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Monday, October 31, 2016

Daily update 10/31

Quiet day.

The market waffled around a little bit today, but not much action.  Breadth was just slightly positive.  New highs were 43 while new lows were 59.  Weak internals. 

The futures rallied a bit in the night, but failed to find any significant buying after the open.  They are still holding support for the moment.

The red count slipped a bit as the green count perked up.  Both remain below 50.  Indecision here.

The bull pressure chart continues to show all time frames are negative.  If the bulls don't show up pretty soon there is risk the market takes a tumble. 

In Daily update 10/24 I wrote "Since Oct. 1 the dollar index has been straight up.  Unless the FED comes out and removes the rate hike expectations for Dec. the index is likely to continue to the 100 area to test the prior highs.  This will lower earnings for SPX in Q4.  Since the prevailing wisdom on Wall Street was for the dollar to decline I doubt many companies did enough currency hedging to handle this big move up.  The move up has hit gold some.  It has not hit oil yet.  I believe that is simply because of the deal talk about a production freeze at the late Nov. OPEC meeting.  When that deal falls apart oil is likely to head down sharply.  The commercial hedgers (part of the Commitment of traders report) have put on the biggest short position in WTI futures since mid 2014 just before the big oil crash started.  That will keep the oil flowing and probably put pressure on price above and beyond a rising dollar."

Oil was down 4% today as the deal appears to be falling apart.  I think the oil price could fall for the next several months.  That could be a drag on SPX.

Politics and the FBI move on the Clinton email situation dominated a lot of the news today.  There could be more revelations coming, or not.  Who knows.  The market expects a Clinton victory anything that casts doubt on that could bring out some selling in the short term.

There is a FED meeting this Wed.  In recent years the market has gapped up the day before instead of the day of.  Due to all the news going on its hard to say if that pattern will repeat or not.  The only thing I know is that 2120 still appears to be key.  The bulls need to show up fairly soon or SPX is likely to fall through it.


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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.