The Nasdaq and S&P 500 are back within their mid-October congestion zones. Absent any unexpected news or a big move in the dollar, I'd be surprised if they were able to move out of those ranges during this holiday week. But that's not to say that nothing will be moving during the week. We often see traders gang up and push some low volume stocks around during these holiday weeks. So it wouldn't surprise me to see some of those games on Wednesday and Friday.
The gaps down on Thursday and Friday are a little troubling but the Nasdaq actually looks like a pretty good risk/reward long above 2150 with a stop under Friday's low.
The S&P has a setup similar to the Nasdaq's but I don't like the risk/reward because 1100 should be resistance.
No changes
| Trend | Nasdaq | S&P 500 | Russell 2000 |
|---|---|---|---|
| Long-Term | Up | Up | Up |
| Intermediate | Up | Up | Down |
| Short-term | Down | Lat | Down |
(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend
*** I'm simply using the indices' relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.
Someone asked me from the last post what a reversal point wave configuration is. It's a major top or bottom pattern characterized by a 5 point wave and it basically looks like an expanding triangle. Each top is higher and each bottom is lower in the pattern. The nasdaq and QQQQ chart are a text book example of this pattern. Confirmation occurs when the market breaks the last low. In this case about 40 1/2 on the Qs or 2020s on the Naz. Or you can anticipate by taking a short position with a buy stop if it doesn't pan out. Often times, after the last top, the market will bounce temporarily at the confirmation level and make and 2nd shoulder of a head and shoulders pattern before finally breaking down. In other words, many head and shoulders tops are but sub patterns of a reverse point wave pattern.
I never heard of this pattern. So when you say major top, what exactly do you mean?
I have to admit that it is new to me also, although I have previously recognized the pattern in individual stocks and always took it for a reliable weakness indicator--failed ascending triangles, for example.
Sanguine Mary Poppins holiday market is another reliable indicator.
All it's really indicating graphically is an increasingly violent struggle between bulls and bears- hence the expanding geometry. Eventually, one side wins and the flood gates open either way. Bottom line is we can expect a big move very soon. It'll either be a big correction down or a powerful continuation. Unfortunately, you never know for sure until the breakout happens. But you can make a bet that it is more likely a top considering the massive move from the bottom last year. Time will tell as we say...
Michael, GLD seems to be in the early stages of a parabolic move, what are your thoughts on this?
Ok, I am going to do a little victory lap here.....
Black Swans do not drift in, they are delivered by a cruise missile in the middle of the night, holidays, or on the weekend.
http://oahutrading.blogspot.com/2009/11/chart-o...
http://oahutrading.blogspot.com/2009/08/mania-c...
http://oahutrading.blogspot.com/2009/11/blow-of...
http://oahutrading.blogspot.com/2009/11/30-year...
As America tryptophans out and wakes up weary tomorrow, with half a trading day to "panic out with", this could be very interesting. Looks like nearly "perfect timing" by our financial overlords. Lots of Turkeys (aka Lemmings) getting cooked today.
Again, an interesting post... I hope people are holding inverse positions or shorting some of the major weak stocks!
Nice work Steveo, but already been there. With the VIX landing on long term support @~20 I went flat at close yesterday, probably as many other swing traders did. Something like Argentina was destined to bring down this fantasy market.
Switching to short mode.
Any thoughts on this Dubai debacle? Why is this such a big deal. Euro stocks down 3%???
Btw Mike, I signed in for a username "lessardrp" and it said I was sent an email but it never showed up. Checked my "junk" folder etc. Tried another username- same thing. You and I shared TA ideas about 5-6 years ago but I've been away from trading. Anyway, I've been posting as anonomous but figured you'd want to know the email notification thing doesn't seem to be working. I assume you have a record of my initial attempt and can send another email?
Later,
Rob
Because of this:
http://news.bbc.co.uk/2/hi/business/8381154.stm
And this:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aSuT3NxqmUOo&pos=2
Lesson: You can't pump sand 24/7 to make palm shaped islands with no oil hedge. And in this economy you can build it, but they may not necessarily come.
My take is that this reveals to those who've had their heads in the sand that the global financial system remains a house of cards. The only question I have is how long until people are convinced that all is well once again and start buying again. I'm sure that by Monday we'll hear stuff like "this is only contained to Dubai's direct creditors..." Which reminds me of what was said at the beginning of the sub-prime mess. Not that I'm saying this is another crisis like that but just that it's standard operating procedure for the Wall Streeters to make those "all is contained, keep buying" claims.
I notice the Euro is down sharply against the dollar in forex since Wednesday. Could see some carry trade dynamics as well as the anticipated bounce off vix support. All this could possibly cap off the reverse point wave pattern I mentioned before. It's amazing how things tend to align.
Dow futures down 200 and nas down 46 at time of this post.
I have already read some pundits/analysts argue the Dubai debacle is contained. The argument is that Dubai's neighbors are backed by real assets (oil) whereas Dubai was just an over-leveraged mirage that depended on faith in its charismatic leader. We will see...but I think the last 20 years of financial panics have demonstrated that these things always have some contagion. For example, it seems major British banks may take huge losses on this thing. If so, the hit to reserves will further constrain lending in the UK and hinder the UK's meek and fragile recovery, etc...
Note of caution for the bears: one announcement of support for Dubai by a major government and/or financial institution, and we could just as quickly go back into la-la land as fast as we fall out.
Oh yeah, Mike, again, looks like the chart for GS was an excellent tell again. Perhaps we will find out that even mighty Goldman is going to lose money here.