. Unfortunately the clowns are not mimes and will have a lot to say. Trading may be wildly choppy through Wednesday.
Stock Indices General Comments:
From the week of July 23
The TF (Russ 2000) holds the key. If the TF closes below 77480 I can’t envision a bullish outcome in the intermediate term . As usual, we’ll look at it in real time if and when that happens. The TF needs to close above 80350 to restore any intermediate term bullish hope.
For the week of July 30
In spite of Friday’s dramatic rally the intermediate-term prospects for the equity indices continues to be full of divergences. The divergences are actually increasing.
The Dow and S&P are a little over 2% from their spring highs. The Naz 100 and Russ 2000 are 5.4% and 6.8%, respectively, from their spring highs. If the Dow and/or the S&P make a high above their spring highs next week the following couple of days will extremely important.
Friday’s low is now the critical downside KRA. It is probably very bearish if any of the indices closes below that low.
DAX / EUROSTOXX 50
We will be watching these two closely to see if either confirms should one or more of the US indices trade above the spring highs.
Friday’s lows are critical to any bullish scenario going forward.
This week we are going take a detailed look at a lot of the markets we cover and trade. We won’t detail all the markets we trade, but we’re going to do a more extensive look at a lot of them than we typically put in the report this week. I think the markets are setting up to offer one of those periods of extraordinary opportunity.
Note I said opportunity. I have no idea if the markets are going to continue in the direction they traded this Friday, but I have been saying for a while that I do think volatility is just beginning. Anyone who understands and trades Auction Market Principles will have a huge edge in this environment. It is always critical to trade with the larger degree trend, or what I refer to in AMP terms as phase of development.
There is no other form of analysis that is as consistent or as objective in identifying the direction of what that trend, or phase of development is. There is no other form of analysis that can give as consistent and objective a warning that a larger degree phase of development is ending.
S&P
A close below the July auction is an intermediate term sell signal.
Dow Weekly Profile
A close below the July auction is an intermediate term sell signal.
Russell 2000
The Russell has been unable to take out its July high. If it does not do so very soon, and reverses from near present levels and closes below 765 it is probably very bearish.
Nasdaq 100
Breadth
Friday’s giddy rally was unable to expand market internals as measured by breadth to above the +2000 level. The S&P is near 2012 and multi-year highs. If the S&P pushes to above the 2012 highs breadth should expand. If breadth cannot continue to expand the present rally is susceptible to at a minimum a sharp correction.
It ain’t over ‘til….
The initial signal something is awry with all the wonderfulness reflected in Friday’s trade is if the indices close below the HVNs highlighted below.
ES
YM
TF
ENQ
Apple: Coal Mine Canary
Every bull trend in the history of the stock market has a few stocks that become over-owned to the point of absurdity. Income managers have been buying Apple stock.
A close below 557 is negative for Apple and likely negative for the overall market of stocks.
December Gold
Gold may have begun an Initiative move to the upside. If this is the case the shorter-term HVNs should hold retracements. Under an immediately bullish assumption, GCZ should not trade below 1616.
Coal Mine Canary, Part 2: Copper
Copper is usually highly correlated with the larger degree trend of stocks because it is a barometer of business health and growth. It continues to non-confirm the present level of the S&P and the stock market in general.
Sept. Copper
A trade below 34200 in Sept. is an initial sell signal. A trade below 33600 is likely a very bearish development.
September Crude
There is not a good R/R trade in Crude at the moment.
September US 30-yr. Bonds
Bonds sold off sharply on Friday and have reached the HVN formed over the past two months. If bonds can eventually trade through this area, 14716 – 14618 is the next HVN and potential support.
US Dollar Weekly
There is no good R/R trade situation in the US dollar at the moment.
EURO Currency
The Euro is just above critical long term support. We’ll watch it to see how it trades through the mid-week circus.
British Pound
The BP is in a daily Balance Area within in a longer-term Balance Area.
Australian Dollar
The Australian Dollar is in a Balance Area of large degree.
Canadian Dollar
Japanese Yen
November Soybeans / Dec. Corn
No change: Beans, Corn are at all-time highs. This is a time of year when important highs going back decades have been registered. Be aware these are very high risk markets long or short at present.
December Corn
Corn is in a daily Balance Area. This presents an Initiative trade opportunity.
November Soybeans
Beans are in a similar position as Corn.
