What an ugly day. The August highs were penetrated by the major indexes putting the markets on a weaker footing with respect to the expected October rally to complete the first leg of the move from the March lows. We will have to watch it carefully over the next few days to see if the trend is reversing in earnest. The September lows are key as they represent the low of the high month for most indexes. We will also be looking for an impulse wave down that would initiate a trend change.
The semiconductor index has already breached the September low and was down almost 5% today - not a good sign for technology. I am long the SSG from 24.00. If your not yet short the semi's, it's a little late near term, but there will most likely be a rally for a second chance. I will wait to short the Qs and the IWM after we see how this current decline plays out. The indexes are approaching an oversold condition with the McClellan Oscillator at (-189), and the 5 day stochastic under 5 for most indexes. In my opinion, an opening gap down tomorrow, should it occur, would not be a good time to initiate short positions, as a near term bounce is likely. There is support for the SP500 between 1009 and 1018 as well.
Yesterday I sold a number of positions near the open including JPM (+170%), UAUA (+110%) and UWM (+22.2%), UYG (+50%). I will try to go over these trades in the next couple of weeks. I am still long a few positions, and it's not all good, but I will be looking for opportunities to exit most of my remaining longs over the next two weeks.
Subscribe to:
Post Comments (Atom)
2 comments:
Craig, is there any part of the following that you disagree with ?
Note #1: I will readily admit that I cannot adequately subdivide intermediate (3) that started in July and that I believe ended in Sept.
Note #2: I am now counting the corrective wave intermediate (2) that ended in July as a zig zag that started in June instead of a more bullish abc starting in May and ending in July.
EW implications of widespread index declines below the Aug highs:
1) Means that intermediate (3) which started in July, in all likelihood, is over.
2) Means that intermediate (5) will be shorter than intermediate (3) and the shortest motive wave of all since the March bottom. Note: This was ALSO true of the minor subwaves of intermediate (1) from March-June
3) Furthermore, when 5’s are < 3’s < than 1’s it means that the following corrective wave (in the present case an intermediate (4) ) is going to be a shallow, choppy prolonged trading range.
4) It does not necessarily mean that the cyclical bull mkt is over (primarily because of the upturn in & rising 200d & 150d). It does mean that the intensity of the remaining cyclical bull mkt is waning. However, those looking to trade corrective moves cannot take much comfort either because of the shallow, choppy prolonged trading range. Bears best trades (risk-adjusted) will have to wait til the cyclical bull is over and we get a cyclical bear within the secular bear mkt.
I think I need to address this is a blog post, but I am too whipped tonight to tackle. Give me a day or two.
Today's rally was very unimpressive except for gold and oil.
Post a Comment