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Trend table status

Trend

SP-500

R2000

COMPX

Primary

Up 7/31/20

?- 3/31/20

Up 5/29/20

Intermediate

Up 10/2/20

Up 8/21/20

Up 10/9/20

Sub-Intermediate

Up 10/15/20

? 10/21/20

Up 10/13/20

Short term

? 10/19/20

? 10/19/20

? 10/19/20


Don Worden of Worden Brothers (makers of Telechart software) used to keep a trend table before his health issues got in the way. I always found it useful. Mine is slightly different. Hopefully helpful. Up? or Dn? means loss of momentum. ? by itself means trend is neutral. ?+ or ?- means trend is neutral with bias of up(+) or down (-)

Monday, October 23, 2017

Daily update 10/23 MARKET FRAGILITY - HOW TO POSITION FOR TWIN BUBBLES BUST

Interesting day.  It looks like the 2575 yearly R2 pivot point resistance held for one day at least.  Today was day 242 without as much as a 3% pullback in SPX.  That beats the old record of 241 days set back in the mid 90s.  This period of time will forever be in the record books.  It is setting low volatility records right and left these days.


The market gapped up to new highs, but started drifting lower immediately.  By days end it had dropped below Friday's low making today a key reversal day.  Breadth was -62%.  New highs dropped off a bit to 200.  New lows picked up considerably to 50.  That is extremely elevated considering both SPX and COMPX were at a new high at the open.  While key reversal days are not often key this one could be since the market is so extended.  We also have been in a slow creep up pattern for quite some time and those are prone to sharp reversals.  It would not be surprising to see the long awaited 3% or more pullback start from here.



The futures went to new highs overnight, but could not hold them.  They ended the day still above the 20 SMA.  Will they bounce or break the MA?


The green count dropped back below 50 again.  I think the triple negative divergence scenario mentioned on Friday might be the more likely case.  It could finally be pullback time.

Today they had a market strategist on CNBC saying everything is perfect and the market can only go up from here.  We have heard this other times recently.  Bulls see no need to hedge their bets and bears cannot be found.  I keep seeing the words melt up over and over again.  If this is not an ideal sentiment condition for a significant top I don't know what is.  What could cause the market to fall?  I heard an interesting statement from a trader at the NYSE during an interview this afternoon.  He said people around here were tired of this rally.  I can understand that.  This low volatility is pretty tough on big traders.  If some of those guys get together they have enough money to push the market down a little and see what shakes out.  Since the August low the market has mostly floated up on a complete lack of sellers.  The volume has been light and the breadth has been mediocre.  If some actual selling pressure showed up I don't think we know exactly what would happen.  The VIX has been slowly creeping up since 10/5 while SPX has continued higher.  That type of divergence has preceded some important tops in the past.  A VIX divergence is not the most reliable signal in the world.  However, we have a number of things going on that might give it better odds this time.

The current bull case can be summed up by saying there is nothing that can go wrong.  If you are interested in what might go wrong.  You might want to peruse this article sent to me by a reader.  Just keep in mind it is a sales pitch for their bearish investment funds.  However, there are a lot of interesting charts and data.  MARKET FRAGILITY - HOW TO POSITION FOR TWIN BUBBLES BUST

Bob

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