12:01am
Futures are slightly down but basically flat. I don’t see a big move happening anytime soon. I think $110 at least is going to hit before we get a stronger bounce, and there’s a chance for us to fall all the way to $109.12.

The stocks that might get some strong action, and will be looked at in detail soon:
AAPL, GS, XLF, FSLR. We will look at all those charts in the LIVE TRADING (on video) at 1PM EST.

VIDEO UPDATE ~ By Chris!

Click here to view the embedded video.

Leave your thoughts on the blog to the following article:

Technicals vs. Fundamentals: Which are Best When Trading Crude Oil and Natural Gas?

By Elliott Wave International

If “fundamentals” drive trend changes in financial markets, then shouldn’t the same factors have consistent effects on prices? For example: Positive economic data should ignite a rally, while negative news should initiate decline. In the real world, though, this is hardly the case. Just read these four oil price headlines from July 22 and 23. (And get FREE access to EWI’s latest energy market forecasts!) Read more.

2:31pm
GS still trading in a triangle formation after hitting the prior low level (now resistance). If we break resistance of the triangle, you should go long. If we break support you should go short. I am however, more bullish on GS than bearish (i’m hoping we break out so I can buy it).

1:48pm
GOOG 10 minute is starting to look more toppish as we broke down a small H&S formation, remember that 483.51 is the 38.2% retrace of the whole rally we had since the lows of 2008. So that’s some support (we have to break) before i go short.

12:01am
Yesterday the SPY closed right at 111.52, which is literally 3 cents away from my 111.55 support level that got breached earlier yesterday. Yesterday i mentioned if we close below it, this could be bearish into tomorrow, but if we closed above we could rally onwards to the 113.50 high and probably to my 114.80 target for this rally. With the SPY closing at 111.52, it is incredibly unsure where the market would go.

I remain bullish (short-term) on the market and will look to buy the SPY if we get a dip to 110.05-110.28 (former resistance now support).  I will only become bearish if we fall under 109.12 and even then will not consider shorting just yet.

2:10pm
XLF  INVERSE H&S formation on the daily might be getting ready to complete itself. We opened right around the neckline today and I think it’s worth going long once we do break that neckline. I am a believer that we do break higher but people wanting to short at 14.95-15.00 make sure you have a stop very tightly above 15.05:

Today at 1PM EST/ 6pm GMT – LIVE TRADING CONTINUES –  Get Idan’s thoughts on the market.

Idan Koren

12:56pm
GOOG daily today confirming a breakout of a descending (blue) resistance line that has held it strongly lower. With that I become more bullish on GOOG into the next week or so:

If we close back below 490.75 today i’ll become more bearish.

11:46am
GS 60 minutes showing signs of a triangle formation. The resistance of my triangle formation is very clear. The support however, could either be where i drew it, or can be a little higher using a less steep line that touches the closes of the candles rather than the lows. Usually this pattern after a massive rally is very bullish, but i recommend playing either side once the triangle breaks:

11:43am
I do expect some weakness for a few days as we hit the 200 SMA daily and the 50% retrace… we will need to close beneath the two for me to continue to believe that we will have weakness into tomorrow. Any level below 111.55 should be good for the bears today.

Woo:
3:00 am EST

Here is an update on the overall market from the Leveraged ETF Pro subscription section:

SPX 1 year:

As I mentioned in the intraday commentary, we need to watch the bullish movement on this very carefully. If you look at the RSI we are above a trend line that has held for the last 3 months. We broke above the 200ma which is at 1113.69. We can also see further bullish action on the 6 month chart.

SPX 6 month:

We can see that the breakout that has happened on a number of levels on the 6 month chart as well. The RSI broke a trend line at the same time that we broke out of the wedge that was forming a little below 1100. We’re above a number of support areas. Also you can see the fibs of the 3 wave from 1170s down to 1010s, and we are above the 61% retrace which is also a bullish indicator. The RSI is a little high, but we’ve seen near 80 RSI’s on this chart a number of times. The projection to 1136 is also playing out very nicely with moves in between and bouncing off of fibs at 10588, 1073, and 1088. After a bounce at 1088, we had a strong move north, which is also a bullish sign. The only chance the bears currently have of saving the market from rushing north towards the 1130s and higher is to create a new correction wave, draw out the market sideways a few days, till the waves correct, and then move south. However, this would take a lot of work to do, and the path of least resistance is currently north. We need to watch out for this though. If we really are headed towards 1136, there is a chance we could move sideways a bit more in between 1106-1118. Either way, the market bias is clearly bullish for now, and I’d look for a break under 1106 to at least get a bit of momentum towards the south. However, with so many trend lines, ma’s and fibs as support under here, we really need a break under 1065 to have a strong bearish bias again.

Idan:

12:01am
Here’s the daily chart of the SPY below. Two major things to note are the following:
1. We broke out of the descending channel on thursday (i pointed that out as a buying day).
2. We hit the daily 200 SMA and the 50% retracement today (could be a day for selling pressure to begin).

I still believe we can rally as high as 115 before we reverse, but what are your thoughts?

SPX 1 month:

There’s a break on the 1 month chart trend lines. You can consider a short if we break back below that line, but I wouldn’t go short at all until then.

SPX 6 month chart:

I would like to see the market above 1106. With the RSI breaking north, the market is still bullish, and unless we open under that RSI, there’s a good chance we could break north of 1106, then 1111. If this happens we’re looking at a lot more bullishness to come.

2:18 pm EST

SPX 1 month

Let’s see if it can break.

FSLR:

I like it. I put a ring on it.

Idan

12:30pm
I am very surprised that ANY bank in europe actually failed this rather lenient stress test. It’s important to read between the lines, and while most of the huge banks DID NOT fail the stress test, quite a few of the smaller ones have, especially in spain. And of course, these tests assumed no sovereign default risk, which i think is bogus.

11:58am
An interesting read:

Quadrillion Dollar Debt: ‘Day of Reckoning’ Looms
What Will Happen as $1,000,000,000,000,000 in Global Debt Winds Down?
By Elliott Wave International

A thousand trillion in debt can’t be wished away or swept under the rug. No one can “forgive” the debt. The consequences of unwinding this debt could be as massive as the dollar figure itself… Read more.

11:52am
Market moving up slowly here, this is an indication that we can continue to move even higher on monday. Currently, we are bound by that ascending channel support (now resistance) and it’ll be interesting to see if the bears shove us down at the end of the day or let the bulls rally us back into that channel. I’m bullish as long as we stay above 108.60 into monday:

Tze
9:47 am

A good and concise summary of what July has been like for the markets.

Nicholas Santiago
Chief Market Strategist
www.InTheMoneyStocks.com

The month of July has been a roller coaster of a month. Since options expiration ended on July 16th the up and down action has been outright violent. One hundred point moves on the Dow Jones Industrial Average have become common over the past week. This morning the major stock market indexes are surging higher to start the day on the back of positive European data. It has been a long time since the markets have reacted positive to anything out of Europe.

This morning it is important to note that the U.S. Dollar Index is trading down sharply. In my opinion this is the real catalyst for the move higher today in the stock indexes. Remember when the dollar declines the major stock indexes will inflate. Today the market rally is broad based as most sectors are trading higher.

Technology stocks seem to be the leading group as Qualcomm Inc (NASDAQ:QCOM) is trading higher by 2.64 to $38.80. F5 Networks Inc (NASDAQ:FFIV) is also soaring higher by 8.75 to $81.87 after a positive earnings report. F5 Networks Inc should have daily chart resistance around the $82.50 – $83.00 area. Baidu Inc (NASDAQ:BIDU) is also trading higher by 1.88 to $75.15 after a positive reaction to earnings.

July has been one of the most volatile months in quite a while. This type of choppy action is likely to continue as the battle between the bulls and bears is just heating up. Every time the sky looks clear the storm clouds come rolling in. The opposite case can be made as almost every sell off or decline seems to reverse higher the next day. Today is a perfect example as the markets are trading sharply higher after yesterday’s sharp downside reversal. Take this month in stride as July has been a month to remember.

Tze

9:44 am

Good EW update from Milen. He posted this on FocalEquity Social.

This is the direct link to his blog:

http://oneelliottwavetrader.blogspot.com/

2:38 pm EST

SPX 6 month:

We cracked the trend line for the wedge, but we didn’t break it on the RSI resistance. This is not enough momentum at the moment to break north. When that RSI cracks, we’ll get a solid rise probably above the 1100 area. Possibly 1106, which was a projection for SPX last week.

Idan:

12:03pm
Ford  (240min) could be getting ready to break out, i think it is a buy on any strength in the market with a massive inverse H&S formation with a neckline between 11.96 and 12.05. I’m considering buying it around these levels:

LIVE TRADING will be at 11:45am EST today!   Make sure to register to blog.

10:56am
JPM getting ready to bust right through it’s $39.55 resistance, i think it’s worth buying at that point with a stop right below. Here’s a 60 minute to make it easier to see why 39.55 is such an important level:

10:50am
We definitely have a clear break of the descending channel formation now… and the next resistance on the SPY is going to be at $110.00

12:16am
The SPY 60 minutes chart is below. Even though yesterday’s action was nothing short of extremely bearish, in order to confirm that we have topped out and are moving to wards the 104.70 level, we have to make a new low (below 106.06-106.20). The bears have to use the momentum into their favor and start breaking down important levels or else we can still rally from the 106.20 level and go higher.

Amzn is ready to collapse (or so it seems). Even though i believe that on the daily a close below 116.20 would mean the start of strong downside and a chance to fill in the gap all the way to the high 90s, The real preemptive trade would be to short it under 117.50 (note it closed below, so we could gap down), as 107.50 on the 60 minute has been incredibly strong support, and closing below it could be a very bearish set up. In any case, you should make sure your stops are not too far away (not more than 0.5% away for this trade):

——3:40pm, moved stop up to 27.10, to make sure i’m making a profit.

2:46pm
107.20 SPY did hit like i mentioned it would. Since it hit the conviction from the bears has not been strong enough. The bears have to break 107-107.20 to get more cofirmed downside into tomorrow to reach 106.10-106.20.

2:03pm
Bernanke: Outlook of the Economy remains unusually uncertain.

With that the stocks tumble away from the inverse H&S formation that we had on the 10 minute. My belief is a break of 108 could end this rally and shove us back down to 107.20 by the end of the day. A break back above 108.65 will be bullish.

LIVE TRADING today at 1:10pm EST, make sure to register—->

12:39pm
AAPL 10 minutes has reversed about an hour ago, but more importantly it is about to reach it’s 38.2% retrace for today’s action (from open to low). If it breaks it to the upside, ($259.60), i think it is ready to rally quite  a bit. 259.60 is also a great place to go short with a stop above that retracement, or above the 50% retrace:

11:18am
It looks like today is the perfect opposite of yesterday. The bears are basically forming the exact patterns that the bulls did yesterday. A gap up in the morning reversed, and now breaking important levels downwards. After 108 breaks, 107.20 is support.

11:05am
SPY 1 minute action suggests that we do continue to move lower currently. There is a very easy way to know how strong the day is. If the SPY makes higher lows and higher highs throughout the day, you have to remain bullish, but today we are constantly making some lower lows and lower highs, so the momentum is remaining bearish for now.

10:58am
AAPL opens today RIGHT AT $265… which is the resistance caused by the left shoulder of the H&S formation. If $265 is the top, then we might have a symmetrical H&S formation with the neckline still at 243.

10:51am
Sorry I had a meeting this morning. However, let’s look at the SPY 60 minute, we can see that we opened right at channel resistance, that’s why we sold off so vigorously in the morning. That said, the fact that we are touching channel resistance another time without touching the channel support is very bullish. As lon gas we remain above 108 today we can actually break that channel resistance at the end of the day:

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Follow Idan and Sun Tze’s 1 million dollar portfolio via email! You can also view the track record here, to better understand the service here’s our last trade:

We are buying RGA (Reinsurance Group of America) at $45.90. We are setting a stop at $41.35. Our target is $55.

Fundamental/Valuation Analysis:

- 12-month earnings growth is estimated at 14%. The stock is only trading less than 7 times its 12-month forward earnings, making its P/E to earnings growth ratio (five-year expected) only at 0.67.

- Quarterly earnings year over year as well as quarterly year over year revenue growth are fantastic sitting at 425% and 37% respectively.

- Even after all capital expenditures, the cash has close to $2 billion of cash, which is about 2/3 of the company’s market cap.

- The company’s bare bone book value per share is close to $57, so the stock is trading away below its book

- Lowest target on this stock according to 9 brokers is $55, which is roughly the company’s book value per share.

Technical/Momentum Analysis:

- The stock is trading below its 10 SMA, 50 SMA and 200 SMA, which is bearish. However, right now it is looking to be in the bottoming process as it is forming a potential double bottom formation.

- RSI is making higher lows

- MACD/Signal is also trending upward

- ATR registered a high level recently. This was accompanied by a wide gap down in mometum.
The tells us that a trend change is about to take place and the recent selloff was exhaustive.

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2:10pm
For those people who went long MMM based on my live trading earlier today at 81.39 (3minute chart below). My stop is at 81.90 currently, and i’m about to get stopped out (with 0.6%+). If you want to take more risk and hope for more reward i’d put the stop in the 81.70 level.

LIVE TRADING ON VIDEO at 1 pm EST / 6pm GMT – make sure to register to blog ——>

12:27pm
Even though the dollar is way off the highs, the UUP (Dollar ETF) has found support at 23.95-24.00 and bounced off slightly that level. I would like to see the dollar strengthen some more and not hit the 23.95 level again to feel more bearish about the market.

11:12am
Strong bounces throughout the markets right now, with the SPY trying to go in for that gap fill. So far the rally seems very strong, however we have not made any highs on financials just yet (GS, JPM). And the SPY might find resistance in 107-107.20.

10:27am
BA (Boeing) tested it’s support early today AGAIN, in it’s triangle formation you can see on the 60 minute, that if we close today near the lows, BA will be ready to fall tomorrow very fast:

10:05am
It’s time for Poll of the day!
Note: There is a poll embedded within this post, please visit the site to participate in this post's poll.

9:59am
GLD on the daily could be getting a bounce soon after falling for about 3 weeks. As mentioned last week, we had an inverse H&S formation back between Dec-April 2010 with a slight ascending neckline. We rested that neckline in may after breaking out of it in early may. Well, now we are very close to it again (at 114.90-115.10). If GLD breaks below it, i expect strong selling, but the first bounce should be bought. Here’s the daily:

9:49am
Financials seem to be doing the best out of the gate right now… but they should be hitting on some resistance right now (which is the low of yesterday’s charts).

9:46am
After getting stopped yesterday from my AAPL trade (as it broke back above $243) with about a 2.50% profit. I see AAPL opened at 243 and sold off YET AGAIN. I will look to short AAPL one more time if i can get it in the 242 area and hope it never sees that number again. Here’s the 60 minute H&S formation:

9:36am
Moment of truth here as we open below 106.10… let’s see where we end up in the next 20 minutes. If we shoot down from here, we could actually see 104.70 today. Here’s the 60 minute to show you the levels of the SPY. I am buying a lot of SPY puts here (in addition to my other ones from yesterday).

12:01am
The futures were down considerably after-hours due to a couple of companies missing the revenue/sales forecasts (such as IBM). This is a big problem because while cost cutting may be effective, the bigger picture is that the demand for goods has not grown, hence the economic situation isn’t great.

That said, we did make a higher low in the futures (compared to the low intraday yesterday). And in the cash markets we did break 107.20 on the SPY. So overall, my thesis remains similar. If we fall below 106.05-106.20 i think we move much lower, but for now the bulls still remain in control of the markets.

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2:11pm
On the SPY 1 minute it looks like we are forming a higher low at 106.70 in comparison to the former low today at 106.58, that’s somewhat bullish cuz the market can now rally past 107.18 and start making new highs on an inverse H&S pattern on the 10 minute (over last 2 days), with neckline at 107.18. If it falls back to 106.58 though, we will have a H&S formation on the 1/5 minute scales with 106.58 being the neckline.

1:52pm
After testing the 146.25 level of former support being resistance on GS… GS failed to rally back above it. In the live trading I pointed it out as a great shorting opportunity. A break of it would also be a good buying opportunity in the future. GOOG’s important level is 464, a break of that could be a nice shorting level.

12:52pm
If you’re a bull on the market, you’re liking today’s action so far, especially in the XLF as it could still be forming an inverse H&S formation on the daily. To confirm that completion the XLF will have to rally above it’s 200 SMA daily or $15. A break of today’s lows will nullify that inverse H&S. Here’s the daily:

12:03pm
AAPL is breaking down it’s H&S formation. It broke it down earlier and just retested 243 again, beautiful short opportunity.

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12:01am
Here’s a 60 minute chart of the SPY, with all the important levels below. It looks like we are in a descending channel bounded by the last two highs and former lows. I also want to point out that as I mentioned in my video i expect 106.10 to be the real important support before we fall strongly to 104.70 (the H&S neckline).

Today we look at the SPY and try to reason what friday’s sell off meant to the markets. While we still don’t believe that one day breaks the rally trend of the last week, a break of 106.10 on the SPY might.
We look at some more important levels in the SPY and possible trends in AAPL and AMZN as well as the GS action.