What a bounce!

DJ Resistance: 17,354.54  All-time record high
                          17,279.94  All-time record close
                          17,152       Breakdown point July peak                        
                          17,015

DJ Support:    16,850       Light
                         16,730
                         16,650       Important
                         16,588       Strong 2013 peak, 200 DMA approx.
                         16,450
                         16,320       Strong
                         16,015       Very strong
                         15,850       Very strong

Technical Analysis:
The bounce up and the permanence of Dow Jones Index Average over DJ16,588 offer a possibly brilliant fourth trimester.
We have to pay attention every moment to DJ16,015 because it means that in this important level buyers where attracted by the market and they battled the sellers.
Please watch on the first chart, hourly, the positive trend line in the last ten days. It comes from the recent low DJ15,850. This line shows a strong support, the trend direction and besides the supports in the short term frame.
The other chart shows the big picture where it is clear that the DJ has to stay over DJ16,588 to think about to achieve new historic high before the end of the year. It is also clear that negative short term resistance (green line) is broken which is positive for the stock market.

DJIA is the weakest between the three indexes. The all three are supported right know for the 20, 50 and 200 days moving averages. DJ is again over DJ16,588 the 2013 peak. The market continues to strengthen but if it not penetrate its resistances we could easily get a down reverse.
The three indexes are pointing up and technically they are ready to visit its historical record high. Let's watch how they fight with the resistances.
The bull market from February 2009 is still in place.
Please, click over the charts to enlarge them.

Fundamentals:
As I have mentioned the U.S. economy is in a positive path instead there are some doubts about the economy in the European Union (UE), China, Japan, emerging markets like Brazil, and so on.
Wednesday FOMC meting will be determinant for the markets. FED has to decide if the last trance QE will finish, 15 billion, or it will last for some time more due the last three weeks correction.
Personally I think the end of the QE will sent a strong message to the markets that the economy is in a solid way and FED trust it. It could be the catalyzer to attempt the record high. Other way if the QE lasts, the market is going to interpret that the interest rates will stay low for at least two trimesters more. That is a good signal for the stock market. I think that the interest rates are going to stay in the actual levels until the end of 2015. Why? The labor market is improving but the jobs quality is not the same as it was before 2008. Then, there is not the possibility for wages increase consequently inflation will be controlled among other factors.
Dear traders and investors keep cool today until 2 o'clock.

Good luck, viel Glueck, buona fortuna, buena suerte, bonne chance!

Ulises

Dow jones closed over its breakout

DJ Resistance: 17,354.54  All-time record high
                          17,279.94  All-time record close
                          17,152       Breakdown point
                          17,015
                          16,900      50 days moving average    
                          16,775      1 Year Positive Trend line, 20DMA

DJ Support:     16,588     Strong 2013 peak, 200DMA
                          16,320     Strong April low
                          16,015     Very strong
                          15,850     Very strong

Technical Analysis:
Market run down directly until it got its strong support at DJ16, 015 and hence it has made a spectacular bounce up. Dow Jones Industrial Average exceeded DJ16, 588, 2013 peak and 200 days moving average, which means that the index is in stabilization area. We have to pay attention if the index stays over that level to continue stabilizing.

The market is almost repeating the September-October 2013 pattern. You can see it in the 2 years daily chart.

DJIA penetrated DJ16, 015 support twice but immediately bounced up and closed the trading day over that level. The closing of the day is very important to analyse the bounce up and to check the damage in the charts. That means that the DJIA actually attracted buyers in the indicated support.

The trend in the short term is still to the downside and in the long run the bull market is still in play.

Please click over te chart to enlarge it

Fundamentals:
The U.S. earnings season and the rumor, that the European Central Bank is going to buy private bonds to introduce more liquidity into the market to avoid disinflation, are driven the market to the upside.
Just Monday October 19th, was the 1987 crash anniversary but this time the DJIA went up forming a clear candlestick hammer. It make me happy because I remembered those terrible days in 1987 when investors tried to sell their positions.
The earnings season as catalyzer has supported the market and turned it up. There are a lot of complications in the world economy, U.S.A. is doing well but not the European Union, China, Japan nor emerging markets. Geopolitical is heavy. Then, I think the market is going to be volatile and going to the up and downside.
Dear traders and investors, we are still in October and market participants are very superstitious, we are not navigating in calm waters. Therefore, probably we are going to face extreme movements in the next days. The important is DJIA to stay over DJ16,588 for the stabilization and to have chances for the Thanksgiving Rally.
Good luck, viel Glueck, buona fortuna, buena suerte, bonne chance!

Ulises

Serious Technical Breakdown

DJ Resistance:  17,350,54   All-time record high
                             17,279.94 All-time closing high
                             17,152      Breakout point
                             17,015
                             16,755      Positive 1year trend line broken
                             16,588      Strong 2013 peak, 200 days MA
                             16,463      Light but important

DJ Support:        16,273.64 Strong Tuesday's low
                             16,015      Very strong

Technical Analysis:
What a reverse!
The damage caused by the downdraft movement is very serious and severe for DJIA, S&P and NASDAQ Composite indexes. The DJIA is the weakest right now.
Technically, I could read a correction considering the breakdown of the 200 days moving average, the 2013 peak at DJ16,588 and the 16 months positive trend line (watch 1 year daily chart) but the very strong support at DJ16,015 is still in play.
To stabilize DJIA, it needs to come over DJ16,588 and stay over it.
I don't expect a bounce up and get a market recovery. The damage shows that the market is reversing and buyers were battled by sellers in the technical levels (please watch volume). I conclude that the market is pointing to the downside and needs the buyers come back to confront the sellers. We are in a war right now and we are going to be witness of several battles.

The third quarter earnings season is going to drive the market direction, not the figures but the investor's interpretation of them.
The risk is to the downside but long term bull market is still in place.

Please click over the chart to enlarge it.

Fundamentals:
U.S.A. economy is recovering, not doubt about it. I will name some arguments to support the recovery which is positive for U.S. equities:
-GDP is growing over 2% and seems stronger.
-Bank lending is loose for corporations and individuals.
-Interest rates are low, the ten years bond interest rates has decreased from 3% p.a. at the beginning of the year to 2.4% p.a.
-Oil prices are coming down, gas prices should decrease then individuals will have more buying power.
-Labor market shows slow but constantly improvements.
-Household balance sheet are becoming better. Rising equities and house prices help them.
The confrontation comes from the European Union weak GDP, unemployment, austerity. Lower  Germany's GDP expectations. The Chinese GDP below 7%. The India and emerging markets weakness like Brazil.
I think that all these arguments have triggered the stock market downdraft movement besides the geopolitical events. Geopolitical is playing hard in the markets.
Dear traders and investors, it seems that the market is not going to stabilize in few days, instead we are going to have volatile movements. This volatility is dangerous because the risk is to the downside. Please, apply the discipline and stay stick with your plan. It is very easy to lose money with this kind of volatility.
Good luck, viel Glueck, buona fortuna, buena suerte, bonne chance!

Ulises

Negative scenery

DJ Resistance: 17,350.64  All-time record high
                          17,279.94  All-time closing high
                          17,152       Prior breakout point
                          16,935       50 Days moving average



DJ Support:     16,674      Thursday low
                          16,588      Strong (2013 peak), 200 DMA
                          16,355      Strong (August low)
                          16,015      Very strong

Technical Analysis:
What a market reverse!
First and foremost I would like to say sorry because I could not be with you last week. I had to bring my mother to the hospital, thanks God all is ok!
The damage inflicted in the charts by this reverse is serious. To erase it, the benchmarks should come over September's low DJIA16,935, S&P1,978 and NASDAQ Composite 4,480.
The three benchmarks are below their 50 days moving average which is negative.
Please watch in the daily chart the negative trend line that works as resistance for DJIA. The 200 days moving average has worked as an excellent support for the DJIA in the last year and now should do the same, let's see it!
The market is in a bearish mood in the short term, this time the supports points drew sellers and they battled the buyers. The hunter bargains will appear, when and what level at?
The bull market is still in place in the long-run, please watch the 10 years weekly chart.  There is a clear positive trend channel and inside it you can watch the important minor supports as positive trend lines in red.
We are facing an important reverse, especially in October, but the trend in the long-run is up.

Please click over the charts to enlarge them.

Fundamentals:
The U.S.A. economy is doing well. We are entering in the fourth earnings season of the year. What worries me is the quality of the new jobs created in the last months. They are not the same as they used to be until 2008. It affects the consumption. We know that the U.S. corporations are doing good money. The countries in the European Union are fighting against the disinflation and deflation, it is a big issue for the recovery. FMI announced today its expectation for the rest of 2014 and 2015, they are not very encouraging http://ep00.epimg.net/descargables/2014/10/07/c4ee2050a389c5db818cb0b1acc4a9e1.pdf.  FMI is asking for more reforms to the European countries and to fight against deflation in a more convinced way. Its world expectations became lower than the last report.
All these and especially the geopolitical issues have attempt against the recovery and have been the trigger for the reverse. We cannot speak right now about a correction.
In my opinion these markets need a correction over ten percent to get a positive path without obstacles. The February last one was eight percent.
Trading: Regularly October is a positive month until the end of the second and maybe third week. Then the market relaxes, don't forget the 1987 and 1929 crises, investors are superstitious. The next up move is in November, the Thanksgiving rally. This pattern doesn't work every year but is valid.
Dear traders and investors, I suggest you to trade in the next fifteen days through your charts base. The bull market is still in place but there is a lot of space for a big correction and the geopolitical environment, the Russian ruble, the Argentinian debt, European small growth, Chinese growth below 7%, etc. weigh on the market. Please keep cool!
Good luck, viel Glueck, buona fortuna, buena suerte, bonne chance!

Ulises