news flash pics courtesy of MarketWatch and Bloomberg
Early morning dive, and late afternoon pump.
Some consumer confidence number was released in the morning. Apparently, Jane & Joe are not as confident as bubble masters would have liked them to be, and that gave an excuse to market players to dump the morning.
As I mentioned in the intraday post this morning, I was patiently waiting to see what the ETF buyers would do, and they did not disappoint
Isn’t the last volume bar on the chart above the very Boo-Yaa of all Boo-Yaas? What is that? 20 million shares? Like 1.8 billion dollars worth of trade? Am I doing the math correctly? Vow!
If it is genuine buying, why wait till the last bar? Why not buy gradually and sooner?
For the day volume was below average but expanded from the day before. Breadth was negative.
Based on changes in daily volume and closing numbers, this was the second distribution day in three days.
As I posted intraday, there is a potential H&S in play.
If it is the H&S that I want to play, I’ll need to wait for a break of the neckline. If I am more adventurous, I can take a shot if today’s low is violated. A move above 930-935 may put a question mark on the H&S scenario.
Now, I can guarantee you that everyone and their grandma see the same H&S as you and I. I am not saying that it may make the pattern less effective. All I am saying is that everybody sees it – player beware!
With respect to the following 15-minute chart, when I was writing these words in the post about S&P action of June 29
So, if I were itching to short, I would first wait for the index to drop below the purple range (or its equivalent in the future market). I would then decide on a stop above the purple range. Depending on my vehicle of trade, I would close my trade, or hedge it, at the end of the trading hours.
I had no idea that it would present us with such wonderful, one-way trade for the day.
Today’s drop nicely halted at some obvious technical levels. The rising trend line that forms the lower boundary of a channel on the chart above, and the 910-915 area that we have discussed a few times contained the drop – clean and technical. I guess both buyers and dumpers of ETFs know when to push it and when to take it easy.
A sustained move below today’s low will confirm a short term trend change, and will very likely open the door to more selling and the possibility mid-term trend change. To me, today’s low is more important than the neckline we discussed above.
We have talked about an alternate short term count on the DOW.
Notice that the short term picture on the DOW is weaker than S&P. That, if continued, would not be good for the bulls.
Let’s Wrap Up:
Index dived with abandon in the morning. Buyers of ETFs showed up late afternoon to contain the damage.
There is a wide range (885 – 965) that has the potential of containing index action in coming days, and frustrating the hell out of bulls and bears alike. A break above 935 may be the first indication that index may be gunning for the top of the range.
McClellan Oscillator pulled back from the downtrend line that has been in play since March, and dipped below zero. Bulls need it above zero.
We made a lower low short term, a close below today’s low changes the short term trend to down. Mid-term trend is up. Long term trend is down.
Resistance is 923-928 (tested three times already), 935 (Jan 2009 top), 950 (pierced and lost three times), and 961 pivot (a long term level from 2003). Support is 912, 905, 893 (55 EMA), 875-885 (neckline and base of a W bottom) and the frequently contested 850
Market needs new bears with capital and conviction. Let’s look for signs of distribution to determine if new bears have emerged or not. Also, let’s keep an eye on volume and wave structure
June is now Bye, Bye. No real window-dressing happened, just a wide range supported at the bottom by SPY, and SSO, and ES
There are ongoing momentum and cyclical divergences on the index.
The high beta, reflation trade that has defined this rally has been weakening with only the techies still holding. Can SPY, SSO, and ES buyers buy long, and hard enough to hold the index and wait for materials, industrial, and discretionary to correct and come roaring back, or are we going to see a rotation into defensive sectors typical of an end to a rally?
All intermediate sell signals are still intact. Bulls need a break above 930-935 to stand a chance of turning the tide.
Let’s take a look at two familiar charts
Index is sitting on 21 EMA. When the fundamentals are all about a discounted future of green shoots growing out of the idea of perpetual deficit-financing, many choose the technicals to get in and out of trades.
I said we should watch the Stochastics behaviour around 50 – so far, no umph!
Nas100 pulled back from the underside of a broken trend line on expanding volume. As we discussed before, Nas100 has been the lone remnant of the high beta trade. It’s showing early signs of fatigue, but that's about it. a broken trend line and fatigue. As long as Nas 100 stays above it MAs and the 1440 level, it can work on mending its situation. Bulls need a higher high, bears need a lower low.
Let’s look at what some news sources wrote as cause of this morning’s drop
This from Bloomberg:
You mean fundamentals matter? What happened to the Green Shoots? I mean, Bloomberg did not know some people had no jobs? None of the neighbours, friends, colleagues, and relatives of Bloomberg writers has been off? Where do Bloomberg writers live? On Mars?
Here goes Marketwatch:
Where do they go to watch the market? The Fifth Avenue? Do they really have to wait for a report to know what is going on in the economy? Why is it called MarketWatch? It should be called ReportWatch.
You know what I like to happen? I like the SPY, and SSO, and ES buyers to push the market higher, and see what these reporting outlets report.
When it comes to analyzing, understanding and planning market activities, I find main-stream media financial news outlets simply useless.
But, to each his own!
I leave you with this chart
While those who are bearishly inclined might be excited at the prospect of a small Head and Shoulder, there is a potentially larger one developing as well. Add to that the fact that index is comfortably above all its short term and mid-term MAs, and the very existence of some buyers of ETFs with billions to be deployed in minutes, and I, for my money, shall be very cautious -- one level at a time -- trading and hedging is the name of the game.
To Canadian Readers:
Let’s drink, party, and celebrate our abode! Let’s have a
Happy Canada Day!