Thursday, January 29, 2009
A top is probably in as today's reversal after our brilliant government came out with a double whammy yesterday with the Fed announcement and Congress passing a stimulus plan that's finally out of the way. Breadth was solidly negative today on the NYSE so after all the hype, nothing but sellers essentially entered the market today. The decline so far appears impulsive, but still has some sub-divisions to go before it can be confirmed. Plus, it appears yesterday's high is around the 50% fibo level from the previous decline (see 15min S&P futures chart).
Bottom line: most likely a top is in for the stock market, so the S&P will break its 2008 low of 740 before it even thinks about breaking the 876 futures' high from yesterday.
Wednesday, January 28, 2009
The S&P futures are hitting the cited ceiling level of 865 I mentioned last night in my previous post. I can't say for sure if it will hold or not, but breadth is extremely strong as almost no one is selling this morning. This has been typical on Fed meeting release days though. The key is what will happen after the meeting. Once the Fed hype is over, whether it be this afternoon after 11:15pst, or sometime later in a few days, the market will resume its downtrend to new lows.
Tuesday, January 27, 2009
The market has been trading choppy and sideways and I've been patiently awaiting signs for a top to be in. I don't have them yet, but suspect they'll come soon, perhaps this week. The chart above shows the clear decisive smooth selloff downward and the very hard faught choppy modest ensuing rally. This screams out to us that the trend is still down. Losses are easily acheived, while gains are hard faught and barely achieved at all.
The big question is when? Well tomorrow the Fed meeting results come out, whoopty-doo. But as usual, people buy into the Fed meeting, and looking at the rally in the futures right now, this meeting is no different. Interest rates are essentially zero so I don't know what all the fuss is about for this meeting other than it's speculators pushing the market higher only to sell as usual shortly after the meeting. The bottom line is that this rally we're about to undergo should be short lived, and I'll be aggressively shorting it the whole way up. Once it tops, which could be in the S&P futures 865 area, it will lead to the next wave of fast and ferocious heavy selling.
The short term picture is unclear, what is clear is that this rally is a correction, and that the S&P low of 740 will be broken in the coming weeks.
Sunday, January 25, 2009
As you can see from the above futures chart posted early Sunday afternoon, the outlook I have from the previous post for the very short term has played out. The ascending blue trendline was broken through late Friday and then the market tried to rally above it again and bumped underneath it several times before the bulls finally gave up and sold off the market in the last few minutes of trading. Now we see Sunday has continued that selling. Now this is a very short term chart and indicator, only 5min, so it's far from certain this will continue throughout the night and into tomorrow morning's US session. If it does continue to sell off, then the 750-775 area are the immediate levels of support to watch for.