Parameter Just Ahead & Some Notes

The predictable bounce has come up to just below the predictable resistance parameter.  Just for fun, here is a 30 minute chart of SPX.  Click to expand.  2065 is the tolerance point (with a quick whipsaw allowance above it) on the bear case.

spx30min

I am expecting this area to hold as resistance, especially when considering over bullish sentiment.  As such, I am short against the S&P 500 via a leveraged inverse fund (SPXS).  But last time I checked, the market was not planning to ask me about my expectations of its coming moves.

In the less favored event that the market does not turn back down within the next few days, I want to present a look at what may come next in the form of the Semiconductor index, which has been a post-2012 market leader.  Here is a daily chart we have reviewed previously.

sox

The implied target of the ‘V’ bottom was noted at the time to be 750.  The index barely got above 700 and is now in a Handle-like consolidation.

What I am thinking is that SOX can turn down with the broad market for another hit of the lower blue channel line and support at the MA 200.  Within this, the bullish objective could still be in play longer-term.  That would be in line with a downside target view on the SPX to a higher low (to the October low).

Alternatively, in the less favored event that the bull does come back now watch the SOX for a break of the MA 50 and the top channel line.  That would mean it is probably on its way to 750.

Bottom Line

S&P 500 is near anticipated resistance for another swing down.  As such, the short-term view is bearish.  If that parameter is broken and a post-2012 leader like the SOX breaks upward, the view changes to bull resumption.

Notable

The Machine Tool Sales data for December, which has been like clockwork every December, greatly underwhelmed this December.  We will go over this in more detail in NFTRH 329, but I wanted to give you a heads up first, as an economic indicator.  IMTS is the International Machine Tool Show held in Chicago every 2 years.  It is very interesting that more sales were not generated.

machinetoolsales

Admin Note

I will be out of my office for much of tomorrow due to a couple scheduled appointments.