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I think that the last conviction bull on gas died in poverty early this year, but I looked at the chart again after reading a prediction that gas would rally to over 7 in the summer.
That isn't what I see on the gas (Aug futures) chart in the near future, but you never know:
My sons are out at an annual Teddy Bear's Picnic at their school today,
and I think that might well also be the theme for the market today, as
overnight ES broke range support at 1070.5, and that has opened up the
next range support target below at 1048.40:
I posted a chart in the afternoon yesterday showing the importance of
these ranges in recent trading. So far in this decline we have not seen
ES break down through a range support trendline and then break back up
again. Here's yesterday's chart which makes interesting viewing:
We will get a snapback rally at some point, and it could be today. If we
break back up through 1070.5, then the next target is the top
trendline of the declining channel at 1075. If that breaks then I would
expect a snapback rally with a target in the 1090 area today.
Until that declining channel breaks though, the bears remain in control
here.
After yesterday it isn't that easy to be upbeat on the bull side here.
Vix broke up through declining resistance and another key resistance
level. It didn't get much further, but that was very definitely bearish.
The mystery behind the strange sight yesterday of a rising channel on
EURUSD while ES was in a declining channel looks resolved today, as all
the recent EURUSD moves seem to be part of a larger declining channel.
Again, that looks bearish for equities:
GBPUSD made a new rally high yesterday and is declining back towards the
lower trendline of that rising channel. Less important but bullish for
USD today and therefore bearish for equities:
There is one ray of bullish light that I found, and that was on the
Nasdaq, which has formed a very nice looking falling wedge. Not enough
to go long here yet, but if that strong declining resistance line
breaks, the pattern target would be for a full retracement of this
week's decline:
Definitely a day to be cautious. Key trigger levels for a snapback rally
are:
In the absence of such a break up, we may see 1052.5 today. S2 Pivot
support is just under 1052 and range support is at 1048.5.
Hello Slopers…..
I apologize for being not-that-great-a-host today. Between family visitors and my imagined belief that Disqus was having trouble, on top of trying to manage a rather large portfolio, my attentions were severely diverted away from blog-land.
The market took another tumble today, and although I'm delighted to have another nice day of profits, I am disappointed that my gains (in percentage terms) fell short of the inverse of the S&P's loss. The S&P was down 1.68% today, whereas I was up about 1.21%. That isn't the kind of performance I'd like to see from my carefully-chosen selections.
The reason for this somewhat watered-down performance isn't because my picks aren't good, but instead because yesterday I scaled back my risk, and thus I wasn't fully invested. As an experiment, I loaded the spreadsheet of my portfolio from yesterday morning, and those gains knocked the socks off the market, because that portfolio was 140% invested.
Of course, I wouldn't be bellyaching like this if the market had pushed higher today, because my losses would have been subdued compared to the market's strength………..and in that event, I would have been patting myself on the back for reducing my exposure.
The frustration stems from the impetus to scale back, since it is partially driven by the end of the quarter. And by "end of the quarter", I do not mean the window-dressing that people are worried about by money managers, but instead my desire to retain a strong, profitable quarter for my own clients, and thus a fear about being too exposed in these final days. That isn't a technical analysis-based rationale, and since I'd like to exercise Spock-like rationality on a consistent basis, I am scolding myself for letting such impure thoughts even enter my head.
On a "bottoms-up" basis, I am still quite bearish, although I can't help but keep looking over my shoulder for some rally out of God-knows-where. We are in a gorgeous waterfall decline………….slow, steady, and tasty…..and the longer it goes, the better. As I mentioned earlier today, we got well into the "green tint" I had illustrated last night, and I think this tumble is ultimately going to take us to 925. As for when, I'm not sure. Next month? Maybe. As late as October? Perhaps.
I will close by saying that since "G-Day" (the day that our government announced its lawsuit against Goldman Sachs), the market has felt normal again. Maybe our good friends on Broad Street turned off their market manipulation machines out of fear. Who knows. But, through all the wiggles and waggles, both up and down, the market has been acting like my dance partner again, and I've stopped stepping on her toes.
On Tuesday morning the emini S&P 500 was around 30 points higher than where it is now, which placed the index above the 200 and 20 DMA’s, a much stronger technical position. Now we notice that the e-SPU is attempting to tread water below all of its relevant trending moving averages — the 20, 50 and 200 — and the decline could be the formation of the “right shoulder” of a substantial 9-month head and shoulders top (see colored rectangles on the enclosed chart).
If the e-SPU continues to weaken and violates multi-month support at 1037/32, then the significant downside potential of the top pattern will be triggered. That said, such an obvious topping pattern usually requires a few knee-jerk, whipsaw headfakes in the opposite direction to confuse the most investors and to make sure that when the top pattern finally breaks down it will actually seem like a complete surprise.
If such a scenario is approaching, then we should expect possibly a couple of violent rallies that get everyone “twisted” into a positive frame of mind. From my technical perspective, the e-SPU needs to hold above 1070 to avert more immediate downside damage and to trigger near-term buying interest that can pop the index to 1100 or higher in the upcoming days.
Without a doubt, the index is at a crossroads. We might know in a matter of hours if the “right shoulder” construction will be a “simple affair,” as in straight down from current levels, or of a more complex nature that includes a couple of vicious short-covering rallies back towards the “yuan high.” Right now, my near-term work is telling me to expect the latter, but to be prepared for the former.
Originally published on MPTrader.com
I took the requisite swing by the Palo Alto Apple Store, and as usual on intro days, there is a line going around the block of people dying to get the latest from Jobs.
Many of them are holding Apple umbrellas, since the sun is out (although it's a pleasant 72 degrees). This company is amazing; how many outfits could compel people to act in this manner? On the left side of this picture is the news van, which always shows up to gawk at the geeks.
