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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 11/10/20

Up 11/4/20

Up 11/9/20

Short term

? 11/18/20

Up 11/5/20

? 11/18/20


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, October 30, 2020

Time to watch for a short term bottom 10/30

Some say election jitters hit the market the last couple of weeks.  Maybe that is true, but I believe the sell off this week was largely virus related lock down  fears.

If you have been a long time reader you might recall how SPX started a multi year series of making bottoms every time it hit the 100 DMA starting in 2013.  Notice in this chart the last short term bottom was at the 100 (white line).  SPX closed below that line on Wed., but it still has not confirmed a break of that MA.  When it fails to confirm a break after two days, the probability of a rebound back above the MA increases considerably.  I don't have specific stats, but watching this kind of price action around MAs over the years is what caused me to look for confirmation of a break in the first place.  Way more often than not this pattern leads to a rebound back above the MA.   Breadth was -59%.  That was considerably less bad than the -89% on Wed.   The price bars are blue which indicate SPX closed below the lower Bollinger band indicating price is extended on the downside.

 

The futures show a bullish engulfing bar followed by a retest of the low.  This has some potential to make a short term bottom.  Also  notice the -DI (red line bottom panel) has turned down below the ADX line (blue line) from a very high level.  This technical condition often leads to a short term oversold bounce.


The red line is way up into oversold territory.  This is definitely a bounce worthy condition if not a true bottom.

We have a good setup for an oversold bounce.  SPX is in a good place to turn a bounce into a true tradeable bottom.  The door is open for the bulls to do something here, but they need to step through that door early next week.  Should we fail here the next target down is the Sept. low at 3209.  If that fails to hold a trip to the 200 DMA (3129) is likely.

Peace and good health to all.  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.