1929 and 2014 charts overlay

This is the chart that has been passed around by traders, the chart that was discovered by Tom Demark, showing uncanny similarity between the 1929 stock market crash and the current Dow chart pattern.

After a brief recovery from a minor stock market selloff in 1929 the Dow nosedived 33% in just 2 weeks, The stock market crash took the Dow down 89%.While history does not repeat itself it does rhyme. Here is another variation of the same chart.

 

Guideline For Thursday

The equity market consoldated ahead of another testimony by Janet Yellen, this time testifying to Senate banking committee. 

But late day on Wednesday it was announced that Yellen testimony has been cancelled due to heavy snowstorm conditions in the area, and the new date for her testimny has not been announced.

 

Whether or not the Fed Buying Team would be very active now that Yellen's testimony has been postphoned, is difficult to say, but without Fed buyers the market may pullback down to supports.

Key inflection price level to watch for is 1815 for ES and 3625 for NQ

-- Bullish above 1815 for ES and above 3625 for NQ, implies the amrket is ready to trend up again, just like Tuesday.

-- Trading below key inflection point is an indication the market is still in consolidation mode. As long as any decline does not get too large the market should rally after finding support.

-- First supports are 1810 for ES and 3610 for NQ

-- Second support are 1790-1795 for ES and 3535 for NQ

Guideline For Wednesday

With the new Fed Chairwoman testifying to the financial services committee on Tuesday it was easy to predict that the Fed would continue to push the stock market up just to make Janet Yelling looks good 

 

The Fed buying binge should continue for a while, with or without any pause, to ensure that major US stock market indices, the Dow, the S&P and the Nasdaq would make another higher high. NQ was just several points shy of the recent high, so for NQ a new high could easily be achieve on Wednesday, while the Dow and the S&P has several layers of resistance to break through.

With the Fed having to print so much dollars to buy the stock market and to buy back US Treasury bonds being dumped by world central banks, gold suppression scheme is starting to unravel. Make no mistake, the world central banks are dumping US dollar treasury notes and bonds ahead of the "Currency Reset" and the loss of US$ status as the world reserve currency, to be replaced by some form of a gold-back world currency. 

On Tuesday we had gold breaking out above key resistance 1280 that has been holding recent gold rally, with the next key resistance is 1300. The Fed would definitely try their very best to suppress the price of gold, but, a clear and sustained break above 1300 is likely to trigger massive short-covering rally, possible with huge opening gap up, that could propel gold very quickly to the next resistance 1380 and then 1440.  

Key support for Wednesday are 1810 for ES and 3600 for NQ

-- Above key support level implies the uptrend is continuing, target is higher high. For ES resistances are  1820, 1827-1830 and then previous high 1846.

-- A clear break below key support level is an indication the buying frenzy is taking a pause, letting the market to consolidate before pushing higher. ES support are 1790-1795, NQ support is 3535-3540.

Guideline For Tuesday

With theFed continuing to hold the equity market up with their endless buy programs they are starting to lose control of the gold market. 

 

With so many short interest in the gold market a continual rally in gold could easily trigger unexpected panic short-covering rally that can cause gold to spike up uncontrollably. Uncontrollable rally in gold price will put a limit on the ability of the Fed's to print as much dollars as they would like, so it could be bad for the stock and the bond market.

For Tuesday key price level for ES is 1795 and for NQ key price level is 3580

-- Bullish above 1795 for ES and above 3580 for NQ.

-- Resistance for ES are 1810 and 1820, support are 1790 and 1765

-- Resistance for NQ are 3595-3600 and 3630, support is 3535

Guideline for Monday

On Friday, massive buy programs engineered by the Fed before the open designed to trigger short-covering panic sent the indices higher at the open and rallying into the close.

We must keep in mind that there is a war between the Fed on one hand determined to inflate certain class of assets and the global deflationary force on the other hand pushing everything down.The battle should continue until the whole fiat currencies collapses as we are now starting to witness several currencies such as the Argentinian pesos, Venezuelan Bolivar, the Turkish Lira and the Indonesian Rupiah (just to name a few), beginning to collapse, but it should continue to spread

The markets closed near resistance on Friday, so unless we can clearly break and stay above resistance, look for the market to pullback in the morning or in the afternoon. Most shorts have covered on Friday so the fuel for any sustained rally has to come mostly from the fed buy programs.

Key resistance for Monday are 3575 for NQ and 1795 for ES.

-- A sustained break above 3575 implies a rally up to the next resistance  3595.

-- A sustained break above 1795 for ES target a rally up to 1810.

Below key resistance implies the market is going into a pullback mode. As long as pullback does not turn into a freefall the rally should continue back up.

Supports for NQ is 3530-3540, and 1770-1775 and 1765 for ES

Guide For Friday Feb 07

Massive Fed buy programs on Thursday designed to panic the short-sellers forcing them to cover in order to induce short-covering rally ahead of the all important employment reports before the open on Friday.

It is certain the Fed will be ready with buy programs on Friday, and it is a well-known fact that the Fed manipulates all markets, be it the stock market, the bond market, or the gold market, etc, whether or not they can push the stock market higher on Friday only time will tell but the result will be known before the market open on Friday. 

Regardless of what they will do, key price level to watch for on Friday will be 1770 for ES and 3500 for NQ

-- Above key price level is bullish, next resistance for ES is 1790-1790, for NQ next resistance is 3540.

-- Bearish below key price level, supports are 1750 and 1732 for ES and 3475 and 3420 for NQ.

Guideline For Thursday

The market tanked hard in the morning, making a new lower low, but then allied up to above morning high, closing near the high of the day for both NQ and ES, now two consecutive consolidation days following a large down-day on Monday

There can be 2 or 3 consolidation/pullback days following a large trending down-day. 

-- If the market only needs 2 consolidation/pullback days then Thursday should be a trending-down bearish day closing near the low of the day.

-- If we need another consolidation/pullback day, to make it 3 days in a row, then Thursday will be another consolidation/u[p days,

Key inflection price level for Thursday is 3455 for NQ and 1746 for ES.

-- Above key inflection price level implies another consolidation/pullback up day. Resistance for NQ are 3480 - 3490, and 1751 - 1755 and 1762 for ES.

-- More selling below key inflection level, with first target below Wednesday swing low.

Latest Investor's Intelligence Bull-Bear Spread report is still showing there is more room for the market to drop lower.At the last pullback low the reading was about 13.4%, current reading is still around 30%, so there is still some room for the market to go lower before the we can expect the low.

At the 2010 and 2011 pullback low, the reading went into negative 10 before the market found a bottom. Here is the latest chart showing Bull-Bear difference.

Guideline For Wednesday

As expected Tuesday was a narrow-range consolidation day following a very bearish wide-range down day on Monday. 

For Wednesday we either get (1) another pullback up-day or (2) a resumption of the downtrend, and it will depends on where it trades in relation to its key price inflection level.

For Wednesday, key price inflection price level is 3455 for NQ and 1744 for ES

-- Trading below is an indication that the downtrend is likely resuming, with key support to break through at 3430 for NQ and 1738 for ES.

-- Next support for NQ is 3400, 1:1 downside target for NQ is 3362, next support for ES is 1720 and 1:1 downside target for ES is 1710. Whether or not support will hold will depends on the momentum of the drop, and whether or not the Yen is confirming the drop.

-- Trading above key inflection price level is bullish, with the next upside target is a break above Tuesday's swing high.

-- Resistances are 3480 and 3500 for NQ and 1765 and 1770 for ES

Guideline For Tuesday

As global credit contraction continues to intensify causing key carry trade funding currency the Japanese Yen to strengthen, triggering the unwinding of the carry Trades, resulting in global stock markets selloff on Monday. 

NQ dropped about 100 points on Monday while S&P dropped over 45 points, with major indices all closing near the day low.

This type of very large down-day is normally followed by a narrow-range consolidation day prior to resuming the downtrend, but with the declining momentum so powerful on Monday, it will not be abnormal for Tuesday's to be another large-range down-day, but we will just have to wait and see.

Key support level to watch for on Tuesday is 3430 for NQ and 1735 for ES. Also key market to watch for is the Japaneses Yen and the yield on the 10-year treasury note, key yield at 2.6%

-- Breaking down below key support is an indication the market is still in freefall, NQ next support is 3400, and NQ 1:1 downside target on the daily chart is 3362. 

-- Next support for ES is 1720, ES 1:1 downside target on the daily chart is 1710.

Guideline For Monday - February 03

A gap-down open last Friday gave short-sellers opportunity to exit their short and reversed long ahead of the long weekend with the usual profit-taking drop at the end of the day.

The direction of Monday morning trend will depend on where it opens and trades in relation to key inflection price levels, 3510 for NQ and 1782 for ES.

Bullish above 3510 for NQ and above 1782 for ES, with key resistance at 3535 for NQ and 1788 for ES. 

-- A clear and sustained break above key resistance should trigger short-covering rally. A falsebreak should trigger a fast trend reversal, targeting a break below Friday low.

Bearish below key inflection price levels, an indication that the downtrend may be resuming, first downside target is a break below Friday swing low. 

-- Supports are 3495 and 3455 for NQ, and 1765-1768 for ES

Carry trades is the main key determinants of trend direction for the US stock market.