Another Bearish Monday…

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Is it time for the bears to start dancing again?

Not so fast... we need more evidence before celebrating I believe.  While today's move up and back down covered about 30 points on the swing (spx), it still had low volume on the spy.  That tells me that this was just a controlled sell off, not some type of panic, or the big boys unloading.

So, we need to see a follow through tomorrow... and with some real volume behind it.  Or, we may just be walking our way down to the 1080-1090 area, to put in a "B" wave down, with a "C" wave up after it.  Don't get me wrong, I'm not turning bullish... but the charts tell me that this is likely only a pullback, before moving higher.

The weekly chart is still moving up, from oversold territory.  The daily chart is very overbought now, so a pullback is overdue.  But we need to see the week roll back down before I'll believe a move down below the 1040 level is coming.  Look at the ADX lines on the daily chart.  You can see that it is moving lower, indicating that there isn't any "strength" behind the sell off (or the rally).

So, daytraders should do well in this large range bound trading, but I believe a big move down isn't here yet.  When the ADX line retests the previous low around 20, and starts to curl back up... that's when a big move is coming.  Depending on which DI line is in control at that time, will tell the next move in the market.  That should happen by this Friday at the latest.

This week I'd like to see a close outside the rising channel... ideally below 1080 spx.  So while I think this week will still close down, I don't think we will see a big sell off tomorrow.  The trendlines drawn in on this chart shows the 1080 area as the break point that would put market outside the channel.  If we see that broken, I think she'll fall hard...

So for tomorrow, it could go either way?  I'm not seeing any clear cut direction in charts.  The 15 and 60 minute charts are in oversold territory and could go deeper, or rise back up and push the market up with it.  The daily is very overbought and again... should pull back.  But the weekly is pushing up now, and could contain any big move down.

The market really needs an "event" to cause the big sell off to start.  Could be anything... maybe good ol' Ben Bernanke will raise rates this Wednesday and collapse the market?  I doubt it, but anything is possible.  Expect the unexpected, I say.

Red

431 COMMENTS

  1. My trading strategy is based on an aggressive retracement of NYMO and also based on call-put ratios marking a top yesterday.

    I'm projecting a big red candle today (some would say out my @$$) down to 1090-1095, and a reversal tomorrow at 1075-1085.

    • I agree with you Rip on going down to about 1080, although I'm not sure if today will end up or down? So far it looks like it's going to be down, but even if it rallies back later today, this week still should be a down week.

      • We could have a green day today, but I would see it as a delay of the inevitable. I'm picking the 23rd and 26th as turn dates based on solar and lunar cycles.

        The pattern I'm following is essentially Nov/Dec 2007. I think what will be unique about this time is that the market will not put up much of a fight when the MAs converge over the next few days. The will close overhead like water over a rock dropped in a pond. Ker-plunk.

        That's how I'm visualizing it. Could be wrong, of course. If I were right all the time I would not have had a big pile of TZA calls for dinner last Friday.

  2. Home Sales Unexpectedly Dip 2.2 Pct Despite Tax Credits-

    Who are the idiots that did not expect this???

    • Morning all…no doubt Jim. When suddenly there's no longer 8000 carrots dangling in front of the would be buyer, he /she loses interest…

        • No worries….you gotta unplug after a long day at the monitor..hehe…
          My life is nuts and I do not usually get large chunks of time to follow the markets and be on forums.
          So I have been getting my fill this past week while on vacation

  3. Red,
    I am still mulling over your concept on the fake prints and have never noticed dates before until you pointed them out. Very telling. I had always assumed massive spikes like that, esp in currency trading which I trade, that these spikes were institutional buys or sells. In other words, very high volume.
    In FX there's no date per se on one's charts so I am wondering if in FX these spikes indicate a potential direction they plan to take the market or if it is just too vast of a market to be affected the way US stocks are? Seems that FX is just too global and too many factors. Any thoughts?

  4. Ok, slightly off topic and I promise I will stay on trading but this is just so weird and, well, blatant.
    I just checked one of my fav news sources and it seems Bilderberg Group feels comfy enough now to actually broadcast themselves by having a website. It's bare bones, maybe a hoax but dunno…weird. Take a look
    http://www.bilderbergmeetings.org/index.html

  5. I know the trading day is young but this market really seems to want to get up to your fake print of 11816. I mean, the financial reality (not the news) is total crap in every way economically possible.
    But up we go…

    • Indecision days are so frustrating. I sat through a bunch of static and chop last night trading London FX only to get price movement as I went to bed.

      Missed out….patience is a virtue but hard to come by…at least for me

    • Red,

      Interesting clip…for reams of data backing up what this man is saying, get the book The Dumbing Down of America by Charlotte Iserbyt. She was a prominent figure in our Dept of Ed years ago and spent 18 years abroad studying communist school systems. She came home only to find our schools more involved in propagandizing than the Euro bloc countries.

      Whilst they were disentangling from Communism, over here it has been ramping up. It's hard to reach people nowadays about limited govt and Constitutionalism because they have no backdrop or point of reference from which to understand it. As long as they receive public largesse from the coffers of the latest administration they will label anyone who adheres to Constitutional, limited government as wacko.

    • Check out 'Century of the Self', a BBC series about propaganda on Google video. It is itself propaganda, but so is the Griffin production.

      Politics in our world are very, very, deep.

    • cool chart…I trade g/j and cable but use trend lines and pivot pts…not familiar with ichimoku….

  6. Market keeps getting crazy pumped everytime we get near 1105 on the ES. Absolutely ridiculous. Must be where the buy programs are set to make sure we don't head under.

  7. Its good to see all green on my account for once, but I believe we probably won't sell-off much more. Manipulators will come in right before the close to ensure we close above the 200 SMA on SPX and we blast off from there. There is just not enough sell-side pressure and we've had plenty of news to fuel the bears, but nothing.

    • Don't be so sure. We go up, we go down. I think this is the time to go down. Nevertheless my account still shows red for the day despite the down move. I can 't win!

  8. Dow needs to close below 10400 to end its daily TD upcount before it gets to 9 but every other index has already ended its TD count so it should happen. Dow is really masking overall weakness. Breadth is nearly 2 to 1 negative. They are having a hard time holding the market until the Fed release.

      • No they don't really work well timing the market(at least the daily) but they are an interesting way at gaging the market. I am following the SP weekly closely though. After hanging out with DeMark and his associate recently I picked up on some of the nuances and qualifiers they use for buy and sell signals.
        Getting to an up 9 count would invalidate the current downcount (buy setup or whatever the terminology is)

  9. We're oversold, hitting channel support as well MA support. Likelihood for a short-term move lower is highly unprobable. Today was Bears turn to follow through on yesterday and they have failed utterly as they have the last 2-3 weeks.

  10. Like I said, 1100 is key and we are now bouncing of the daily 10 SMA on the ES and SPX. I plan on closing out my shorts and buying some SSO calls at the end of the day if we don't look like we will close under the 10 SMA

  11. Change of trend looks like its forming. I think i see some more selling through Friday.

    Bounce at 1080 +- possibly slightly lower. then back up to finish rs is my bet.

  12. The end of day ramp job is starting. Watch for the typical stick save to close above the 10 SMA around 1100 and even possibly pushing it up above San's level of 1104.

      • Looks like we are headed to the 1080 lower channel line. Tomorrow might be a “pause” day though, as today sold off pretty hard. Isn't the FOMC meeting tomorrow? I think it's at 2:15pm. So maybe it will continue down into the meeting and reverse on it… or rally before it, and sell off on it? It's usually a turning point in the market.

  13. You will notice in the last hour the vix moved above 6%. that was a good sign for shorts. If the vix goes above 65 tomorrow something is brewing.

  14. While I have no great love for BP particularly or any global corporation, it was nice to see a judge rule with some common sense against the moratorium. Oil companies will always profit but no gulf drilling would have been a shove off the cliff for our economy instead of the slow deliberate suicide march up the mountain before finally deciding to jump off the ledge.

    http://www.cnbc.com/id/37857843

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