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ANALYSIS, ALERTS, OTAPS SIGNALS, CHART ILLUSTRATIONS, AND COMMENTARY
Thursday, December 11, 2014
Is This Week's US Equities Market Sell-off Yet Just Another Year 2014 Quarterly Futures Expiration Price Level Week Consolidation Echo?
CONTRIBUTOR
Wednesday, December 10, 2014 3:30 PM EST
SUMMARY
- Many fundamental issues globally and domestically have arisen that might force the Santa Claus rally into an early untimely end..
- Has this week's sell-off presented a real challenge to higher highs before year's end?.
- Probably not. Each quarter this year we have experienced a similar futures oriented price consolidation week associated with approaching expiration.
In the last three trading sessions the S&P50 has lost about 2 percent. This past mid-November's Friday option expiration price momentum high, which occurred about 2 and a half weeks ago on 11/21/14, had set observable resistance to US large cap equities along a very slightly inclined positive trading channel. The market seemingly bump along topside resistance within this channel six of the last ten days leading into this past Friday's (futures traded on Thanksgiving) strong close.
There has been much talk of an extended Christmas rally into the new year. Some analysts have been calling for further gains, and this seemed a prevalent theme going into this past weekend. However, this theme appears to have met a challenge, with this week's significant sell-off.
Why the sell-off? The headlines are full of reasons. The Chinese market appears under pressure. OPEC is taking US shale production and market share head on, pressuring the global economy. European market woes remain. Some think the FRB may be closer to raising interest rates than expected as the dollar runs. Commodity deflation is pounding energy and commodity based stocks. Smart, demanding, and apparently tight-fisted Christmas shoppers (now aware of after Christmas sales) are abound. And a seemingly already over-extended equities rally, by historical standards, is on many analysts minds.
So, how seriously should investors and trader's take this week's sudden plunge in prices? And will prices get worse before they get better? Has the best Santa has to offer the stock market this season already occurred?
These are interesting questions, yet very difficult ones to answer with any certainty. At this juncture I would instead prefer to simply bring another recognition, and perspective, to the many accounts offered being offered for this week's market sell-off, a perspective that may brighten the coming season for near-tem bulls, and give shorts some pause in betting the house, just yet anyway. I believe we may be experiencing what has become this year a simple routine technical selloff, with rather routine and forecast-able timing and extension, associated with quarterly futures (and ensuing FOMC announcement). I call the phenomena the start of "Futures Expiration Price Consolidation Week Echo."
Let's take a look at the following framecharts of the S&P500 /ES emini futures highlighting this phenomena. The framecharts picture the phenomena within a very useful and illustrative time cycle price momentum echovector analysis and contextual overlay. Each of framechart is basically the same chart, just presented in different frame zooms and perspectives.
(click to enlarge)
(click to enlarge)
(click to enlarge)
The first framechart above highlights the coordination between this Monday's morning high with corresponding Mondays 1.2,3 and 4 quarters ago. It also highlights the preceding Friday close (green arrow) for each. And it depicts the time cycle price momentum echovector and its slope, and the ensuing extension vector (in pink) into the following week's Friday's close for each quarterly Monday highlighted. The coordination and symmetry unveiled is striking, particularly when reviewing the annul echovector's echo-back time cycle price momentum echovector parallelogram illustrated, and yesterday's low.
The first framechart above highlights the coordination between this Monday's morning high with corresponding Mondays 1.2,3 and 4 quarters ago. It also highlights the preceding Friday close (green arrow) for each. And it depicts the time cycle price momentum echovector and its slope, and the ensuing extension vector (in pink) into the following week's Friday's close for each quarterly Monday highlighted. The coordination and symmetry unveiled is striking, particularly when reviewing the annul echovector's echo-back time cycle price momentum echovector parallelogram illustrated, and yesterday's low.
The second framechart above zooms the first, with focus on the bi-quarterly and quarterly cycle echovector parallelograms active. It is a bi-hourly OHLC perspective and presents the echovector coordination with even greater detail.
The third framechart is very informative as well, sand illustrates how the current annual echovector is running consistent with and parallel with the presidential cycle echovector and its coordinate echo-back-date in September of the same week. The bull market since then remains on trajectory, and appears technically still quite healthy, at least from this perspective.
Summarizing, this week so far, has performed right on target within an echovector pivot point forecast and analysis, and presented a great active advanced position management opportunity to both short-term shorts and short-term long day-traders, and for swing-traders with simple few-day time horizon's, and was fully predicable within the right analytical framework.
Stronger concern for a sell-off, one that could genuinely dampen the Santa Claus rally, will begin if we have over-extension in the annual coordinate forecast echovector this week or discordant weakness in the market next week, and beyond. Protection becomes warrant if market prices pierce the key active annual echovector 's coordinate forecast echovector's OTAPS-PPS* active advanced management position polarity switch signal vector target price support threshold emanating from Monday, December 16, 2013's low.
Disclosure: The author is short SPY. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: This is a short-term net short bear debit put spread initiated Monday already well in the money, with cover on the BTO side planned before market close today, Wednesday.
Contributor, Market Alpha Newsletters Group
Chief Market Strategist And Senior EchoVector Analyst
PROTECTVEST AND ADVANCEVEST
Kevin John Bradford Wilbur is the Chief Market Strategist and Senior EchoVector Analysis Methodologist at PROTECTVEST AND ADVANCEVEST. He is a prize-winning Economist and Financial Physicist with an over 35 year span of experience and awards in Academics, Research, Management, Practice and Trade. Kevin has specialized experience in the Major Market Indexes, Commodities, ETFs, and in derivatives and the derivatives markets.
Search market pivots to read more about Kevin John Bradford Wilbur and his specialty, and about THE MARKET ALPHA BRAND NEWSLETTER GROUP.
For further information on constructing and calculating echovectors, coordinate forecast echovectors, and echovector pivot points, see "The Simple Single-Period EchoVector Pivot Point Calculation".
For further information on constructing and calculating otaps-pps position polarity cover and/or switch signal vectors and their trigger points, see "The On-Off-Through Vector Target Application Price Switch And Position Polarity Cover And/Or Switch Signal Vector Trigger Points".
See THE MARKET PIVOTS FORECASTER AND POSITION MANAGEMENT NEWSLETTER for further updates that might develop regarding this analysis.
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