Trucharts.com Blog week ending 12/12/2014

Trucharts.com Blog Week ending 12/12/2014

We expected the markets to hit 18000 for the DOW and 2100 for the S&P500. It came close but did not touch these milestones. We stated that the markets were looking extended and that the risk was high - that scenario played itself out this past week. The breakdown in oil and the commodity complex was not surprising. We expect oil to hit between 50 and 55 - that would be more than a 50% correction and we expect some bottoming in that range. The commodity 15 year bull cycle may be coming to an end. Stocks looked extremely extended and one of our sentiment charts was showing that a puulback was imminent. Check out this chart which had predicted prior pullbacks - it is the chart of the stocks below their 50d SMA vs S&P500 - check this chart below:

You can see in the chart above how the trend for the stocks above 50d SMA is trending down even when the market is hitting new highs. This is evident in both the charts for stocks on the NYSE and NASDAQ. It does not appear that this has bottomed. We should keep an eye on this indicator on ur reports page under "Charts" at .

We expect volatility to be up this week and the S&P to touch the 50D SMA at 2000 and we have to see if the buyers jump in. The DIA has it's 50D SMA at 172.4 - we would like to see if this bounces back. The megaphone pattern in the indices is lookign evident - but then we have to wait and watch - if that does play out then the S&P500 has to break below it's previous low on the prior corrction in October. 

Fortunately for our portfolio, we followed our charting buy/sell signal strategies and closed positions in SDRL (down over 50% from our sell price), RIG, USO (all oil related). We stated shorting GM - still looks like a good short - in addition we had shown the chart for FCX as short in our last blog. We are short ALTR, IBB, DAL, YHOO and long BIS, WSM. We have hedged our positions with puts and calls. Although we see opportunity oin shorting AA - we will wait and watch since we are over exposed to shorts currently. 

Good luck trading next week.

Trucharts team