Wednesday, 6 January 2016

Set for much lower levels

Monday was pretty exciting for equity bears, and some might understandably feel frustrated after a rather subdued Tuesday. However, price structure is offering a rather clear bear flag, with renewed downside in the near term, at least to the sp'1960/50s.



Despite the net daily gain, the sp' weekly 'rainbow' candle remains an outright bearish red.

There is plenty of opportunity for downside to the lower bollinger, currently @ 1911. By early next week, that will be around 1920.

Meanwhile... in the far east...

China, monthly

Despite the Tuesday morning intervention from the PBOC (and/or its agents), the Shanghai comp' still closed net lower for the third consecutive day.

With the 3400 threshold lost, next support is 3K, then 2500s, 2K, and the 1600s. Clearly, any price action <2500 is difficult.

*it is notable that Bank of America has a target of 30% downside to the 2600s in 2016.

Update from Mario at SMF

Its a brief video, but its interesting to see a straight call for a 30% decline.

*bonus chart*

sp'weekly8d -fib retraces

If by some miracle we're trading in the 1600s or lower in the months ahead, there are a fair few fib' retrace numbers to be aware of. In my view, it will be damn difficult to see any sustained price action below the double top of 2000/ be aware of the 1604 and 1573 fibs.

Looking ahead

Wed' will see the latest ADP jobs, intl' trade, ISM/PMI serv' sector, factory orders, EIA report.

*the FOMC min's will be released at 2pm, and the algo-bots will certainly react to that.

Goodnight from London