As I’ve mentioned, it’s going to be an unusual time for me, because I am making the long trek (and perhaps insane, considering how many are intending to do the same) up to Oregon to witness the once-in-a-lifetime total eclipse. We’ll see if I regret it or not.
Speaking of regret, we need to see what next week holds. We are at such a crucial crossroads right now. The past two weeks have been a total kick, all thanks to Trump’s antics. The big picture still screams “doomed market”, but the shorter-term picture is more uncertain. Simply stated, if we have a good solid down day on Monday, we are in a complete different ball game. A firm bounce, however, may mean more of the same.
Looking at the Dow Industrials, there is still plenty of room for hope that the bears will get to enjoy things more.
The daily middle band is a, and perhaps the, classic place for a bear move rally to fail, and after three days of failing to break above the SPX daily middle band this rally failed there into today’s solid trend down day.
Since I capped the SPX chart below SPX has delivered a new retracement low. I’d like to see a move down to the 2405 area next to follow the path that I sketched in on the SPX chart at the end of July. Ideally SPX would then backtest 2450, possibly hitting the daily lower band at a lower level there, and then decline to the 2320 area, very possibly making the main retracement low there and setting up a solid dip buy opportunity into the end of the year. SPX daily chart:
I have some things to do this afternoon (and I’ve filled every body cavity you’ve got with trading ideas already, so there’s that) – – thus I will leave you with this one chart of the IWM illustrating that, thank Jesus, we have broken this ascending channel.
My head’s in a bit of a whirl for a couple of reasons. First, I had a long meeting about overhauling good old Slope. That’s always a fun, creative exercise. Second, I enjoyed my second Blue Bottle coffee of the day during the same meeting, which is probably too much caffeine for my dainty constitution.
Anyway, just to share some thoughts on where the market stands………
The decline into last week’s low was slightly over 2%, so the break back over the 5dma, now at 2457/8, has put SPX back on the Three Day Rule. In the event of a daily close more than two handles below the 5dma today or tomorrow, then historically there would be a retest in the near future of last week’s low at 2437. This is the highest probability historical stat that I watch. SPX daily 5dma chart:
Well, there’s just no doubt about it. I have a lot more fun with down markets than up markets. Last week was a total kick. Today was all about defense.
It’s no shock, though. As I mentioned repeatedly last week, and during the weekend, this brief “shock spikes” in the VIX tend to vanish quickly. Until a missile actually explodes somewhere, it looks like everything is calm once more.
It took me about eight years or so, but I finally learned not to swallow all the weekend doom porn from ZH. On Saturday, I sent out this tweet in response to something they posted about oh-how-awesome the collapse on Sunday’s Globex market would be:
And here we are Monday morning before the open………with double digit green figures on all equity markets. (more…)