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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

?+ 9/25/20

Up 8/21/20

?+ 9/18/20

Sub-Intermediate

?- 9/15/20

Dn 9/11/20

Dn 9/21/20

Short term

? 9/4/20

? 8/18/20

? 9/4/20


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 (-)

Friday, February 9, 2018

Daily update 2/9

Rebound.


SPX briefly penetrated the 200 SMA, but rebounded sharply.  Breadth was crazy.  It was +70% at 9:55 AM.  The plunge took it down to -84% at the low.  After the rebound we ended the day +56%.  You just don't see swings like that very often.  New highs were 9 while new lows were 341.


Last night I wrote "Even though SPX made a new low the futures are still above the prior overnight low.  I do not know if we need to test that low to make a bottom or not."  I guess the answer was yes.  The futures tested the prior overnight low today and rebounded sharply.  They ended the day back above the lower channel line thus putting them in consolidation mode.  Given the oversold nature of the market a bounce is more likely then sideways consolidation.

I see two big green volume bars in the SPX chart and a nice rebound off the 200 DMA.  This looks like it should be a short term bottom and could provide a sizable bounce.  However, I think this low will be retested down the road.  A rally from here seems unlikely to make it all the way back to new highs without running into trouble.  We have had a lot of V bottoms in this bull market.  I think we have had more in the last 9 years then in all of history.  I think that era is over.  As you know I have been expecting the volatility regime to move to a higher level for a long time.  Based on past history it is long overdue.  I think it is finally here though.  The FED is reducing its balance sheet and raising rates.  Long term rates have also been on the rise.  That combination should lead to higher volatility for quite some time.

I heard Josh Brown say the market has never gone from a new all time high to down 10% in 9 days before in all of history.  I mentioned last night I could not find any similar looking pattern.  What troubles me is that nearly everybody is saying don't worry.  After years of people nearly panicking on a 5% drop over a month they are all cool, calm and collected after the fastest 10% drop in history.  That is usually what happens during the initial stage of a bear market.  Keep that in mind as the price action unfolds in the coming weeks.  We might still be in a bull market, but we might not.  I will be watching closely for further clues.

I think this one is appropriate.


Have a great weekend.

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.