Yet Another Bear Flag
While SPY made a bullish, inverted head-and-shoulders reversal pattern on its intra-day chart after the FOMC announcement on Wednesday and may rally a bit on Thursday, its daily chart is starting to look like another bear flag. SPY had a high-volume drop on Monday, and a sharp, but low-volume retracement Tuesday and Wednesday. That’s a classic bear flag. If SPY is unable to surpass Wednesday’s high, the next leg of the bear flag projects down to the May 4th gap at 87.89.
QQQQ, IWM, XLF, and ES all have the same pattern, and DIA may already be leading the way down. The XME popped back above the neckline of its head-and-shoulders top, but did so on light volume.
The market needs to rally on strong volume immediately; otherwise the SPX has another 20 points of downside coming soon.
Losers
The top four weakest sectors since the June 11th peak are: XME, XLE, XLB, and XLI.
Ant Stampede
Wednesday morning, breadth on the NYSE hit a peak of +2100. That’s a lot of stocks being up. You don’t get breadth like that every day. In fact, the last time was June 1st – a day when the SPX was up 24 points. And the SPX was up only 6 points on Wednesday? That’s a major bearish divergence. The market may not be able to generate breadth like that again for another three weeks. When you get that many stocks rallying, you have to put some points on the board, and the market failed miserably. Lots of stocks were up, but not by very much; sort of like a raging stampede of ants. Yes, there are a lot of them, and they are coming at you hard, but they are easily squished nonetheless.
XME, in particular, was strong. I was tempted to sell, but was just a little too lazy and too greedy. I think it’s got more in it. I want 42, and would probably be bribed with a little less…
VIX closed outside its lower BB today. Strong move given the action in the market. Quickly scanning the VIX chart, today’s close may have been the greatest close below the BB since the bear began. When the VIX closes outside the lower BB, the next day it usu. reverses. This means Fryday for the markets. A Fryday-Funday combo deal could even be in the cards.
This ant stampede was pretty brutal during the last 20min of trading.
Gridiron question: When the Bears take on the Lie-ons (aka green shoots), who usually wins?
I’m not sure what makes a “Golden Cross” (50MA over 200MA), but there is one on SPX. I suppose it needs some type of confirmation. Stochastic has almost given a buy but MACD has not.
JG,
I’m all for Fryday. Got salt and ketsup?
George… great! I like trading on the same side as you.
i got a sell on spx on 15th at 942 still no buy so I am not yet buying
great down 122 after buying even htz at 7.96
K:
Are you in Albania?
MICHAEL JACKSON DEAD AT 50
WOW RECESSION IS OVER ACCORDING TO CNBC” can’t you feel the pain easing”.Ok this is me ,the company i work for is shutting down for 3 days on the 4th of July, 1st time in 35 years.they are now talking about shutting down on labor day,that is a 2 day holiday for us,that would be the 1st time in 45 years!!! Mercury Marine,brother works there in Fond Du Lac WI,employ 2000,they are now talking about consolidating with Oaklahoma plant…..someone please tell me where these green shoots are??
I’m with you Scotty. The only green shoots that I see are the freshly printed ones coming out of the Fed and inflating the markets.
Matt