Bearish flag showing

I was awake at 3am this morning and witness some pretty heavy sell stops going off one after the other today, and it seems that they were not finished today, and we are most likely to see more of the same either today or possibly later in the week.

Also we have broken out of a bearish flag on the DAILY SPX CHART so the bears are still winning here, and giving alot of weight to the market right now! OUCH!

bearish flag on SPX chart

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S and P In trouble.

We hinted a few days ago that the S&P could be forming a bearish flag. These patterns have about a 80% chance of playing out in technical analysis terms. This did in fact play out, and the market is now in serious trouble.

The bottom of the bearish flag broke today, and skidded down to the 1580 level. We have bounced a bit, however as you can see on the chart, things do not look too good for the S&P right now.

If the bears come out in droves, we could see 1550 come soon, and maybe even lower, but the target off that flag is about the 1550 - 1560 level. Time will tell.

S&P broke bearish flag

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spx bearish flag showing after FOMC

spx bearish flag showing after FOMC

Our VIP ELITE GROUP HERE!  Got plenty of warning about what was coming today.  The TRIN reading was pretty much giving it away.

Todays FOMC meeting was a chance for the bears to really come back and grit their teeth so to speak. The Market sold off hard down to the low 1620's and right now if you look at the chart there seems to have been a bearish flag that has formed.

If we break the 1615 level on the S&P that could spell real trouble and the market is not looking very healthy here.

spx chart - bearish flag playing out ?

Since the middle of May, if you remember back Dummy boy Bernanke and his cartmen stubled and stammered on congress hill and hinted about the end of QE and stimulus into the market. Today was just reiterating that.

News is nothing more than boring for me, and this came out in the charts first. This pattern now, or I would think it is a high probability bearish flag (meaning there is a strong chance of more movements to the downside) could play out now, as retail traders try to decipher the news, while we just trade the charts. :-) ** insert cheesy grin here **

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us bonds daily chart - us bonds daily chart look horrible

us bonds daily chart look horrible

If we take a look at the us bonds daily chart it looks horrible at the moment.

Right now it looks to me that this chart has a bearish flag that has now been broken, which as  you know the us bonds daily chart is the inverse to the S&P 500 so that means this is bearish for bonds, and bullish for stocks and equities at the moment.

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bear flag chart - market shows bear flag chart

bear flag chart is still playing out on the S&P and we have not seen any strong buying hands come back in so far. It seems they are trying to take out more sell stops!

The bear flag chart pattern you see below is strong indication as well as looking at weekly chart, that the bears are still in control for now.

bear flag chart

One of my favorite market indicators the 'SUMMATION INDEX' is still clearly on a sell signal. 

bear flag chart

We have still not hit the bear flag chart target yet, but it is early in the week and anything is possible. There is much hype and histeria with the news right now, even after obama has been re-elected, but still the charts and sentiment are giving us a much better picture of the actions to take right now. When trading we must remember one IMPORTANT thing. The charts NEVER LIE! The Governments do!


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The Air Down There!

How is the air down there? Well I must say that the S&P did have a great start to the day, but then trust Ben Bernanke to come through and wreck that. The man got up shaking, his lips quivered, and we all know he was lying through his teeth, but this moron caused the S&P to sell off and wipe out its globex gains by the close. LOL. So a nothing nothing day really!

Looking at the chart, we have still broken the rising channel, and we seem to be forming a small consolidation pattern down there. Is this just a bear trap where we trap traders short and then shoot higher to the moon? or is this a bearish flag (a pattern that normally precedes lower prices) like some traders are seeing.

This market requires a bit of patience, but my thoughts are that even though we have broken the upwards channel the market is still holding its head above water for now. A break below the smaller line on the chart = bearish! But if the buyers take charge and take us back into that bigger rising channel, that will be very very bullish. But for now, we just need to be patience and wait. 

USD

Here we are on the USD. We have been talking about it being all about the dollar recently. The QE3 program is not good for the USD, but no matter what the news brings we must keep watching the charts. Right now the USD is at a make or break area. It is touching the falling resistance line that goes all the way back to JULY 2012. This is a very important area and the next few days are also important as a break will be bad for the US indicies, but hitting this line and then seeing bears come back will actually be very bullish for the indicies. But it is all about the USD right, so we need to be patient and watch as the week is young. :-D

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