Overview of past week for the S&P500 - bearish outlook

Needless to say articles calling the tipping point here and here were dead-on.  Over the past couple of months since August decline it was all to clear that this was a period of consolidation before another push to the downside, and this push is gaining steam.  From the time I have spent looking at charts, I have never seen what many of the perm-bulls were expecting.  A Massive drop in august and then magically a regaining on confidence in the system resulting in a buying back to yearly highs.  There is on caveat...  QE3... This appears to be off the table right now, but you can easily foresee S&P500 at below 1000 as a signal to the FED that the market needs more money pumping. Again, this market is strictly controlled by central banks at this stage, if they ease it will go up, if they signal a halting to easing (not even tightening) the market will meet the reality of price discovery.

October I don't think will disappoint the crowd that fears this time of year based on historic data (ie crash of 1929, and many others).  The first day of October is listed here on a 5-min intraday chart.

Using the SPY as a proxy for volume, we can see that this market ended at the lows of the day on substantial volume. This market also closed below a key level that has been a battle ground throughout Aug-Sept 2011 as well as key resistance in the early part of 2010.  The level was 1120, some commentary about this battle can be found at: Once Again The Battle For SPX 1120 Is Raging

Lets take a step back and look at the daily chart from March until now.

From any technicians perspective this chart is broken.  We are heading into an area of consolidation which occurred in early 2010 which may provide some support but this market getting to 1040 in relative short order is becoming every more likely.

One technical indicator that I think is important to note is the MACD.  There has been a failure to reach the 0 (neutral) level, and the momentum has rolled back down to the bear side, setting the stage for a rough week ahead. 

The S&P500 has decisively broke out of the consolidation range over the course of September.  And a similar move to August could be in the works.  Eurozone failing to react, weak US financials, poor world  economic data all point to a deep recession in the short - mid term.  But remember the caveat ... QE3 (probably valued at $1 trillion +) will of course cause this picture to be voided but all we can do now is wait and see how governments, investors, corporations will respond to this new phase.

I guess it was time to short :) - S&P500 drops nearly 3% - on Fed annoucement - September 21 2011

Two days ago I warned that "We are coming to a definitive point in the markets" in the post :
Time to short S&P 500 ? Depends on Fed Meeting Wednesday 

Evidently it was time to short as the Fed announcement disappointed the markets as the "Operations Twist" was already priced into the markets and then some.  It appears Big Ben realized that further asset outright purchases would elevate commodities (ie gold) to levels that are unthinkable and with that inflation creep which has already started to occur.

It has been commented on many websites that until the S&P 500 gets to the 950-1000 range QE3 will be unlikely. 

We will see if the range will be broken sharply tomorrow, the selling continues expect that 1000 much sooner that most people think.  October might be a "typical" October where markets get reacquainted with economic reality.

SourceFire - Stock Charts - September 20, 2011

Thought it would be interesting to have a look at SourceFire.

From Wikipedia:

Sourcefire was founded in 2001 by Martin Roesch, the creator of Snort. The company created a commercial version of the popular Snort software: the Sourcefire 3D System, an intrusion prevention solution. Sourcefire states that it is committed to advancing open source technology and continues to maintain close ties with the Snort user community.

Company mission from their website:

Focused on its mission to be the leader in intelligent cybersecurity solutions, Sourcefire® is transforming the way Global 2000 organizations and government agencies manage and minimize network security risks. With solutions from the network to the endpoint, Sourcefire provides customers with Agile Security™ that is as dynamic as the real world it protects and the attackers against which it defends

 Weekly chart

The company has shown relative strength company to the broad S&P500 / Nasdaq Indices.
As seen below, FIRE has appreciated faster than the general indices.

Another notable divergence is more recently.  August was a terrible month for NASDAQ and S&P500, however SourceFire emerged unscathed which shows relative strength. 

Time to short S&P 500 ? Depends on Fed Meeting Wednesday

We are coming to a definitive point in the markets.  The Fed will be announcing its meeting Wednesday, which will really set the pace of the next 3-6 months.  The chart below shows also a short signal.... Slow stochastic is getting into overbought territory and the 50 day MA resistance is right above the current price.  A touch of this level at 1226 could be an optimial short entry with a tight stop above this level.  If the Fed disappoints the market, look out below, however there has been talks the FED announcing some form of stimulus which is not priced into the market (ie surprise).

Brookfield Properties Corp Technical Analysis | Stock Chart |

I picked up a recent short play (put option expiring in October) with a property management company Named Brookfield. The company is listed in the US and in Canada under the stock ticker BPO.
 

Despite being oversold, this stock from a technical perspective is in deep trouble.  Breaking below all moving averages, as well as break out to the downside from a triangle correction.  I have a preliminary target of around $13.11, based on today's closing price is about a 15% decline.   It is worth noting that the MACD just crossed over the signal line on a daily and the last 4 days have had increasing volume.

A major level to watch is 15.06, which is the 200 week moving average.  If this level gets broke on high volume look for a rapid decline in the price.  As the world realizes the global economy is slowing, commercial property prices will be affected, but mostly Office rental properties as more companies go under.

This as well as other property management and construction companies have had a large run up without a sustainable pullback to assert their fair value. I would expect over the next 3-6 months many companies pulling back 10-30%.


Another great analysis on this chart is done by
Seeking Alpha :  10 Cheap Stocks With Bearish Trends Despite Growth Profitability



Wikipedia: Brookfield Office Properties

Brookfield Office Properties Inc. (TSX: BPO, NYSE: BPO) is a North American commercial real estate company. Brookfield Asset Management owns 50% of its outstanding common shares. The company has its headquarter operations in New York City and Toronto.^[2] Its New York City head office is on the 11th floor of the Three World Financial Center in Lower Manhattan, New York City, while their Toronto head office is located downtown in the Brookfield Place office complex, which encompasses an entire 5.2 acre city block and offers over 2,600,000 square feet (242,000 m²) of office space^[3]

Brookfield owns, manages and develops office properties in the downtown core of New York City, Washington, D.C., Boston, Denver, Minneapolis, Toronto, Calgary, Ottawa, and Vancouver. Brookfield's properties include One Liberty Plaza and the World Financial Center in New York City; Brookfield Place (formerly BCE Place), First Canadian Place, and Queen's Quay Terminal in Toronto; Place de Ville and the John Edmunds Towers in Ottawa, Canadian Western Bank Place and Enbridge Tower in Edmonton; Suncor Energy Centre, Fifth Avenue Place, Altius Centre, Herald Building, and Bankers Hall in Calgary; and Royal Centre in Vancouver. It also operates real estate service businesses and has a land-development business primarily based in Canada.

Minera Andes Inc. - TSX: MAI - Technical Analysis Review - 6/9/2011

Minera Andes Inc. - TSX: MAI

From Homepage:

Minera Andes is a producer of gold and silver and an explorer of gold, silver and copper in Argentina. Minera Andes trades on the TSX under the symbol MAI and OTC in the US under the symbol MNEAF. Rob McEwen is the company's CEO and largest shareholder (owns 30% of the company).

This stock has made a tremendous move over the past 8 days.  Today was the most bullish day of all - Gold fell $50 from peak quickly, and MAI held its own.   The stock is over bought, so a pull back is not out of the question but I suspect we might have a little more upside before a decent correct to consolidate about previous resistance 2.40 - 2.60.  

Looking to sell 1/2 position if 2.88 gets touched.

Friday's 10% pop was due to the following news item : Update on Proposed Merger of US Gold and Minera Andes


Minera Andes is situated in Argentina and is exploring / mining the following properties.

Gold $1920 - all time high - September 6th, 2011 - Gold breaks $1900

Gold makes its move over the all time high recently set, to close to or at $1920.  This rise in gold is impacted significantly by the recent and continuing turbulence in the world.

See previous post: Geo Poltical Risk - International economic slowdown - Markets poised to open sharply lower: