The indicators show negative divergence but the RSI and MACD line likely want to see another high in the CPC after a pull back occurs. Thus, two potential scenario's are shown in the right margin. The red line would corresond to a market rally tomorrow, the CPC would drop lower, but on Monday and/or Tuesday will likely spike higher which would correspond to placing a true near term bottom in the broad markets. The purple line shows the CPC continuing higher to place its high at 1.30 or higher tomorrow, which will identify a market bottom tomorrow, so tomorrow would experience strong selling, and then a rally will follow with the CPC coming back down.
The first scenario with the red line appears more likely at this juncture. There has been lots of market punishment so a VST market bounce, perhaps keeping traders happy into the weekend, may occur, then the markets can place the true bottom early next week ahead of the Thanksgiving holiday. With two different CPC prints now occurring above 1.20, you should already have your long shopping list in front of you and nibbling on your fave longs. As the markets place a bottom the long positions will go the wrong way, but the idea is to scale in to the long position/s as this near-term bottom occurs. Even if a market crash would occur tomorrow, these new long positions can remain in place moving forward and added to accordingly. 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.
Seems like there's no more green days, only see red day after day. No good news out there for the market to rally before holidays next week unless Wash.D.C. come up with some kind of promises, QE is not working anymore!
ReplyDeleteVIX does not match your level of fear just yet. TA is still your friend until the president and congress are on tv more often.
ReplyDeleteYep, VIX is subdued, so that would hint at a market bottom still a few days away. Volatility can be psycho, however, and by Tuesday it could be well into the 20's in a heartbeat. Just take it day to day, hour to hour.
ReplyDeleteFor VIX, watch the moving average confluence with the 20-day MA (17.56), 200-day MA (17.72) and 50-week MA (18.14), thus, 17.6 thru 18.1 is the battle zone. Market bears win above 18.1 and higher. Market bulls win with VIX under 17.6 and headed lower. The VIX begins Friday at 17.99, within the battle zone, watch which side it exits.
CPMKTL & CPMKTB show a fair drop in total market liquidity and the debt markets, credit spreads have widened (JNK:BND), FORCE and COPP indictors on the SPX 1-hour chart says the bulls are fully in retreat despite the tantalizing CPC and NYMO prints...
ReplyDeleteYet, as pointed out VIX is sleeping peacefully...
SPX currently sniffing the 61.8 retrace of the summer rally (1346)...
The fundamentals are getting so bad they are seriously impacting the technicals. Any solution to the so-called Cliff will carve at least 50 basis points off of 2013 GDP. Obamacare will shave another 50. Further domestic weakness will shave say another 15, and add another 15 for Europe. Further, the market is clearly saying that Bernanke has no clothes - and he proved it this by offsetting a QE injection of $35B with the issuance of cash management bills of $25B which, obviously, the primaries were obliged to purchase. It was positively ECBish.
The Congressional leaders are talking Cliff now on CSPAN. "We know our responsibilty" Blah. Blah. SPX shivering with hat in hand at 1356. Once upon a time just showing their faces and talking the trash would be good for an immediate 20 point run and a full-fledged spanking of the Bears.
I frankly suspect the days of easily predicted bounces using CPC and NYMO may be past. Maybe a rally here, but brief, and followed by a savage sell-off to 1270 or worse. The only way to make the institutional models work now is to take profits to offset losses, and lower the re-entry prices going into 2013.