Last week here I wrote “For next week, if SPX stays below 1872, then assume all bounces should be sold and price is likely headed to 1850, and then near or below 1812.” Furthermore, I posted the open interest for SPY which suggested a close over 185 by Friday. Somehow, both things worked out even though it was definitely not an easy trade. The market gapped below 1872 Monday morning hitting the first target of 1850 and then some. From there it bounced over 1872, which failed to hold and proceeded back down to hit the second target. Finally, it bounced back to close at 1864 (and above the 185 calls). Go figure.
I posted a poll to Twitter on Friday and left it open for 24 hours. The results were honestly a bit alarming and demonstrates that nobody has a f***ing clue. Although truth be told no one ever does :-).
Ok, that’s a bit hyperbolic because although there is zero consensus on how the market will open, it doesn’t mean there is no consensus on how the market will end the week. Well, actually, my current poll “On Friday’s close SPX will be 1) above 1865 2) below 1865” is currently also about evenly split, demonstrating again that nobody has a f***ing clue. If you haven’t voted, the poll is open until Sunday at 3:30pm EST. After that the final results will be pinned to my twitter handle.
Was Thursday’s double bottom the start of a countertrend rally?
The market closed on Friday near short term overbought levels based on SPX stocks above their 3 and 5 day moving averages. A good sign for the bulls next week would be if they can both continue higher and then remain above 40% next week. 
Some positives:
- SPX made a lower low, with positive divergence on the daily chart.
- SPX had a false breakdown below the all important 1812 level and the 200-week EMA and bounced back with vengeance. Failed breakdown?
- The weekly chart put in a hammer, but of course needs confirmation.
- The current open interest taken at face value suggests that SPY will close at or above 190 by Friday. There is also support at the 185 and 180 put strikes, but note that remaining under those heavy strikes could lead to escalated selling due to delta hedging.
Some negatives:
- The market is clearly in a downtrend and the burden of proof remains on the bulls.
- The weekly chart does not have positive divergence on the SPX double bottom. Thus, even if the market does see follow through, it will likely be short lived.
- Volume, NYSE up/down and advance/decline breadth on Friday’s bounce was no where near an accumulation day and rather meager in comparison to the down days during last week.
????????:
- China – will they move lower upon re-opening or ride the coattails of Friday’s US up day?
- Oil – will any more news come out about OPEC’s willingness to negotiate and importantly how will oil respond/trade?
- Have financials put in a bottom (even if just short term)?
As you can see from the above, its easy to understand why sentiment is currently so mixed. Thus, below are levels that can help guide you for next week. Furthermore, I have included several individual stock charts with comments for those looking for new set-ups.
SPX levels of importance:
Opening below 1850 – neutral to bearish with support at 1834, 1810, 1790, and 1775’ish. An open below 1834 without being able to get and hold above 1850 would suggest another leg lower is likely imminent.
Opening above 1850 – neutral to bullish with resistance at 1865, 1874, 1881, 1907, 1920 and 1940. A gap open over 1865 that is not filled would increase the odds of a continued rally. And a gap over 1881 without being filled, could trigger a multi week countertrend rally.
Some stock ideas: Here are some ideas that shouldn’t depend heavily on how the overall market is trading. For a more detailed approach to those set-ups along with several other more short term trade set-ups consider joining us here.
If you are looking for daily market analysis to keep up with the drastic market moves, short term stocks set-ups, plus real time option trades (entries and exits) and some sass, come join us.
For those who have asked, I closed 3/4 of my ongoing TLT long trade for a handsome profit.
Tags: bearish, breadth indicators, bullish, day trading, delta hedging, market, max pain, open interest, options, S&P 500, SPX, spy, stock market
No One Has a Clue, but for Next Week Know This…
Last week here I wrote “For next week, if SPX stays below 1872, then assume all bounces should be sold and price is likely headed to 1850, and then near or below 1812.” Furthermore, I posted the open interest for SPY which suggested a close over 185 by Friday. Somehow, both things worked out even though it was definitely not an easy trade. The market gapped below 1872 Monday morning hitting the first target of 1850 and then some. From there it bounced over 1872, which failed to hold and proceeded back down to hit the second target. Finally, it bounced back to close at 1864 (and above the 185 calls). Go figure.
I posted a poll to Twitter on Friday and left it open for 24 hours. The results were honestly a bit alarming and demonstrates that nobody has a f***ing clue. Although truth be told no one ever does :-).
Ok, that’s a bit hyperbolic because although there is zero consensus on how the market will open, it doesn’t mean there is no consensus on how the market will end the week. Well, actually, my current poll “On Friday’s close SPX will be 1) above 1865 2) below 1865” is currently also about evenly split, demonstrating again that nobody has a f***ing clue. If you haven’t voted, the poll is open until Sunday at 3:30pm EST. After that the final results will be pinned to my twitter handle.
Was Thursday’s double bottom the start of a countertrend rally?
The market closed on Friday near short term overbought levels based on SPX stocks above their 3 and 5 day moving averages. A good sign for the bulls next week would be if they can both continue higher and then remain above 40% next week.
Some positives:
Some negatives:
????????:
As you can see from the above, its easy to understand why sentiment is currently so mixed. Thus, below are levels that can help guide you for next week. Furthermore, I have included several individual stock charts with comments for those looking for new set-ups.
SPX levels of importance:
Opening below 1850 – neutral to bearish with support at 1834, 1810, 1790, and 1775’ish. An open below 1834 without being able to get and hold above 1850 would suggest another leg lower is likely imminent.
Opening above 1850 – neutral to bullish with resistance at 1865, 1874, 1881, 1907, 1920 and 1940. A gap open over 1865 that is not filled would increase the odds of a continued rally. And a gap over 1881 without being filled, could trigger a multi week countertrend rally.
Some stock ideas: Here are some ideas that shouldn’t depend heavily on how the overall market is trading. For a more detailed approach to those set-ups along with several other more short term trade set-ups consider joining us here.
If you are looking for daily market analysis to keep up with the drastic market moves, short term stocks set-ups, plus real time option trades (entries and exits) and some sass, come join us.
For those who have asked, I closed 3/4 of my ongoing TLT long trade for a handsome profit.
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Tags: bearish, breadth indicators, bullish, day trading, delta hedging, market, max pain, open interest, options, S&P 500, SPX, spy, stock market