Daily update 12/31

The rally stays alive.

Friday's consolidation continued today.  Late in the day there was a pretty strong rally to close well.  Breadth was +69%.  New highs were 3.  New lows continue to drop and ended up at 51.  Breadth was quite strong and would seem to indicate there will be more upside to come.

The futures clearly show the current consolidation above the 20 SMA.  There is no sign the bounce is over yet.

The green line crossed above the red line.  That will sometimes bring out the sellers.  However, the market was so oversold at the low it seems likely we were sold out in the short term.  That will not preclude sellers from coming back at higher prices though.  I think they are likely to hold off until we get a short term overbought condition.

I mentioned several times in the blog that the market experienced periods of low volatility lasting a few years followed by years of high volatility.  The recent low volatility period lasted longer than past periods.  However, I think it is safe to say we have now changed over to the higher volatility regime.  I think we should expect this to last for several years.  I had to laugh when I heard somebody saying how the FED's QT was having no effect on the market.  Maybe a look at the monthly chart will be helpful.

Does that look like nothing happened in 2018 to you?  That looks an awful lot like a top to me.  We had years of low volatility and QE.  The QE ends and the volatility picked up considerably.  I realize that correlation does not necessarily mean causation.  However, in this case it does make sense.  Now that the ECB has stopped their QE program the global liquidity will decrease at a faster rate.  I am going to stick with the bear case and let others fight the FED.  I want to see clear signs the worst is over before declaring the end of the bear market.

The oversold bounce is consolidating the gain so far. There is plenty of room to continue higher to work off the extreme oversold condition.  It is up to the bears whether they still feel an urgency to sell or not.  Will they wait for higher prices before making their appearance again?  We will have to wait and see.

Happy New Year.  Make it a good one.

Bob

Daily update 12/28

Consolidation day to end the week.

SPX was up and down through the day.  There was an afternoon rally that made a new high, but then sellers took over into the close.  It is common to sell off into the close on the last trading day of the month.  Being as Monday is a half day the funds did their work today.  I don't think it means the end of the rally yet.  Breadth was actually +59%.  The selling was mostly in the big cap stocks.  The new highs were still low at 6.  New lows dropped way down to 91.  Overall volume was light which is good for a consolidation day.

The futures confirmed the break of the 20 SMA.  That is a slight positive. 

The red count is collapsing back towards 50.  The green count still has barely budged.  I would think these two lines would get pretty close together before sellers show up in force.

I guess the big boys will take a four day weekend so Monday is likely to be quiet.  So far the oversold bounce looks likely to continue.  I heard famed technical analyst Ralph Acampora on CNBC this afternoon.  He said this is just an oversold bounce so far and we usually see a lower low in this technical condition.  He thought his bounce might carry up towards the Oct. low around 2600.  That was the low SPX broke that started the cascade down.  That is definitely a possibility.  It would be what a friend of mine calls returning to the scene of the crime.  It might be a bumpy ride to get there though.  I would also expect a ton of overhead resistance at that point. 

I hear many people getting on TV lately saying how good the fundamentals are.  How the economy is nowhere near a recession.  Jim Cramer was imploring people this morning to just buy something.  I am reminded of watching ECRI's Achuthan on CNBC in April of 2008 telling everybody the U.S. was in recession.  You should have heard how they all ridiculed him.  That was because Q1 2008 GDP had just been reported at +3%.  The funny thing is many months later the NBER dated the recession start as Dec. 2007.  That Q1 2008 GDP was later revised negative.  We will be lucky if we know we are in a recession within 3-4 months of it starting.  The economy is in what ECRI calls a growth rate cycle slow down.  Until that passes and the economy starts a new growth cycle it is possible it slips into recession at some point.  Nobody knows whether we will or we won't.  All we can go by is what the market is telling us.  The markets are worried.  Worried for nothing or for good reason we do not know yet.  I suspect it is for good reason, but that is not why I am bearish.  I am bearish because we had a textbook top formed this year.  I commented many times how the summer rally showed weak breadth like it was the final move up.  The sell off since the end of Sept. has given us strong signals we are now in a bear market.  I see no reason to listen to the pundits tell us to buy now because things are wonderful.  There is a very good possibility we will see lower prices in the months ahead.  For nimble traders it is buy the dip and sell the rip.  The rips in a bear market can be quite large, but they are short lived.  Do not overstay.

Have a great weekend all.

Bob

Daily updare 12/27

Nothing like a little volatility at the end of Dec.  We have not seen this kind of volatility this time of year since 1931.  Keep that in mind when the pundits are telling you how great things are.  I urge everybody to think for themselves here.  The older one is the more protective of capital one needs to be.

SPX opened well down and stayed down until late in the day.  An afternoon rally took it green.  Breadth was +52%.  That is pretty interesting since it was -83% early in the day.  That is a pretty big swing.  New highs were still very low at 6.  New lows came in at 206.  The oversold bounce looks like it might continue.

The futures ended the day above the 20 SMA.  They still need to confirm a break of that MA.

The guys on TV were feeling pretty good at the end of the day.  Bob Pisani was telling us that this is how bottoms are made.  That is true for short term bottoms in a bear market.  Not in a bull market.  I want to make sure everybody understands the current situation.  We made an oversold bottom back in late Oct. and during the bounce around period the VIX dropped below 20 before SPX crossed the 200 DMA.  The only time in the history of the VIX that failed to indicate we were in a bear market was 2016.  However, this time the market broke down to new lows well below the original oversold low.  That confirms what the VIX was saying about being in a bear market.  We have a confirmed bear market in the most leveraged stock market since 1929.  Leverage is going to get unwound and it won't be pretty.  I have a way of using the ticks to give me a signal a new bull market is likely to be starting.  That would be confirmed by SPX crossing above the 200 DMA with the VIX still above 20.  We will not miss the beginning of the next bull market.  The only thing people should be thinking about right now is capital preservation.

The last leg down in this sell off started after the FED raised rates.  Very often news induced moves get retraced and that is also true of the FED.  When the FED announcement hit SPX was 2578.  That would get the futures up near the 50 SMA which makes for a good target for this rally.  We are in buy the dip and sell the rip mode.  Traders need to be nimble and flexible or on the sidelines.  Targets don't always get hit and overstaying on the long side in a bear market is not good for the trading account. 

Bob

Daily update 12/26

Now that is an oversold bounce.

SPX tested below Monday's low a few times this morning, but failed to break down.  That emboldened some buyers and some short covering.  The volume was pretty low.  That indicates the sellers were largely absent.  For such a big day it would have been better to have a lot of volume.  Not to be in this holiday week.  Breadth was strong at +85%.  New highs were 5.  New lows fell way off to 779.

The futures rebounded all the way to the 20 SMA.  It is hard to believe how stretched they were.

The red count has come down out of oversold territory. 

Big days like today get some bulls all excited, but the fact is they happen in downtrends and do not always mean a bottom is in the making.  There is still plenty of room on the upside if the bulls are willing.  I have no idea how long this bounce might last.  Hopefully there will be upside follow through, but there is no guarantee.  There have been plenty of one day wonders like this before.  I think it is safe to say we should expect more volatility. 

Bob

Daily update 12/24 Here's why no Wall Street analysts believe stocks will suffer next year, despite a fear addled market

The market is delivering lots of coal in the stockings this year.

Early this morning they said on CNBC that the market has never been down more then 1% on Christmas Eve.  Looks like we broke that in spades.  Breadth was -73%.  New highs were super low once again at 3.  New lows came in at 1212.  What a smack down.

Oversold became more oversold again.  No sign of a turnaround yet.

The short term bull pressure red line is over 91%.  The only reading higher than that in history that goes back to 2000 was on 10/10/08.  The highest reading since 2009 was 87% in Aug. of 2011.  In both instances the market traded in a volatile trading range for weeks. There will be lots of sellers on every bounce for a while.  This is a nimble traders market.

The red count is almost up to 98%.  Amazing. 

The confidence of market participants has been destroyed and it will take quite some time to rebuild.  By that time people might realize the fundamentals have seriously deteriorated and there is no recovery.  The lack of people claiming we have started a bear market is really startling.  In years past we got more panic than this over a 5% pullback.  SPX hit the magical 20% off the high today and the VIX was only 36.  With a 19% pullback in 2011 the VIX climbed to 48.  One more sign of the lack of fear now.  That is the hallmark of the initial stage of a bear market.  Stocks decline but cause no panic early on.

SPX closed slightly below the May 2017 low.  It has wiped out 18 months of gains.  It ended today just 3 points above the weekly 200 SMA.  In this extreme oversold condition it seems possible we could get a bounce.  I would expect any bounce from here to only last a few days though.  There will likely be lots of ups and downs. 

Interesting article sent in by a friend (tnx Manny).  Here's why no Wall Street analysts believe stocks will suffer next year, despite a fear addled market  Among all the carnage on Wall Street none of the big firms are bearish for next year.  A pretty clear sign the bottom is nowhere near being in.

That is a lot of targets above 3000 for year end 2019.  Considering that we are having the worst Dec. since 1931 I would expect a little more respect for downside risk.  We got nothing in that department.  I believe this is a long way from being over.

In Daily update 1/26 The infamous sideline money I wrote:

"Sometimes I get what I call nagging feelings.  They don't always come to pass, but over the years a lot of them have.  Sometimes I can figure out why I think a certain way and sometimes I can't.  Ever since this bull market started I have had this nagging feeling that it would end without much warning.  I have been paranoid that the market would start what looks like a normal pullback and just keep on going trapping everybody that is long along the way.   I don't know that I can explain exactly why I have this feeling.  Part of it might be the expectation that the real trouble that causes the next bear market is likely to originate overseas.  Maybe I worry for nothing.  Time will tell.  I just wanted everybody to understand why I obsess over figuring out the bull market top.  I am convinced the next bear market is not going to be a pleasant experience."

Maybe I didn't worry for nothing.  At least the market made a clear bull market top.  I was worried it would not.

Merry Christmas all.  If you don't celebrate Christmas now I hope that one day you will understand the Truth, see the Light, and be able to find the Way.

Bob

Daily update 12/21

More selling.

That looks like a nice 3 day volume climax type low.  Today was option expiration day and there was some rebalancing going on that helped the volume.  It still could be good for an oversold bounce.  The breadth was -77%.  New highs were 2.  New lows were 1015.  Notice the lower double top pattern from a few weeks ago.  I should have mentioned it, but I really did not expect the market to tank like this with it being Dec.  It figures the one time I didn't point it out it comes to fruition.  Everything about this chart is screaming bull market top.

There was a big bounce early in the day when the FED's Williams kind of walked back Powell's tough rhetoric.  However, the bears showed up and hammered the market.  Price is extended.  Not much else to say about this chart.

The green count fell to .76.  Less then 1 percent of SPX stocks are short term bullish.  Pretty tough to get any more oversold.  The intermediate indicator collapsed.  Should we bounce here this low is highly likely to be tested down the road.

This looks like we might finally have a short term volume climax bottom.  TRIN ended the day at 2.  It is too bad it was not 4 or 5 that would indicate some panic.  However, 2 can be enough to cause a bounce.  Hopefully the big boys got their portfolio adjustments done and the market will have a little bounce next week during the holidays.   

I am surprised at how relaxed everybody is on TV.  I heard Josh Brown say when the volatility rises like this it is best to increase equity exposure in 401Ks.  He is usually somewhat cautious when price is below the 200 DMA.  Today he seemed to be in the full bull camp.  People that were pointing out the poor technical position all seem to think it will all blow over in the first quarter next year.  This is so typical of a bull market top.  Very few see it.  This is about as clear as a bull market top can get technically.

Have a great weekend all.  Remember the reason for the season.

Bob

Daily update 12/20 Greetings From Stiltsville : Deficit Spending is not a Free Lunch

SPX confirmed its break of the Feb. low by closing below yesterday's low. 

Heavy volume once again.  However, late in the day there was yet another V bottom bounce.  Breadth was -79%.  New highs were 4.  New lows spiked up to 1225.  Oversold got more oversold.  Common thing to do in a bear market.

The futures bounced 20 points after the close.  I have no idea what that is about.  They are still stretched to the downside.

This is a really, really oversold market. 

The VIX popped over 30 today and the buyers stepped in.  I do not like today's candlestick for a long lasting low as there is yet another V bottom.  However, that does not preclude a bounce from here.  I view this situation as a confirmed bull market top.  A bounce from here that carries above the Feb. low does not change that.  I think there will be a ton of overhead resistance up there.  The market has to bounce sometime.  With the VIX hitting 30 today maybe the dip buyers will be a little braver this time.  If the futures are still up in the morning maybe the rally will stick.

Good article on pumping up GDP.  Greetings From Stiltsville : Deficit Spending is not a Free Lunch

Bob

Daily update 12/19 History Says the S&P Can Bounce Into the New Year

Many people were expecting a more dovish rate hike then we got.  Powell said they expect to raise rates two times next year instead of three.  However, that was not enough to bring out the buyers.  The sellers took over and SPX broke the Feb. low.

Volume was high on the break down.  I suspect a lot of stops were run today.  Breadth was -70%.  New highs were a whopping 4.  New lows picked up to 787.  More confirmation we are in a bear market.

The futures are extended.  Not much else to say until they do something that looks like a significant bounce.

The market has been oversold for a while now and yet the market refuses to bounce.  That is the hallmark of bear market price action.  If we were still in a bull market the volume pattern around the 10/29 low should have formed a bottom.  On a retest of that low the bulls should have stampeded back in.  That did not happen.  In Daily update 10/1 A Historic Divergence In Stock Market Breadth I wrote "Maybe this is nothing, but the odds another bad bear market is coming are rising."  It looks to me like the last two days have confirmed that.  We are in a bear market.  The market is oversold enough to bounce and seasonality favors that, but there is no guarantee that will happen.  I would not be surprised if a bunch of the bigger hedge funds aren't talking to each other about trying to jump start a rally.  At this point I think it would be hard for SPX to get much above the 200 DMA.

The market commonly does the opposite of what it did on FED day the next trading day.  Sometimes it takes a few days to undo the action of that day.  I really have no idea what happens here.  Today could be a fake out break down.  It would not be all that unusual for the market to run a bunch of stops then reverse.  With this being the tail end of Dec. that might happen.  Just be prepared in case people start panicking over the break of the Feb. low.

FDX mentioned after the close yesterday that global trade is tailing off dramatically.

“Internationally, economic strength seen earlier this year has given way to a slowdown. The peak for global economic growth now appears to be behind us,” said FedEx Chief Communications Officer Raj Subramaniam to analysts on a call. FedEx founder and CEO Fred Smith characterized the U.S. economy as “solid.”

MU had similarly bad comments.

“Smartphone unit demand is also continuing to weaken, particularly at a high end in what is seasonally slow quarter for mobile,” Micron President and CEO Sanjay Mehrota told analysts on a conference call. “As we enter calendar 2019, we are seeing weakening demand from our customers.”

I have been talking about the global economic slow down all year.  The data has now made that obvious to everybody.  That is why the price of oil went tumbling down.  The U.S. economy is starting to show some signs of slowing now.  We live in a tightly coupled global economy these days.  If the entire globe is slowing the U.S. is not going to escape that.  I have been watching ECRI to see if they mentioned their long lead indexes turning back up like they did in 2016.  The last article on Dec. 17 said their indexes were still falling and to expect continued weakness.  This is why we have entered a bear market.  With the ECB ending its QE program and the FED maintaining its QT program global liquidity will continue to contract.  The odds of global economic activity picking up again without global easing seem very low to me.  What are the odds we get easing before things start breaking all around the world?  My guess is pretty low.  Any bounce from here is most likely a rally to sell into.  The leverage in the system is much higher then in 2000 or 2007.  This unwind will likely be worse then either of those bear markets.


Historical look at bad Dec. starts.  History Says the S&P Can Bounce Into the New Year

My apologies I just realized tonight I had not updated the trend table.  It is the season and I have been a little bit busier then usual.  Sorry about that chief.

Bob

Daily update 12/18

Another test of the Feb. low.

SPX survived another test of the Feb. low.  Breadth was -52%.  New highs were 3.  New lows were 699.  Another gap up faded in the afternoon.  However, dip buyers showed up at yesterday's low. 

The futures are up a bit tonight.  At least things did not go crashing down today.

I heard this is the biggest Dec. decline since the great depression.  Of course the month is not over yet.  The bulls are supporting the Feb. low.  Maybe the FED will throw them a bone tomorrow and we can get a year end bounce going.  A break down here would probably lead to the biggest Dec. decline ever.  I don't see anything imminent enough to cause that this time of year.  I heard talk the folks in D.C. might be able to not shut the government down for Christmas.  How nice of them!  Most of the economic data is now in for the month.  The oversold condition could support a decent bounce.  The bulls just need a break in the news flow.  Lets see if the bulls can hang on to a rally sometime this week.  The alternative will be pretty ugly. 

Bob

Daily update 12/17

Test of the Feb. low.

The market gapped down and tested the 12/10 low.  That brought out some buyers into the noon hour.  SPX got slightly green, but then the sellers pounced.  SPX dipped slightly below the Feb. low before bouncing at the end of the day.  Breadth was -85%.  New highs dropped down to 6.  New lows spiked up to 850.  That was the highest since back at the 2016 low.  Volume was elevated, but not the highest we have seen in this sell off.

The futures busted support and headed all the way down to the Feb. low.  They found some buyers down there though.

The red count is really oversold now.

I heard Bob Pisani on CNBC sound pretty exasperated today.  He said the volume was not all that high, but there was a lack of buyers.  He mentioned people have been buying when the market got oversold, but have not been rewarded.  I believe worries about the credit markets and the global economy are causing the problem.  Even though the U.S. economy has been good so far it also has cracks.  I think the FED will raise rates again on Wed., but will give a signal of some kind of pause.  That could spark a bounce.  I think they have been giving signals to support that idea. 

The market is oversold at key support.  We are also in the last half of Dec.  Hopefully investors got their hedging and selling out of the way today.  There was no sign of panic that I could see.  I also heard one of the regulars on CNBC talk about the lack of panic needed to make a good bottom.  I believe today confirmed we are in a bear market.  While the market may bounce from here I think it is now inevitable that the Feb. low will break.  That will surely cause a cascade down.  I think that won't happen until next year, but there is no law the market has to bounce here.  That is just my best guess with seasonality and the oversold condition.  I don't see anything that looks like we are making a long lasting bottom.  It looks like the great unwind of leverage is beginning.  With all the leverage in the system caused by the FED's ultra low interest rate policy it will be a very ugly unwind.  Next year is not going to be fun for bulls.

Bob

Daily update 12/14 Bubbles and Hot Potatoes

Bad economic news from around the world weighed on the market.

SPX held above support, but made a new low close for the current correction.  Breadth was -77%.  New highs slipped to 16.  New lows were up again to 591.  Volume was not particularly high.  Not likely to be climactic. 

The futures are treading on thin ice.  Will they bounce or break down?

The red count is back in oversold territory.

Dec. has started on a rough note, but has a history of reversing during the second half.  Will history repeat or is the market going to head down to test the Feb. low?  At least we are oversold enough to bounce.  Next week is option expiration which often has an upside bias.  In addition there is SPY option support for next week at 260.  If the news flow helps a bit a bounce from here is doable.  We will just have to see whether the bulls or bears show up on Monday.

This is a long, but an interesting read from John Hussman Bubbles and Hot Potatoes

Have a great weekend and remember the reason for the season.

Bob

Daily update 12/13

On Tuesday I wrote "If SPX can stay above yesterday's low on a closing basis for another couple of days it might embolden some buyers."  SPX has accomplished that.  Now it is up to the buyers to show up.

SPX has gapped up the last three days in a row.  The sellers have come out each day.  SPX is higher then it was three days ago despite the sellers taking whacks at it.  It spent most of the day below yesterday's low and did test lower, but did not break down.  It bounced late in the day to get back off the low.  Breadth was -63%.  New highs were 28.  New lows spiked up again to 363.

The futures tested lower, but ended the day within the range of the last four bars.  The white bar after the green bar has not sent the market spiraling down yet.  Maybe it won't this time.

The red count is above 50 and below overbought.  The green count turned up a bit.  That is a slight positive. 

There was a lot of back and forth in the market today.  There was real money on both sides of the trade for a change.  I think there was some accumulation of stock amidst the selling.  That could provide a decent base for a rally as long as the bulls continue to hold the market up.  Small caps were down (IWM was -1.39%) so SPX held up because of the action in big cap stocks.  Many bottoms are led by big caps with the small caps catching fire after it is more obvious the market has turned.  We are in limbo here until the market breaks or the bulls catch fire.  If the bulls show up tomorrow watch for the VIX to close below 20.  The last two bounces took off after that happened.  I would expect that to work again as a good sign of a short term bottom.

The ECB announced they will end their bond buying program at the end of the month.  Global liquidity will dry up at a faster rate as the FED is doing maximum QT still.  Not a great backdrop next year.

I saw Jim Paulsen the chief investment strategist at Leuthold Group on CNBC today.  He is starting to get a bit worried about recession.  He mentioned credit spreads blowing out.  I have seen him a number of times over the years in this bull market.  Every time I saw him he was very positive on the buy the dip and longer term.  He was occasionally cautious in the short term expecting some pullback in the market.  He has obviously been right with the buy the dip mentality.  This is the first time I can remember seeing him really and truly cautious.  You never know if an optimist like him is a perma bull or not until things get rough.  He did not sound like a perma bull to me today.  I am beginning to think he might actually know what he is doing rather than just being bullish all the time and right until a bear market hits.  It is not often somebody so optimistic starts flipping so he might be worth paying attention to.

Bob

Daily update 12/12

Another big gap up sold into.

SPX closed about 20 points below its opening price.  The bulls pushed SPX above yesterday's high and it held up there until the 2 PM sellers showed up.  They went to work all the way to the close.  Breadth was +63%.  New highs were stable at 34.  New lows dropped way down to 122.  The bulls are trying, but the sellers have not relented yet.

The futures ran up to the 50 SMA, but turned down hard.  That leaves us with a white bar after one green bar.  Since the early Oct. high there have been 5 rallies that had green price bars.  Four of those rallies were over on the first white bar.  The while bar on Nov. 2 is the only one that did not kill the rally.  That instance had green price bars on the daily chart showing some upside momentum that we do not have now.  Will tomorrow go against the odds or will the sellers show up again?

The red count slipped a bit more, but remains above 50.

The bulls have been trying to get a bottom in by pushing the futures up overnight.  However, the sellers keep showing up to spoil the party.  Dec. is an odd month in that often the direction of the last two weeks is the opposite of the first two weeks.  Obviously the first two weeks have not been kind to bulls.  If the usual pattern is to repeat we should see the end of the selling around the end of this week.  I feel bad for money managers with the current news flow.  Up and down, up and down.  It is a tough time unless you are a day trader or very nimble.  If that is not you there is no law that says you must trade.  When the market is not favorable to your trading style it is ok to sit on your hands.

Bob

Daily update 12/11

The bulls showed up overnight, but the bears showed up after the open.

The selling took SPX well below yesterday's open.  A ferocious rally broke out between 2:15 and 3:15.  However, sellers showed up again going into the close.  Breadth was -53%.  New highs were up a bit to 35.  New lows dropped considerably to 276.  The bulls needed to see a close above yesterday's high to help form the bottom.  That did not happen and now the bulls need to get a close above today's high.  Tomorrow's FED announcement and market reaction will be interesting.

The futures are in limbo here.  They bounced from yesterday's oversold condition, but have not done enough to get bullish yet. 

The red count dipped only slightly and remains well above 50.

Has the market changed?  Rebounds from retests of lows in this bull market have always seen follow through buying the next day.  That did not happen today.  I can understand people not wanting to chase the gap up.  Often on an open like that the buyers come back when SPX gets back to the break even point.  That also did not happen.  I don't know if the afternoon rally was a news event or not.  I did not see a particular headline that would drive it.  It only lasted an hour and did not hold all the way to the close.  There just seems to be a never ending supply of stock for sell.  That goes along with these rebound type bottoms we keep seeing.  We are not getting that good climax kind of bottom that might indicate the selling is done.  Will we still get a short term bottom and bounce here?  That could still happen.  Historically the second half of the month is much stronger then the first half. I don't think a year end bounce will lead to new highs unless some real strength comes in though.  I think there is still too much up in the air with China for money managers to commit a lot of money.  That may be a problem in Jan. if there are many investors that have been waiting until next year to sell for tax purposes.  If SPX heads down through yesterday's low there is potential support at the 4/2 low (2553).  Below that would be the Feb. low (2532).   Below that we probably get a mini crash.  If SPX can stay above yesterday's low on a closing basis for another couple of days it might embolden some buyers.

Bob 

Daily update 12/10

Test of the Oct. low.

That green support line is from the low of May 3rd.  This looks like a good test of the Oct. intraday low.  SPX got down there and failed to crash.  It paused for a while which emboldened some buyers to step in.  The breadth was -66%.  The rebound was led by big cap tech.  QQQ was up over 1%.  New highs were 11.  New lows were down a bit from Friday at 543.  The bulls still need to follow through on the upside, but this is a reasonable looking double bottom.

The futures made a nice bounce off the low, but have not done enough to even turn the price bar white yet.  The bulls need to show up again tomorrow to put in a short term bottom.

The red count turned down from oversold.  There is a sizable positive divergence in the intermediate indicator. 

The stage is set for a short term bottom and end of year rally.  The bulls just need to show up and get the upside going.  On Friday I heard the FED's Bullard talk about it might be a good time to pause in the rate hike campaign.  He will be a voting member next year.  That made me wonder if he was sent out to telegraph that on Wed. the FED will hike then pause. Maybe Powell will give some talk about being data dependent and not on a schedule for hikes.  Hard to say, but maybe that idea was floating around in some investor's minds today.  The market rallied significantly on the thought that Powell might be less hawkish.  If that becomes reality it could drive some buying.  It is really up to the bulls now.  A close above today's high would greatly increase the odds of a short term bottom.  The alternative would likely be another mini crash if we get below today's low.

Bob