Saturday, November 10, 2012
One of the things that bothers me is the overwhelming amount of media that suggests bearish moves are over or that the stock market has hit a bottom. This morning I came across this article on CNBC's website: www.cnbc.com/id/49760677. It's title is: "Did the S&P Bottom Thursday? Yes, says the VIX" It lays out some obscure pattern that supports their assertion. This is my problem with the article. First the VIX is only at 18.61 and has not breached 20 at any time during this last down turn suggesting that the selling has been orderly; which means its likely to continue. You typically need some sort of capitulation type move in the market with a VIX spike to signal a bottom. During our last selloff in June 2012 for example the VIX nearly hit 28. Second the stock market is effectively sitting on a 13 month support line that originated in October 2011. This is our fourth touch which generally would be supportive if we were to bounce off of it. It's too early to tell and would never feel comfortable calling a bottom at the very bottom. That just does not happen. Finally there are a number of other longer term technical indicators that suggest this move down is far from over. With some indicators pointing to a move that could last for months. This is one of the reasons that I never give myself price targets (aside from resistance and support levels) I tend to follow what the indicators tell me and the visability with these is typically not more than a few days
Friday, November 9, 2012
Very weak retest back to 1490 on the S & P. Traded their briefly and then fell back into the 1480s for most of the day fading to 1479 by close. Long and short term technical patterns are growing increasingly bearish. Did not add any positions since the retest was not substantial. Market is still oversold with 1398 now the retest stock market on the upside. Need to move with conviction above 1480 (probably on Monday) or 1475 will get taken out. Still yellow on investments because of the weak retest.
Thursday, November 8, 2012
So not much of a retest. The S & P 500 bounced above 1400 for less than 10 minutes when the stock market opened this morning and then pushed noticeably lower. Still looking for a bounce of some nature just to confirm the bearish trend. Will not add to my bearish ETF until we get a little technical bounce. The next Fibonacci retraces are at 1371 and 1350 although i'm more concerned about 1375 which has a good amount of volume being a previous resistance level.
Update from last nights entry. They S& P 500 is much lower than its bearish range. It could correct back up to 1410 and close and still suggest weakness. 1400 is still the critical level but a couple of days from 1395 to 1405 would not be unexpected. Will update after market close
Wednesday, November 7, 2012
So the S & P got to 1400 faster than I thought, traded through it to 1390 and then settled back to 1400 for most of the day. a bit of a push down at the end to finish at 1394. we will probably retest back to 1400 and see if there is any support if we finish below 1400 tomorrow, it could get ugly in a hurry
Tuesday, November 6, 2012
Election Day and the market was up strong with the S & P finishing at 1428, up 11. It finished however below the technical resistance level of 1130 after trading above it for some of the day. Futures as of 10:32pm EST point to a decline tomorrow. Market needs to close above 1430 to break bearish pattern otherwise we will probably test 1400 shortly.
Monday, November 5, 2012
S&P 500 bounced off 1410 and moved slightly higher throughout the day closing at 1417. I bought some put protection today for my bearish ETF in case of an incumbent defeat tomorrow and a republican rally. All signs still point to a bearish move in the market especially with the rate on the 10 year bond ($TNX) moving down to 1.68 from 1.72. Expect an uneventful day tomorrow ahead of the election tomorrow night.
Sunday, November 4, 2012
Fair employment report helped move the S & P 500 up above 1430, but was not able to hold and market moved down and closed near the lows at 1414. Market unable to penetrate and hold above 1430 signaling increasing weakness. Huge congestion zone from 1400-1413 if market moves and closes below 1400, further downside expected.