See the blue fib line on top? That is the intra-day high from the 23rd of September. Notice how close to the apex of the rising wedge this level sits? Well, I guess it got too tight for comfort and when asked, market participants decided to wait until earnings reports before running any higher. Either that, or smart money wanted to get a head start on the selling. Either way the push was firm and it found support just above the 20p MA at about the local top seen on Thursday. So we can conclude that there is still buying on the dips.
The break of the the bottom trend line in the wedge was significant and accompanied by volume. It is hard to discount this event. For me, it is evidence that there is at least one big seller that decided not to take holiday. Open the 1 minute chart:
You can see on the 1 minute chart how this was a pure sell - quickly eliminating 7 pts on the index. If you look closely, you can see a 5 wave EWT. Unfortunately, I was unable to identify it in real time and did not ride it with an early short. If I am not in position already, I try to catch the pause in the middle of wave 3.
The down leg did retrace to the 38.2%, 50% and 62% levels. I tried to scalp some ES action at the second test of the 50% retrace. I got a small piece - nothing to write home about. I did the same at the 62% level with better results. Tight stops really limited my profitability today.
We finished the day conveniently testing the 62% retrace level and the 200p MA after popping through the top trend line in the final two minutes of trading. And one final note, WTF happened with the index during the first hour of trading?
I really do not know what to say here - you can discount the day entirely or you can argue that we have just seen a preview of what is to come.
Your call...
22 comments:
Strange Friday- Monday combo ,
Still short and feeling fine .
thanks David
David, the thing is, the reason we crashed is because credit went to hell. Credit is currently doing incredibly well. Eventually it will go bad again, but right now things are OK.
Good to hear Payline,
Just some other things I am noticing tonight:
1. $VIX is down at around 22.7 and is indicating how complacent traders have become.
2. $TRIN shows a negative divergence with the $SPX over the last 4 weeks and is at .54 right now. Below .8 is considered over-bought.
3. Fast daily stoch has already turned down from its top and looks very much like what we had at the end of August.
I have been quite these past few sessions, despite wanting to call a top at the top of my lungs.
Shush... Let's not spook the irrational bulls!
KPH,
I think we'll hear more about credit in the coming weeks. Without disclosing too much, I have a close relationship in the commercial real estate business. Big business in NY, NJ, and CT. The percentage of tenants past due on accounts is at a record level - making it very difficult for property owners to pay their notes. Unlike consumer mortgages, commercial notes are shorter term and typically renewed every 5 years. Banks are not willing to refinance - primarily because the values of the underlying propterties have fallen by 40%-60%.
I do not think we will see good news on the credit front!
Cheers!
Kph , I am sure I dont agree that the credit markets are humming along .
To Quote my WFC banker " well we are getting our money for nothing , that doesn't mean we are going to give it away to anyone else.
I have a customer that was a Bank auditor in the Sl mess , and then worked in the mortgage resultion trust corp.
Hes view is , there has been program after program to buy up the " bad" mortgage backs , but nothing much happens. ( Tarp , Bad bank , PPP , Fed , ect )
Why , have they not jumped in to unload ? because if the state and the value was know ..... well u get the idea .
In my view , the ave american sent 133% of income from 2004 thru 2007 , Credit cards , Home Refis ect.
Con credit has been dropping 10B a month of more scene Jan.
( as I recall you are in Retail so you know better than I )
That means too many stores, too many resterants to many car dealers More bad banking news
Please forgive my rambling rant .
Best of luck.
David, yes, things are going to go bad. BUT... the credit markets have been doing quite well! Does the blowoff top come within a week or has it already hit? I have no idea.
David ,
If I can add to the list
Put /call ratio is .766 5dayA as it was Sep 23 to Oct 2. and the end of Aug.
666 - 1080 is 62%
Not all the major Averages made new highs ( post 25 sep ) Confirmation is not there yet.
My gut told me on that 1080 fed day
HOY.
All that being said , 1120 could be in the cards , We would like to see a break under the Oct 2 lows at some point to hook the bull case
( without a B2 reversal )No more bear traps please.
I spent some time in doughting this week end , but I come out as sure as I can be, this is simply a Bear market counter trend rally. If that is correct, someday we visit the March lows.
( unimaginable as it seems today )
All here , the last of the Bears , best of luck
Kph , btw , Didn't mean to gang up one you there , there are always alot a view points.
My best
Payline, I may be making/have made a mistake by covering yesterday on early weakness. I'll tell you I'm not too happy about covering (at a decent price) and seeing the market go down a bit. We are definitely blowing off, may have already done it.
I am sure there are plenty of people buying right here because we have a dip from yesterday. (just went long and sold out. iNTERESTING pattern here. At least temporarily I think we probably have support here. Man, some bad decisions on my part yesterday.)
Kph, we all have those days weeks , ect , I personally think I have been making too high risk of trades, acting, without confirmation.
We should all learn from out mistakes. ( I make lots of them ) .
Best of Luck
payline, it is simply impossible to pick a top or a bottom. I thought that SPX had to be topped out at 1020, but that has not been the case. At 1070, I would think we are fully valued, but we'll have to wait and see. A lot depends on just when people start to panic and liquidity/credit/etc tightens up again. It is guaranteed to happen, imo.
Kph , what we need to see is a lower low, than the past low , in our case now , lower than the Oct2
low , that will be a very strong sign that the bull run is over.
David
WTF happened with the index during the first hour of trading?
I think that was when the s-P feed was broken , I dont think its a gap,
as there is no gap in the 5 min chart of spy or upro .
We filled today's gap in the after hours does that count ?
From a Non Ta perspective , if JPM blows out in the am , We set new HOY. If they lay an egg it would have been a great time to be short the futures.
From TA , What is more important , the am selloff or the full retrace?
I have no idea at this point what EW we are in.
EW is a rough, approximate tool. We MORE than filled any gap AHs, and we may go up a bit more. I'd think this could be the blow off...
Hey Payline,
I shorted the futures at 1079 with a 6 tick trailing stop and I am off to bed!
Woke-up to see that I was stopped out at 107875 - not what I was hoping for - but certainly better than a loss!
David the stop loss has been unkind to me of late to too. but that was much better than a loss.
Today is looking to be ugly for the bears
Ugly - yes, but we need to see what the bulls have for us going forward. The media is in overdrive, the exhuberance is thru the roof. Let's see if there are institutional sales at the top of this pop.
My target is 1120/end of October. I will be very interested to see C, BAC and GE this week. I think they will add color to the outlook.
JPM profits all on investment banking - increased their loan loss provisions - uncertain outlook on consumer credit. BAC and C have far more exposure to credit and I think will put at least a pin-hole in this inflating baloon.
Placed another shot on the ES at 1084 targeting a pullback in the futures at the open. Looking to pick up 3 pts.
Good luck!
David , I think even GS will be interesting , Expectations. are so High.
Its not a great time to be 100% short :)
I had a buy window open last night in the intel numbers to buy UPRO as a hedge on good number , I did same thing on AA , This time I freaking froze and didn't hit the comferm button.
Great expectations , its making me wait .... I never liked that song .
Best of luck to you
I went short pre-market but covered a minute ago. I had been long yesterday but sold for a very small profit.
If your target is 1120, why not go long?
Personally, I do NOT think that we are going to hit 1120.
btw, what I am likely going to do here is wait for the 2-3 day blow off that is coming (?), then short CRE via the REITs. I should have kept my spx long from yesterday...
Post a Comment