The Weeklies (by Faces In Cabs)

By -

Bears ended up owning this week.  After Thursday’s sell off and the continued price destabilization on Friday, the weekly candles on many index charts now show bearish engulfing candles for the last week (e.g., not just on the daily charts).  So technically, let’s move up a trading time frame and look at a few weekly index charts.

Dow Weekly (10 weeks of gains erased this past week)

NASDAQ 100 Weekly (showing the mildest pull back, 3 weeks of gains erased)

Russell 2000 Weekly (shows strongest pull back with a pending double top range test at 1082)

Remember, once a daily shock event shows up in the markets (like Thursday), after shocks are not uncommon over the next couple of weeks or so.  After Thursday and Friday, the weekly charts have quickly formed a bearish engulfing candle (e.g., in merely two days).  With this week’s lower closes across the markets, index prices remain destabilized on a higher time frame (weekly).  So, simple odds continue to favor more daily shock events during August – especially if volatility remains elevated.

Market Notes

  • Bearish engulfing candles on weekly index charts
  • Weekly declines came on 2 consecutive days of higher volume selling
  • Trend has NOT changed
  • A continued market pull back is VERY possible
  • Daily prices remain destabilized (expect more shock events)
  • Volatility closed near highs for the week ($VIX, $VXN, $RVX)
  • August POMO begins Monday

It is reasonable to generally hold forth that it will take much larger players (e.g., institutions) to stabilize market’s prices once again.  I would technically observe that abruptly bouncing the market futures in the pre-market did not work on Friday (e.g., the Dow still dropped 120 points intra-day).  Furthermore, the large and successive volume spikes on Thursday and Friday strongly suggest that institutions were distributing assets (not accumulating them).  Overall, August may become a much rougher month for JBTFD bulls.

That’s all for now.  Have a good weekend!

FacesInCabs