Stock Market Technical Analysis
Whenever a make or break pivot comes to a point on a Friday the odds normally favor the bulls as Fridays are low volume from the start and drifts lower throughout the day. The Fed's SPY/QQQ (NASDAQ:QQQ) stealth buying program is volume sensitive and as the volume drops its pacman style buying ramps up. Friday afternoon it was in overdrive because the big pivot in the S&P versus the VXX EMA battle had finally come to a point where one or the other has to drop back.
Looking at the charts above, which show the situation with both the S&P and the VXX having the same large EMA pairs set up virtually identical and both ready for a big lift. In my midday chart post on my website blog Friday, I called attention to the VXX because it had its red line appear above the green line. The S&P 500 still has its red line hidden by the green line. As you can see above they both closed that way. Normally, in technical analysis you would call the VXX as the winner because its red line broke to the topside of the green line first. However, the voraciousness of the Fed's buying program Friday was truly amazing and in the last thirty minutes the VXX price started falling suddenly into the close which would lend to the argument that the S&P will have its red line break to the topside of its green line to match the VXX on Monday. This is about as close as a dead heat can possibly get and the stakes are high. If you zoom in, the VXX should be the technical winner but Team Yellen has been driving the market with unbelievable tenacity the past week. Which way the market is going to break seems too close to call even still plus, we have the variable of the upcoming Wednesday Fed speech where Bullard hinted that the Fed may take a turn to the dovish side with some sort of QE extension.
Looking at this chart cluster, we can see that in charts 1 and 2 the S&P and NASDAQ both closed right at their 50 SMA lines. In chart 5, the S&P closed right at the lower line of its two year bubble channel and the VXX is still riding its lower channel line in chart 6.
Lastly, a look at the short term channels above shows the movement the past week.
The Sunday night Futures session will be a clue as to which way the market breaks as they were very actively buying S&P 500 Futures the two nights prior to the reversal starting. If they are in the Futures again tonight there is a good chance we will have a gap up in the morning.