Well that was an impressive trend down day yesterday and a lot of technical damage down. I am now officially impressed, and while I had been thinking we might put in the retest high just before the holiday weekend, Greece has pulled that forward a few days and in all likelihood both the 2015 high and the retest are now in the review mirror. This would be a good time to pull together a few reference posts to show where I think we are here.
The first post is from Monday 2nd February where I confirmed that the January close on SPX met the criteria for some very bearish long term stats suggesting very strongly that the best case for SPX in 2015 would be a flat close, and the worst case a large decline. You can see that post here.
On Friday night I posted the small channel from the 2129 high together with the larger falling channel it was trading within. Both have broken down at the open today and the bears now have a shot at breaking more important support levels. SPX 5min chart:
Well, the market hasn’t even opened yet here on Monday morning (and I say “morning” loosely, since my dogs know what’s going on with Greece and got me out of bed at 4:30, so it’s pitch black here in Palo Alto) and it feels like we should be getting the Friday bar ready, since there’s been so much amazing news over the past 72 hours. There were over 600 comments on Slope this Sunday – – on a Sunday, people. Most blogs don’t get that many comments in a year.
One might think I’m disappointed the ES has pared its losses by half already. Nope. I actually prefer it (honest!) I am not aggressively short “the market” at all right now. Yes, I’ve got 80 individual shorts, but I have one and only one big short in the form of an ETF, and that is the high-yield instrument JNK, which is kind of a throwaway. I’d be a lot more upset if I had a ton of index puts, since the plunge over 40 points on the ES at the opening bell was so exciting, but now that actual trading is getting ready to open, the profits on such options would be greatly trimmed.
Well, the past 48 hours have been absolutely riveting (I am typing this early Sunday afternoon). I’ve been following every little tidbit of news flowing out of Europe. Six horrible years brought upon by the Anti-Christ (Yellen) and her global henchmen in Europe, Japan, and China have kept me paranoid and cynical so that I still figure anything is possible with respect to a sudden stick-save. All the same, the possibility of some serious downside action on Monday is electrifying. We’ll see how it pans out, of course. As I’m typing this, the Globex isn’t going to open for 75 minutes, but the earliest signals from EUR/USD are definitely pointing lower………
I’m not going to tempt the market gods by gloating, though. Naysayers and bear-haters have been victorious for all these years, and they seem stone-cold certain that nothing is going to be different. Here’s the chap who sneeringly called my good trades “occasional winners” (which has become a permanent meme around here) and his take on things as of Friday:
Maybe. We’ll see. Stay tuned.
The bears turned in a second consecutive very solid day yesterday, with a fail at the 50 hour MA in the morning and a close marginally under both the daily middle band and 100 day EMA. If bears can break the low yesterday by more than a couple of handles then that opens up an H&S target at 2085-8 and below that a test of channel support and the daily lower band in the 2078 area. SPX 60min chart:
Bears had a pleasant break from the uptrend yesterday, pulling back to close on the low just above support at the 50 DMA (2107) and the daily middle band (2104). On the bigger pictures the bears haven’t accomplished anything yet, and to take back control of the market they need a closing basis break below the daily middle band. Until we see that this is likely to be just be another buyable dip. SPX daily chart: