The market plunged on both September 1st and October 1st. Perhaps that was because the big funds finished their month-end window-dressing. Are we seeing the same thing now? Monday will be the first trading day of November.
SPY rallied on light volume Thursday, so bulls must be cognizant of the possibility that the market is constructing a bear-flag retracement of the plunge. However, volume in the futures (ES) was not light, so this may be a bullish indication if traders were reaching for something leveraged rather than boring old SPY.
But even it does turn out to be a bear-flag, bears must be careful not to short it too early. Flags are similar to wedges in that they are sharp and pointy. They keep pushing up to a pinnacle, blowing out all your stops in the process.
Breadth ramped up to a very high level on Thursday. If the market can stay roughly flat as the internals unwind a bit on Friday, that will be a bullish development. All the bulls need to do is keep it flat and they win.
SPY didn’t leave any gaps behind on the way down, so when looking for upside targets for the market, the next one would be the QQQQ gap on October 28th at 42.35. The XME was halted at its 10/28 gap on Thursday, so maybe the Q’s will be stopped at their corresponding gap today. The XLF has two gaps above also.
All the major ETF’s left un-filled gaps on Thursday. That’s a very bullish sign, in the short term. As I write, the overnight futures are in a bull-flag formation, so that is bullish if it lasts until the open. It is ironic, but short-term bull-flags can construct a bear-flag on a higher time-frame.
Keep an eye on the BKX banking index – its 20-day moving average is poised to cross below the 50-day if the banks don’t rally strongly today. That could be a bad omen for the market. It just doesn’t seem like the sort of thing a fabulous bull market should be doing. The banks appear to be worrying about the FOMC meeting next week.
futures as of 5:30 am
s&p down 1
—
Market Last Change %
Crude Oil 79.7 -0.17 -0.21
Natural Gas 5.077 +0.015 +0.29
Corn 379.5 +10.5 +2.76
Soybeans 987.0 +16.5 +1.68
30yr Bond 119.03125 +0.34375 +0.29
10yr Note 117.71875 -0.53125 -0.45
NY Gold 1045.6 -1.5 -0.14
NY Silver 16.625 -0.03 -0.18
Emini S&P 1060.5 -1.00 -0.09
Emini Nasdaq 1708.5 +1.00 +0.06
Emini Dow 9875 -28 -0.2
2thfixr im still sitting green. plan to for many days. as I said i doubled up which means i went short near the top and bought more when this fakeout occured yesterday.
as for my teeth… thats why i asked if you can come here
Here’s a look at the SPY monthly. Feel free to adjust the lower trendline as I may not have drawn it exactly as it should be.
http://www.freestockcharts.com?emailChartID=0a2a8e61-c2d3-4b85-9873-08602df6d14b
Month-end effect is alive and well. Christmas rally around the corner.
2thFIXER…..bought and sold TBT for a 1 point gain this week…..going to buy it back around 46.5 again but its looking like a head and shoulders on daily for 1 yr dont you think???? pull up 1 yr weekly of $tyx and $ tnx with 18wk sma…..today will be crucial to keep them below WEEKLYma and keep bond rally alive…..also end of MONTH
What could motivate K to go to school on an off day and work out?
I guess brazilian girl served as motivation
Up at 5:40 out by 6:40 in school by 7:40 out of gym by 8:40 and hopefully home by 9:50? Lol
4 hrs in total for an intense 45 min workout.lol now I can trade and be more focused.
BOUGHT…..TBT @ 46.34……less than i paid earlier this week….lol
String, read last night that you are feeling well. That’s great!
2thFIXER …as i posted before ..i hope TBT crashes……get it????
Yesterday’s action was another Muff’ed Market Myth; supposed to “buy the rumor and sell the news” and it was the opposite.
That little bounce up was enough to fill the intraday gap on the SPY. SKF’s intraday gap is still open.
what just happened?
oh yeah i forgot economics news LOL.
Mitch
Yes I am fine. It appears Dave is on our worry list now. I am good to go.
String
SPY on 15min 36MA support. SKF hitting 15min 36MA resistance.
We’ll see what happens.
1037 test today?
Yes, Dave, you’re on my prayer list. Get well soon.
If we have a worry list I should too. have had sporadic pain to the right side right under the hip for almost a year now. I believe workout fixes everything so maybe no worries.
i thought kidney stones often form on the left side but am no dr. dr phil any advice? (or you can leave it till after market closes not to tick off matt)
How’d that Chigago PMI come out? I can’t find anything about it.
this is your friend George,
http://www.forexfactory.com/
chicago PMI is up but less of an impact i think.
look at canadian gdp, german holiday spending and our consumer spending.
bookmark that link its amazing!
NVM PMI is a leading indicator i was mistaken
Greenshoots anyone?
Thanks K, got it. Looks like sentiment is good although CNBC is reporting that it slipped(?) Go figure.
CNBC is on crack george what do you expect?
I wasnt expecting chicago PMI to ruin my plans! damn!
George, GS pre-released the figures one day earlier. They were a bit off so the market sold-off on Wednesday and rallied on Thursday.
ok i see where today’s greenshoots are coming from
http://www.businessinsider.com/china-opens-new-nasdaq-like-exchange-and-stocks-immediately-sour-200-2009-10
China Opens New NASDAQ-Like Exchange And Stocks Immediately Soar 200%
it’s spooky day before halloween. will there be blood before or after? No idea!
but i know I will wear a mixed costume of bull horns and bear red.
MOOO
According to a Reuters source- the nice guys at Goldman have trimmed the rescue loan to CIT Group to just $2.125 billion.
CIT paid $285 million in fees to Goldman for reducing the loan, putting up an initial $250 million in collateral. Goldman agrees to stand behind the loan should and when CIT files for bankruptcy.
Goldman was due a payment of $1 billion when the CIT Group did file for bankruptcy- which many will agree- is coming as sure as Christmas.
Update | 7:20 a.m. The CIT Group is likely to file for bankruptcy in the coming days, analysts and experts told Reuters.
Come on guys Green shoots right?
Dave,
Gout has some tricky chemical causations.
Allright,
again putting money where mouth and brain are feels good
All greed aside I went short at the top of Eur/usd last night and just cashed in $76
K,
WTG. SPY 15min stochastic is crossed down now. Not a good sign unless it can overturn it because the MACD pincers haven’t closed yet.
K, I take fish oil. Wonderful.
SPY trying to consolidate here for a move up.
XLP down too so much for a safeplay.
George,
SPX had/has to get above 1070 for anything major to happen. Now goldman is running out of money to give to CIT so i am not so sure about the market at 330pm. fed also ended their open market operations so double edged sword
BOUGHT DDM 1/2 position again @ 39.17
TRENDLINE across DDM tops sits at 39.87 now….my SELL TARGET= 70c
you might be right George and Phil on going long. I’ma take a break be back at 12
DOW 9940 is sell target
Nice pick up Phil on DDM. No, I don’t know what you mean about TBT crashing. I assume you mean that stocks go down and the TLT goes nuts in a flight to safety.
GEORGE…..if DOW starts to accelerate up….this correction is over …and new highs ahead NOW…..otherwise its just the B wave and we go down to new lows in wave C where i will LOAD UP there with DDM…thats why i am buying here in case it takes off NOW
spx right now is using my special chart line as a support on the daily
2th fixer…..thanks…no i dont think stocks go down…see 11:01 post….i have a little tlt but my portfolio is 90% coupon bonds 10% stocks so tbt crash is good for me
Thanks phil. SPY still has a chance because it hasn’t closed its 15min MACD trendlines. It’s making a move here but I can’t tell how successful it will be. With its 15min stochastic down, that’s bad.
I know its coming from zerohedge and all but
NYSE Problems Escalating As Selling Intensifies; Exchange Moving To Backup Servers
http://www.zerohedge.com/sites/default/files/images/NYSE%20Backup.jpg
What? This selling is p-nuts. When SKF moves $10 – that’s the real McCoy.
Well, K, I guess you gave the “super” signal to increase selling!
This is juice for shorts so they will be covering at some point making a great counter.
The market is trying to bounce at the 61.8% fib retracement of yesterday’s rally. However, SPY volume is running ahead of yesterday, so that’s something additional for the bulls to worry about.
Except for one BBT scalp, I’m not messing with it until the 5min shows some luv.
UUP is up but I didn’t trade it today. Booo
Not a very good follow through is it? Could catastrophic wave 3 down have begun?
SRS made it up to its 15min 36MA as resistance. It really hasn’t been all that strong today so far.
I’d like to see the inverse at least fill yesterday’s gap before reversing. Wouldn’t that be nice!
When SPY gets down to 104.40, that will be a major support area.
George
If we fall through that support I think we could get into the “Down goes Frazier” mode. Need more volume though.
String
George,
. I’m not home but yeah 
Wow.. market tanking..
Took a short via 120 AMZN NOV PUT @ $121.30.
up a nice 10% since the trade which was about 30 mins ago.
JIM….unlikely……youve been reading too much prechter..hes only right once every 20 years.. lol
SKF hit yesterday’s gap-down as resistance and is hesitating.
Stringm, are you talking about “Thrillah’ in Manilah’ “?
I just posted a chart here:
http://www.trivisonno.com/spx-bear-flag
I try to put things into perspective as it relates to the market. If I walk down to an open air market or super market and noticed things on sale and moving fast should I be frightened? What if it was MY merchandise I’m seeing on sale? Am I liquidating? Ex: selling millions of floppy discs? Useless now but worth a penny and better than nothing? Was XOM 10 billion light?
THIS is my vision for next TEN years http://1.bp.blogspot.com/_V7Pddp58Py0/SuQ-iH2G5bI/AAAAAAAACeQ/Lg5yaSZB1pg/s1600-h/spx+future.png
Wow.. up 15% now on the trade.. AMZN taking it on the chin..
BTW.. thanks Matt for the continued analysis..
I’ve missed being here..
OK GEORGE…i am lowering my target to SPX 1500
George
No I am talking about when Foreman kept knocking Joe Frazier down like bobble doll.
String
Phil
Dang that’s a mighty big concession, but it takes a big man to admit his error. I’ll stay tuned for more updates.
String
Stringm,
I remember it well. I actually met Joe Frazier.
string….did you see the chart??…both bulls and bears will be driven nuts
Patience paid off on the BBT scalp.
Phil, as wierd as it seems I can see how that chart can play out. It is contrary to a lot of thinking though, like that bottom in 2013 will happen next year.
George
I can still hear Howard now “Down goes Frazier, Down goes Frazier”. Foreman was king for a year. Showed them all though. Out earned them all, returning to the ring, selling hamburger grills and making TV comedies. Guess it’s who laughs last that counts.
String
I’ve never met Foreman: I think I’d run if I did.
Unless he gave me a grill.
I’d rather have lunch with my mechanic than go home and stare at the screen. Later barber to get a haircut and see if I can take my barber on a date(female) lol.
This market wants to be bloody for halloween.
lol George …
my friend has one of those grills.. seems to like it a lot.
Hey K…
you should be referring to her as your hair dresser then and not your barber ..
barber = old italian guy in his 50′s with that tall jar of blue liquid on his counter and the blade razor ..
Phil
I agree with the oscillation for years to come, I just have the tops to the right lower. The Dollar will have to fall a ton more to get the SPX back to 1500. I don’t think the rest of the world will set still for that. They will intervene or the dollar will not be the reserve currency anymore and it will not matter.
String
btw.. glad I took my profits on AMZN.. was sensing a bounce which it just did.
+ 10% on trade.
George
We are about to test your support level.
String
GEORGE…look at that chart ..it is a beautiful ABC from 2000….a correction…ie against the trend which is UP……now it could be wave A of an even bigger ABC and we are in a B wave now …but what if the correction is over??..that would mean new highs ie 1600…ps this could be a developing huge triangle also but you can see that i am long term bullish because of what i see in this chart
Mitch
Have you been stalking anything lately, your SYY was great. I have an eye peeled on UPS.
String
BETTER CHART http://3.bp.blogspot.com/_V7Pddp58Py0/SuQ-ialDXzI/AAAAAAAACeY/OmJZh-UE5hg/s1600-h/spx+secular+bear.png
Stringm,
That’s a 100% retracement from yesterday on the 5min chart.
Phil,
I see what you mean. We’ll find out here what legs the market has.
dax took it on the chin into the close.
George
VIX has jumped three bills. The old moving and shaking days may be back for you soon.
String
String,
NOC, although under general market pressure, yep its throat is on this market too, can be worked by a trader for a few pence.
Phil
I like this scenario:
http://www.ritholtz.com/blog/2009/08/aftermath-of-secular-bear-markets/
String
Stringm,
That’s MUSIC to my ears. I certainly am enjoying today!!!! Yippie ti ya!
I always look for those “overshoots” on those fibs and such and go from there. That eliminates the hanky-panky folks play to shake out stops and robots.
SKF is up $1.68 and it was down slightly over $2 yesterday. That means the underlying is still ahead a small degree. Parity eludes the inverse.
Hairdresser it is! Haha pardon my poor english but 1037 test seems good?
.
K Says:
October 30th, 2009 at 9:54 am
1037 test today?
STRING…..i have no problem with your scenario…in fact it looks like a triangle to me….ie a 4th wave….ie new highs eventually with post triangle thrust
The 1020 target that I mentioned on my bear-flag chart could happen today, but more likely, I would expect it to be hit sometime next week.
K,
That was a fantastic call.
Matt
i will not add more shorts today that’s it but next week perhaps. later all good luck!
CIT shares halted. source: CNBC iPhone Alert.
CIT is down to .85c. It’s still moving on my charts. Perhaps leftovers?
The NDX is holding an uptrend line on its daily chart. This is the one that connects the intra-day lows from August 17th, and September 3rd.
SELLING all QID bought @ 23.60 into next surge
Thanks to 1987 Paula and I have a good life. On
Friday before black Monday in 1987, the SPX closed
below its 200 DMA. Mother was going to close her
short position, but Grandfather told her to increase
it to 400% using stops. On Monday she made a lifetime
income in one day. She made it possible that Paula
and I would not have to work for anyone…also
made us pay back every penny she spent on us
after high school.
SOLD 2000 QID @ 24.09
String,
Sounds like you’re feeling better. That’s
good news.
Are you wearing a gold number 1 around
your neck?