As shown on the Daily chart below of the S&P 500 E-mini Futures Index (ES), price dropped this week through one support level of Fibonacci confluence and down to the next one before bouncing to finish the week just back above the first confluence level.
Volumes have been exceptionally high since last Friday. Whether the spike in volume on Wednesday’s final drop is capitulation volume remains to be seen.
We’ll need to see price hold above the 1850-1870 level and continue to rally and hold above the 200 MA (pink) around the 1900 near-term resistance level on increasing volumes…otherwise, any further rally may simply be a dead-cat-bounce…particularly since we now have a lower low and the Daily uptrend has been broken.
Failure to hold 1850 may see panic selling enter this market…especially if the SPX:VIX ratio drops below the 60.00 level on increasing downward Momentum, as I mentioned in my post of October 15th.
Allow me to share a simple sketch I drew that was part of an NFTRH interim update for subscribers last night. The black line is where we have been. The blue line is a projection of what a typical correction (whether a healthy interim one or a bear market kick off) might look like.
We used real charts of the Dow, S&P 500 and Nasdaq 100 to gauge the entry into the current correction and now the resistance points to the expected bounce off of the US market’s first healthy sentiment reset in quite some time. But our cartoon above gives you the favored plan on how the correction could play out. (more…)
Tim Knight, me, Mr. Permabear, was beating the “Buy” drum this week, hoping for a bounce. Well, the bounce is underway, and it’s a beefy one.
I am taking things on a stock-by-stock basis. I don’t expect to nail the top of the bounce. On the contrary, I expect I’ll enter plenty of positions too early. However, I don’t want to prejudge the size of the bounce. As I said, I am judging each stock on its own merits.
Thus, I am beginning my ravenous re-entry into bear-land by shorting these 30 stocks soon after I put up this post. They themselves have already bounced mightily to zones I feel are prudent for shorting. I may well have 200 positions by the time I’m finally done.
When will the bounce end? The Fed announcement in a couple of weeks? Election day in the first week of November? Today? I don’t know. I do know this, though: the bulls are in for a very, very big surprise. Just like before. You’ll see. (more…)
On Wednesday night, after some seriously wild action had settled down a bit after hours, I made some educated guesses in my trading room about what ES/SPX might do over the next few days. Some of these I also talked about on twitter then and yesterday morning. They were as follows from ES 1842-3 at the time:
1. ES was making the second low of a double bottom targeting the 1855 area (Topped at 1857)
2. That move should make the second high of a double top (target 1821 area) (bottomed 1815)
3. An (Thursday) AM low would be made on SPX in the 1830-40 ES area (low was 1828)
4. SPX would then break up from an IHS with a target in the 1920 area (pending)
5. That 1920 area would be reached on Thurs/Fri this week (pending)
6. SPX would reverse back down hard to hit the 1789 double top target (pending)
6. That double-top target would be hit Tues – Thurs next week (pending) (more…)
I got a brief scare this morning when I saw the ES was down hard, but it didn’t take long for the market to shake off its fear and power higher. This is precisely what I want because (1) I’ve got a lot of longs (2) I want the market, per my video last night and the post the night before, to get back to an attractive shorting level. As fear leaks out of the market, you’re going to see the XIV (the VIX symbol backwards – clever, huh?) push up. I’m looking forward to bulls feeling at-ease again. The next level we’ve got to cross above is 1864.75 on the ES, so watch it closely. It’s important.
The badgers were getting very angry yesterday and we saw wild swings on SPX, though in the end SPX closed at 1862, not far under the daily lower bollinger band at 1867. SPX daily chart:
Yesterday bounced hard, then retraced all of that bounce to make a marginal new low, and closed slightly up. The bounce has established the 200 DMA as resistance and was the fifth day out of the last six that SPX has closed well under the daily lower band. The lower band closed at 1883 yesterday and could close as low as 1965-70 today. SPX daily chart: