Saturday, October 3, 2015

SPX S&P 500 Daily Chart

The relief rally arrives last week. From the Tuesday low at 1871 to the Friday high at 1951, price ending at the high, the SPX gains 80 handles, +4.2%. Shorts are running for their lives. After the Monthly Jobs Report, everybody and his brother threw out the baby with the bathwater at the opening bell yesterday which had a capitulatory feel, however, volume was only in line with the prior day's volumes. The Friday candlestick shows the long lower shadow which was the early selling and then price turned positive on the day above 1922 and shorts covered creating extra bull fuel into the closing  bell.

Price overtakes the 20-day MA at 1945 a critical first-step in the bulls building on the rally. Watch 1945 closely early next week. A back test to 1945 is likely to prove if the bulls have the beans to go higher, or not (bounce or die). Stocks recovered from Monday's drubbing and finish +1% higher on the week.

Seasonality-wise, the stock market is typically buoyant to begin a new month as new money is put to work especially for a new quarter (Q4) so the bulls used this seasonality to their advantage to create the relief rally. Keystone pointed out the high CPC and CPCE put/call ratios which indicated ongoing fear and panic and the relief rally was expected and occurred. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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