Markets commentary for 7/9; and ChartsEdge map

Market Map for Jul09
Posted: July 9th, 2009

Author: Mike Korell
Filed under: One-Day Market Map
Comments to ChartsEdge »

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Thanks once again, Mike and ChartsEdge!

Folks, here are some comments of my own for this morning. First, if you are subscribing to Andre Gratian's work, you are receiving Andre's updates, projections and comments; and/or, if following Tony Caldaro's work, there are Tony's OEW numbers and indicators. From our own work posted here, and looking at where the markets stand, we know that just some days ago we broke under support levels that had been at 902/906 and 898, and then 892. Now the SPX is working with the numbers around that "head and shoulders (H&S) neckline" around 878/880. Isn't it interesting that on the way up from the March lows, once the markets got past 838 then the next big area of Fibonacci focus had been 880/881 (on the way to 884/888)? Looks like the market is back to resonating around those numbers looking for support. The original ChartsEdge weekly cycle forecast had indicated a strengthening later in this week, so that may be contributing to this effort to avoid the widely-watched "H&S" fate.

Update - my preliminary read of the Elliott Wave structure down from SPX 932 indicates that one resistance level to watch is 892. Of course there's the 200-day moving average to watch, and yesterday's high at 886.80 will of course be watched to see if the market can make yesterday look like a swing low. But the 13-day exponential moving average (EMA) is at 904.26, having crossed under the 34-day EMA now at 906.73, so this bearish cross also provides slightly higher resistance levels which happen to be right back at the 904/906 level which represents another prior support level that, once broken, can act as resistance now. You can see this on the SPX daily chart I posted last evening here (scroll down to see it, and click on the image to see it larger and more clearly).

Options players and others who are just interested in the VIX might want to take a look at Bernie Schaeffer's July Option Advisory Commentary at Schaeffer's Research site. He wrote them June 25 and released them to the site yesterday; and, while I'm not sure I agree with his suggestions regarding potential path for the VIX, certainly his information and insights about volatility are worth knowing.

There certainly are interesting things happening in some other markets too, as I've posted here yesterday, including gold losing important support, and the yen making an eye-popping breakout. Gasoline (UGA) moved to a potential Fibonacci support level, and it's evident that oil and natural gas are trying to find support too. One reader left me a comment stating that "max pain" for UNG is at $14 for next week's opex - thanks for that! - so if it can pull out a reversal pattern from yesterday's $12.11 (or from $12 or a bit lower if it pokes lower, perhaps today), that will fit with a move back to its triangle apex. As for oil, in $WTIC the price recently broke a support that was just above $64 and we'll see if that becomes resistance if oil is attempting a bounce. Yesterday I showed (either here or at my UBTNB3 charts blogspot, see links at right) that gasoline reached a Fibonacci .382 retrace level, and below is a chart showing that oil did the same yesterday. Doesn't mean that they can use that as support to move to higher highs, but a significant level for potential support and we'll see if that means they can regain those broke support levels slightly higher. Oil's up a bit already but not back to $64 at this point; and the indicators are still pointing down. Treasuries moved up as well and we'll have to keep an eye on there to see how they act as they near some chart resistance levels.

The dollar has been trying to find support to make a higher low, and there are reasons to think it can still do that, so it bears watching still and again. I understand there are some reasons to support the yen being the currency that really strengthens here, with Japan having an account surplus rather than deficit - we'll have to see if there are some surprises remaining with currencies movements. Couple that with the G8 meeting, and equities bracing for earnings season, and there's never a dull moment!

I think I missed an opportunity to point out Weird Wollie Wednesday! a moniker that pretty well fit yesterday! so indeed, it is time to consider the "max pain" levels and the "max pain" calculator at the site listed along the right side of the page is a convenient way to check that. The concept doesn't work spot on in strongly trending markets ... and last month, we saw that the "max pain" charts were so "U" shaped rather than "V" shaped, that the opex date price level was slightly off-center (unlike in May when the "V"-shaped ones associated very well for SPY and QQQQ). It's worth checking out the "max pain" levels for the items you're trading, keeping those caveats in mind.

Here's that chart for oil ($WTIC):