Sentiment, technical indicator, and market charts to watch for equity market direction this upcoming week, April 20-24, 2009

Here are some of my swing trading sentiment, technical indicator, and key market charts as preparation for the upcoming week of April 20-24, 2009. I'll be traveling and not much available from Sunday through Wednesday, so I'll make some comments interspersed with these charts about what I'll be looking for with these various markets and market indicators over the coming days. It turns out I won't have time to post all my various charts here, so in addition to the ones below, I'll also post some others - as well as my equities, gold, dollar, oil, and other charts at my UBTNB3 blogspot (see link in welcome paragraph at right).

First comment, about the VIX (volatility index), we saw yesterday that it poked and therefore tested my long-standing 33.81 Fibonacci retrace level of 33.81. I should think that's low enough, especially given this cycle time window. But if the VIX does want to sink under that, then my next target would be ~24.80 which is the Fibonacci .786 retrace back to its February 2007 low. I'm skeptical it gets there, but just saying in case! There are some standard chart support levels you can see, that would probably also keep it from getting to 24.80.

Anyone else curious to see whether this SPX:VXO ratio gets a reversal at its 200-day moving average? But I'll post weekly and monthly views of this ratio, that we'll have to use if equities keep rallying and VIX keeps falling, to look for other resistance levels (maybe in keeping with the 24.80 idea for the VIX if it happens!).


The CPCE put/call ratio dropped again yesterday, so does it dig lower or can this be just an intermediate swing low? If you look back at the CPCE weekly and monthly charts I posted recently, you see that CPCE is indeed low, but has been lower. So, it's a clue that market sentiment is a little too positive but not a slam-dunk sell signal. Then again, check out the sentiment graph from SentimenTrader I posted yesterday at my UBTNB3 blogspot (link and feed at right side of the page here) - it's showing sentiment too bullish for both the near-term and the longer-term, therefore also supporting the idea that we're seeing the rally putting in some level of a peak.


The bullish percent charts for both the S&P 500 (SPX) and the Nasdaq 100 (NDX) continue to show optimism reaching to peak levels, even measured against prior peaks over the past two years. At some point bullish percent will roll over and that will help signal or confirm that there's another move down in the markets. Didn't happen yet, but obviously getting very close.


The McClellan charts for the NYSE and Nasdaq (as generated by DecisionPoint.com and available via Stockcharts.com) show that the Summation Index continues to look much more positive than it has in a long time, and still uptrending. The Summation Index is a longer-term indicator, and I'm not sure whether to see this as telling us that over the longer term the markets will continue to hold up well, or that we need to be watchful for when it will top out and roll over again. Maybe we can see it as positive for the intermediate term, subject to that comment about rolling over. Meanwhile, the Oscillator which is more short-term oriented continues to look shaky. It does look like a triangle - whichever way it moves out of that consolidation, should be respected. If up, then positive again for a while; if down, bearish. The ratio-adjusted index at the bottom of both these McClellan charts has been choppy, in keeping with the choppy market action. One of these days it will cross over to the downside and keep going; that just hasn't happened, yet.

If the banking index wants to test higher, then I've got a very rough calculation of a C=A target at about 41.80 (not exact, but somewhat short of the 46 level of chart resistance). I haven't forgotten the idea that on an Elliott Wave basis, the BKX may be putting in a 4th wave up that will roll over to another 5th wave, new low. The StochRSI looks like it might be starting a bit of negative divergence, but the MACD and DMI-ADX are not rolling down yet.



Gold can be working to finish a c=wave (comprising 5 small waves) to finish an abc wave 2 pullback. Or something more bearish (that (C) wave down idea). So far it has respected the long-time 850 pivot level. The action doesn't look like a burning (C) wave down, yet; looks consistent with the wave 2 down. That said, obviously it will need a trigger day up on good volume to show it wants a wave 3 to new highs, so if you're looking to be long on that idea then you'll want to look for something like that. Personally, I think even the wave 2 pullback wants somewhat lower (if you try calculating a c=a for it, you'll see what I mean).


The dollar looks consistent with my funny idea of a diagonal wedge, still - if it plays out, then it will zigzag up to a slightly higher high (92 perhaps?) into late May. If it falls under that uptrending channel line that it fell to on March 18, then something more bearish is happening for the dollar.


The Dow Transports continued to move strongly from that Fibonacci retrace. Perhaps they will test the 3300 level before a pullback? I don't have a short-term count for this index on the daily chart, however. But if this index does get to 3300 then I will expect resistance there.