The bulls failed again today, as the bears took her down into the close...
We are getting pretty close to a temporary bottom now. I still think we will see at least the 100.72 spy fake print level, and even the low 990 spx area could come tomorrow... who knows? At that point I would expect a multi-day rally.
The charts are getting into oversold conditions now, but can continue lower. We still didn't get a capitulation day today, and that tells me we still have more selling... before a brief rally. Tomorrow could be the day, since everyone is now extremely bearish, and negative... meaning they are expecting horrible job's data on Friday.
Of course a prelude to that data will be released tomorrow morning... the Continuing Claims, and Initial Claims, but Friday will have the big kahuna... the Nonfarm Payrolls and the Unemployment Rate. I think we will bottom either tomorrow at the close or Friday... it depends on the numbers?
Will the government spin them to look "not so bad", or will they just tell the truth... which is horrible of course. I think that they will already be factored in, especially if we tank again tomorrow. The old "sell the rumor, buy the news" dance (normally, "buy the rumor, sell the news"... but reversed when bearish).
So, put the technicals with the news, tomorrow looks like the best candidate for a "capitulation day". Not saying for sure that it will happen, as we still haven't got a one day relief rally bounce, squeezing out the bears. But, there's no guarantee as to "when" that day will occur.
We now have 8 down days in a row on the NDX, while the SPX would also be the same, except for a small up day on last Friday. Not exactly what I'm looking for... to squeeze out the bears, before falling again. But then again, they did the same thing on the way up, closing higher every day with only a few small down days... trapping the bears for several months of pain.
Maybe it's the same thing going down? Trap all the bulls long, and not let them out on any rally. That should indicate that once a rally starts back up, the bears will be trapped short... with very small down days to allow them an escape.
Ok, with that said, I don't know what will happen tomorrow morning. Sorry, I wish I did. If the Continuing Claims, and Initial Claims are really bad, then we could gap down and trend down all day. If they aren't too bad, then we could rally up slightly to backtest the breakdown area from today. But, I would expect the selling to resume later, as the fear from Friday's data should cause continued downward pressure.
If we get to 990-995 area, that's a great spot to go long for several days. If we rally tomorrow (to squeeze out some bears), then the move down to that area might not happen until Friday. My gut tells me that they want a relief rally going into the 4th of July weekend... to make people feel better of course.
But, my gut isn't that accurate, so the only thing I can say, is that I expect the 990-995 area (at minimum the fake print of 100.72 spy) to be hit by Friday at the latest. Then a multi-day rally... allowing everyone another chance to get short again.
Best of luck to everyone...