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Friday, November 30, 2018

Daily update 11/30

Optimistic headlines over something happening with China at the G20 meeting this weekend drove the bulls to do some more buying.

SPX closed less then 2 points below the 200 SMA.  Breadth was +51%.  Yet another weak breadth day relative to the size of the move up.  New highs 57.  Oddly new lows spiked up to 246.  Internals still aren't particularly good.

The futures have a confirmed break of the 100 SMA.  They are still below the 200 SMA.

The green count crossed above 50.  It remains below overbought levels though.

The last three days have all been driven higher by headlines.  First it was Powell.  Then it was optimistic comments on trade with China.  Therein lies the problem.  News headline driven moves are so often eventually retraced.  Is all this optimism justified or misplaced?  It is possible anything positive from the G20 meeting like Trump agreeing to hold off more tariffs may already be discounted.  If things get tense and the tariff war gets ratcheted up then the downside looms large.  Monday will be interesting.


Thursday, November 29, 2018

Daily update 11/29

Just like the last spike up so far.

I showed the last spike up on the futures last night.  Here is the mark on the SPX chart.  Notice today did the same as the day after that last spike.  I am sure it will play out differently, but eerie looking.  Breadth was -53%.  New highs were 39.  New lows remain elevated at 160.  When we made that last spike top new lows were down around 50.  That is probably not good to be that much higher.  I guess we will see.

The futures tried to push higher after the FED minutes came out at 2 PM.  However, they ran into some sellers the last hour.  No confirmation of a break of the 100 SMA yet.

 The green count remains below 50. 

The market has worked off its short term oversold condition.  Other then yesterday the breadth has not been very good on this bounce.  That makes me think it will roll over at some point.  The question is when and from what level.  So we watch and wait.  Maybe the bulls will come out in force and this bounce will get some legs.  Another strong day would help in that department.


Wednesday, November 28, 2018

Daily update 11/28

The market was struggling until the Powell speech was released.  Investors liked the change in language that interests rates are only a little below neutral now.  That caused a huge round of short covering.  How much of the move was new longs is hard to say.

SPX closed above the 20 SMA.  It remains below the 200 SMA for now.  Breadth was +78%.  Earlier in the day it was -56%.  What a difference the FED can make for one day at least.  New highs were only 44.  New lows were still high at 198. 

The futures spiked up above the 100 SMA.  I noticed a similar bar where the yellow arrow is.  Maybe the result will be different this time.  If the market stalls here and turns back down then maybe not.

The green count crossed above the red line, but remains below 50.  Will this be a bounce cross that brings out sellers or are the bulls ready to get serious?

News induced moves like this are notoriously fickle.  So often the move is completely retraced in the future, but not always right away.  The only thing I am sure about is that a lot of people were cussing out Powell as they covered their shorts.  The first target on the upside would be the200 DMA at 2761.  The 50 DMA at 2781 would be the next target.  Key resistance may still be hiding out at 2800.  If the market rolls over and breaks today's low SPX might test the Oct. low.  In the short term I wish I new whether SPX might want to retrace today's news induced move over the next few days.  I guess we will just have to see what happens.  I don't see anything that says we have a successful test of the low and it is off to the races yet. 


Tuesday, November 27, 2018

Daily update 11/27

Strange day.

SPX rallied after a gap down and closed positive.  It closed the 11/20 gap down.  The breadth was actually -59%.  R2000 was -.87%.  New highs came in at 22.  New lows spiked up to 224.  Odd internals for a positive day.

The futures made it up near the upper channel line.  That could be resistance in the short term.

The red count increased today despite SPX being up. 

The internals suggest the positive day was caused by the biggest of the big cap stocks.  Not exactly an all clear sign.  I don't know if the market is trying to find a bottom or just bouncing from an oversold condition.  The bulls still have more work to do.  Market internals are still favoring the bears at the moment.  It looks like the bulls are trying to defend the Oct. lows.  It just isn't clear to me they will be successful.  The market needs to sort itself out here.


Monday, November 26, 2018

Daily update 11/26 History Says FANG Feast Is Finished

SPX closes above the high's of the last three days.

The market gapped up this morning and held up all day.  There was some late day buying that got SPX above the recent highs.  Breadth was +62%.  New highs were 15.  New lows ended up at 143.

The futures ended regular hours above the 20 SMA.  After the close they tumbled back below that line.  There are green bars again.  The last time we had a green bar the sellers showed up and killed the bounce attempt.  I don't know if it will be different this time or not.

The red count is still above 50.  The bulls need to prove themselves.

The bulls generated a nice bounce today, but have not done enough to turn the market around yet.  They need to show up again.  The VIX is back below 20 again with SPX still below the 200 DMA.  With the exception of 2016 that has meant we are in a bear market.  That doesn't mean the market can't bounce from here, but it does mean the market might not bounce just because it looks like it could.  I happen to hear Ralph Acampora on CNBC.  He is a very famous technical analyst if you don't know of him.  He mentioned there are a lot of broken charts and it is important for the indexes to make new highs.  That is a sentiment I share.  You might recall I complained about the rally to new highs off the Feb. low.  The lack of technical strength made it look like a terminal up move.  Now we have the market acting like it is in a bear market.  It is definitely possible.  This is a seasonally bullish time of year so a rally could certainly happen, but it might be a bounce to a lower high.  Tomorrow will be interesting to see if the bears show up to sell today's up move or if the bulls come out to keep the upside pressure going.

Pretty interesting comparison to 2000.  History Says FANG Feast Is Finished


Wednesday, November 21, 2018

Daily update 11/21

A bit of a bounce.

SPX gapped up and rallied some early on.  After going sideways most of the rest of the day it sold off going into the close.  Breadth was +71%.  New highs dropped down to 16.  New lows went way down to 144.

The futures are hanging in the consolidation area from late Oct.  To make a bottom, or not to make a bottom.

The red count remains above 50.

The day before and the day after Thanksgiving are positive 76% and 71% historically.  Monday is down 64% of the time.  When Monday is up it is usually a positive sign for the rest of the year.  Patience is needed while we see how the market handles this retest of the low.  There will be no more updates until Monday.

Today's global economic headline.

The Organization for Economic Cooperation and Development on Wednesday said global growth is slowing amid rising trade and financial risks. Growth forecasts for next year have been revised down for most of the world's major economies. 

Have a great Thanksgiving.  If you don't live in the U.S. it never hurts to take a moment and give thanks for all that you have.


Tuesday, November 20, 2018

Daily update 11/20

So retest sooner rather then later it is.

SPX closed fractionally above the 10/29 close.  That makes today the second lowest close in this correction.  This constitutes a test of the low whether we go lower or not.  Breadth was -82%.  TRIN was 1.6 (finally a TRIN above 1 on a down day).  New highs dipped to 32.  New lows spiked up to 546.  That is the most since Feb. 2016.  Volume increased considerably.

The futures opened down and saw follow through selling early on.  There was a sizable bounce intraday, but the sellers took them down to slight new lows before another bounce.  The buyers seem to be protecting today's low.  That happens to be slightly below the low of the high volume big up day on 10/31.

The red count crossed above 50.  There are divergences in the red count and the intermediate indicator as we retest the low.  That is good if the market finds a bottom.  On the other hand, there is also room to go lower before getting an extreme oversold condition.

Based on the strength of the rally I mentioned in the blog I thought a retest of the low would be successful.  The way this decline has unfolded has lowered my confidence on that somewhat.  This decline has acted more like a bear market then a bull.  In a true bear market strong breadth readings do not mean a retest of the low will be successful.  I don't get the feeling the selling is getting exhausted.  No sign of panic in the air or anything like that.  Today the market sold down this morning and V bottomed sharply back above the open.  That was not exhaustion that was dip buyers coming to the rescue.  The afternoon retest of the morning low also bounced, just not as strongly.  Again buyers stepped in rather then exhaustion.  That 10/30 now looms large.  There was a lot of buying that day.  If SPX gets significantly below that will those buyers hang on or capitulate?  With the lack of signs of exhaustion there is risk the Oct. low does not hold.  A third leg down would greatly increase the odds the bear market has started.  Without selling exhaustion it is still possible the sellers will stop and wait for higher prices.  That could allow for a successful retest now.  That scenario could see a bounce to a lower high though.  Now we wait and see what happens here.


Monday, November 19, 2018

Daily update 11/19 SPY option data

Worries over AAPL cutting back on IPhone orders brought out tech sellers again.

SPX made a new low close for the current pullback, but did not close below the lows of the last two trading days.  Breadth was -71%.  New highs increased to 47.  New lows were up some to 229. 

The futures tested down into the same area they found support last week.  Instead of breaking down they bounced.  Lets zoom in to the 60 minute chart of intraday data.

The bulk of the price damage was done by about 12 PM.  The afternoon had lots of ups and downs but was essentially sideways.  This is the kind of pattern I mentioned last week I would rather see then a V bottom bounce.  This may be a consolidation to lower prices, but if the market reverses here it might have a chance to bounce for more then a day or two.

The red count shot up some, but remains below 50. 

The 270 strike has enough puts that might explain the attempted support in this area.  The real put support is down at 260.  If the market breaks down here that seems like a likely target which would coincide with a test of the Oct. low.

SPX is trying to find support around here.  The question is will it be successful or not.  I think the bulls still have a chance to generate a Thanksgiving week bounce.  Further selling below the lows of the last four days will shift the odds to a test of the Oct. low sooner rather then later.  One disturbing thing is the action of the TRIN.  It was below 1 again all day despite the sizable move lower.  That happens much more often in a bear market then in a bull.  Despite the sizable sell off from the market top I can't detect any panic in the air.  They have put a few people on air on CNBC that are cautious, but I can't recall hearing an outright bear.  They also constantly remind me how good the fundamentals are.  The trouble with that is the good fundamentals only apply to the U.S.  The rest of the world is not so good.  Japan and Germany even had negative GDP prints.  The way this sell off has unfolded is definitely different then what happened in Feb.  That one acted like a bull market panic.  This one is not.  Be aware the market may be transitioning slowly into a bear.


Friday, November 16, 2018

Daily update 11/16

A little bit of upside follow through.

SPX closed fractionally above yesterday's high.  Breadth was +51%.  New highs were up to 39.  New lows came down to 173.  The bulls are trying to get a bounce going.  It looks inconclusive as to whether they will make it happen.

The futures remain below the downward sloping 20 SMA.  A green price bar in a downtrend might bring out sellers again.  To get the bounce going the bulls need to show up on Monday.

The green count turned up a bit, but remains below the red line.  This is a neutral condition.

The bulls have engineered an oversold bounce.  So far that is all it is.  They need to show up next week and keep the upside pressure on.  I don't have a clue what the odds of that happening are.  The dip buyers came out and bought today's gap down.  Will they do that again if we have another one on Monday?  Possibly, but I can't say for sure.  Maybe we have a big gap up and the sellers come out to play again.  No predictions tonight.  I am in wait and see mode.

Have a great weekend.


Thursday, November 15, 2018

Daily update 11/15


SPX tested considerably lower, but dip buyers seemed to be buying on the way down this morning.  The volume was very good today.  Breadth was +54%.  New highs slipped again to 19.  New lows popped up to 230. 

The bars on the futures chart show several lower tails.  Somebody was stepping in to do some buying.  The last bar is a big bullish engulfing candlestick with a close back above the 50 SMA. 

Both counts fell today.  The red count is still over the green line, but if the bulls generate a positive cross this will count as a bounce cross.  With the lines this close together that would be easy to do if the bulls come out to play again.

The bulls clearly are defending the market in this area.  That might be due to the SPY option support which will go away tomorrow.  On the other hand, it could be real and the market is getting ready to bounce again.  I was favoring the scenario where SPX gets very close or touches the 50 DMA then the real retest of the low.  That is the way it most often plays out.  If the market does bounce from here then it might make it to the 50 DMA.  That is if the 200 DMA does not stop it.  Breaking today's low could lead to a mini cascade down to the Oct. low. 


Wednesday, November 14, 2018

Daily update 11/14

More down.

The bulls tried again today with another gap up.  It did not take long before the sellers went to work.  If this is going to be an inverse head and shoulder pattern the decline needs to stop right here.  SPX closed below the left shoulder already.  Breaking that low caused a mini cascade which took SPY below the option support level of 270.  However, buyers stepped in and mounted a furious rally.  Unfortunately that left us with another V bottom and no sign the selling is exhausted.  Breadth was -61%.  New highs fell again to 22.  New lows were up again to 163.  The 50 SMA has now crossed below the 100.  Remember the 200 SMA is already trending lower.

The futures confirmed a break of the 50 SMA at the close.  The afternoon bounce might see some upside follow through in the morning.  The question is whether that would last all day or fold up again.

The red count crossed above the green line.  I guess there is a chance this turns into a bounce cross if it brings out serious buying.  I would want to see it happen before betting on that though.

The bull pressure lines are negative on all time frames.

The market is seriously acting like the bear has hit.  Morning upside gaps are fading quickly.  There are V bottom rallies after sizable moves down.  Everybody on TV is telling us don't worry be happy.  Everything is fine.  That is largely true in the U.S.  The trouble is we now have a global economy and across the globe economic weakness is showing up more and more.  How long can the U.S. hold up alone? 

There was a sigh of relief heard on TV after the big bounce from the low today.  V bottoms like we had today are not very effective when SPX is below the 200 DMA.  I would much rather see a low made mid morning and SPX trade sideways the rest of the day.  That would make better odds the selling was exhausted.  A rebound the next day might then entice some real buying.  A rally from this setup tomorrow would be suspect.  A successful retest of today's low might change the look of things.  SPY has stronger support down at 265.  The Oct. low is the next support below that.  Should SPX make a clear leg below that Oct. low it would be a third drive down.  Most bull market pullbacks come in two steps.  Three steps down commonly signals a bear market or at least a very prolonged corrective period.  The TRIN continues to be low on down days.  That also happens more often in bear markets then bulls.  I am not seeing much in the way of worry.  The technical deterioration indicates people should have their guard up at least.  This may all blow over, but we can't know that yet.  If the global economy keeps slowing things here could get a lot worse.

More headlines on global economic slowing.

Japan's Q3 GDP -0.3% quarter-over-quarter, as expected (last 0.8%); -1.2% year-over-year (expected -1.0%; last 3.0%).

Germany's gross domestic product (GDP) shrank 0.2 percent in the third quarter of 2018. It is the first time the German economy has seen a contraction in more than three years.

Oil has been falling on rising supply.  OPEC is now saying that demand is declining. That only happens during economic weakness.


Tuesday, November 13, 2018

Daily update 11/13

Oil seemed to be the problem today.

The bulls showed up this morning, but were met with sellers.  The dip buyers managed to keep the market from crashing again.  SPX closed right at yesterday's low.  Breadth was -51%.  New highs dropped way down to 27.  New lows were up slightly to 145.  SPX did not confirm a break of the 20 SMA.  I guess that keeps their hopes alive to continue the bounce.  Some people are talking about a possible inverse head and shoulders developing.  I can see that, but I have no idea what the odds are of that playing out.  The market might need a closer retest of the low.

The futures did not confirm a break of the 50 SMA. That keeps the bulls hopes for a bounce alive.

The green count fell further, but remains above the red line.  At the risk of being repetitive that keeps the hopes of a bounce alive.

Today seemed to be adding to the consolidation that started forming mid day yesterday.  SPX tried to break down below yesterday's low a few times, but buyers stepped in.  Rally attempts were sold into.  If the bulls engineer a bounce from here I suspect it will run out of steam at the 50 DMA.  If we keep falling there could be SPY option support around 270. 


Monday, November 12, 2018

Daily update 11/12

Splat.  Talk about an AAPL supplier cutting its outlook put a damper on tech and the entire market.

SPX opened lower and kept on going.  It broke down through the 200 DMA and 20 DMAs.  Breadth was -71%.  New highs were 57 while new lows came in at 124.  Volume was slightly lower then yesterday.  Bulls put their hands in their pockets.

The futures dipped below the 50 DMA and the lower channel line.  They are right at those lines as I write this.  There could be some support here for a bounce.

The green count slipped below 50, but is still above the red line.  The bulls still have a chance.

Tech selling was in vogue again today.  When this rally started I mentioned we have no sign the tech selling is exhausted.  Today was a good indication that it wasn't.  Another down day tomorrow will break this rally attempt and the odds shift towards a retest of the low sooner rather then later.  The bulls still have a chance to keep the rally going if they come out tomorrow in force.  Most of the price damage was done by 11:30 AM.  The rest of the day was largely sideways with bouts of buying and selling.  SPX took a late day dip to new lows going into the close.  However, QQQ and IWM did not make new lows.  That leaves a multi hour consolidation at the lows.  That could make a bottom for a bounce or be the mid point of the move down.  I don't know which it is.  I have conflicting data at this point. 


Friday, November 9, 2018

Daily update 11/9

Global sell off.

The market opened lower as global stocks were down.  SPX kept falling most of the day until it got 1 point above the 200 DMA.  SPX rallied strongly into the close.  Breadth was -67%.  New highs dropped a bit to 60.  New lows were up to 104.

The futures tested the 20 SMA and bounced.  This keeps the bounce alive.

The green count dropped out of overbought.

The bounce is still alive for now.  A lot may depend on what happens globally though. Oil has taken quite a dive which brings up questions about the global economy.  We know it has been slowing for quite some time.  Is that slowing about to accelerate?  Even with the late day bounce QQQ was still down 1.7%.  R2000 was down 1.8%.  That would indicate a considerable willingness to sell.  Which probably makes the retest of the low scenario more likely then the potential V bottom we have at the moment.  The market could mess around a few more days before deciding to do that though.

It has been made widely known about how strong the year after mid term elections has been historically.  I even saw an article in the USA Today about it.  I have to wonder if something that widely talked about will actually happen.

Have a great weekend.


Thursday, November 8, 2018

Daily update 11/8

Typical pause day after a prices explosion.

There was selling at the highs today so there is some resistance in this area.  Breadth was -52%.  New highs were stable at 73.  New lows were up a bit to 63.  I should have noted last night that SPX  is just below the 100 SMA and the upper Keltner (20) channel line (blue channel).  That might pose some resistance here along with the 280 level on SPY.

The futures are consolidating above the 100 SMA.  No confirmation of a break yet.  The 100 often provides support and resistance.

The market is short term over bought at resistance.  In a strong market SPX powers right on through.  I don't think we have a strong market so the upside could be tough to come by.  The 50 DMA still lies above should the bulls decide to push it up there.  Much above that seems unlikely.  The volume pattern and the strength we have seen in breadth suggests a retest of the low should be successful.  Sometimes there are pullbacks into Thanksgiving.  Based on history that would be a good time to complete the bottom.



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