Whilst Thursday saw some relatively moderate equity price swings, with a new month.. the giant monthly cycles have a new candle. For the chart maniacs out there, it should be absolutely clear that underlying price momentum continues to increasingly favour the equity bears.
sp'monthly
Dow'monthly2
Summary
re: sp'500. First, note the MACD (blue bar histogram) cycle.. now at levels not seen since May 2009. Second, the lower bollinger is around 1850, and offers rather strong support in the near term. In terms of upside resistance... we have the 10MA @ 2034.
Lets be clear.. until we see a monthly close >2030, the bull maniacs are facing a major problem. For the moment... the default trade remains to the short side. On the smaller daily cycle time frame.. the 200dma (2063) is arguably the last line in the sand for the serious 'big bear' money.
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re: Dow. First, note the third consecutive red candle on the 'rainbow' (Elder Impulse) chart. Can Oct' also settle with a red candle? If so.. it'd be another major support to the notion that the August break was something other than just a short term washout.
Second, note the decisive break under the lower bollinger in August.. something not even seen in the initial break in late 2007/early 2008.
Indeed, right now... there is reasonable justification to target a test of the Oct'2007 high of 14198... some 2000pts lower than current levels.
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Looking ahead
Friday will see the latest monthly jobs data. Market is expecting 203k net gains, with a static headline jobless rate of 5.1%.
Other data: Factory orders (10am).
*there is a wheel barrow of Fed officials speaking.. inc' Fischer and Bullard. If any of them say anything to that upset Mr Market, it sure would help aid a break <sp'1900.
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Carrying the weight of the world?
For yours truly.. it was a better day than feared. Futures had largely cooled from overnight highs (equiv' to sp'1940). AAPL was knocked sig' lower in early trading, and I made good use of that opportunity to offload that position. Yet, I'm still left with four short-market positions (including long-VIX).. that I really want to exit.
If we do break <sp'1900 tomorrow (and that sure could happen even if we open higher) and are trading in the 1880/70s by late afternoon, I'll try to offload another position or two. I would consider holding across into Monday, as a test of 1867.. and even a brief foray to the 1850s still looks possible.
sp'weekly1b
The current weekly candle is threatening a spike floor. I'd really like to see a Friday close <1900... as that would keep the door open to further weakness next week.
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Thank the gods, its almost the weekend... I'm real tired... this week has felt like I'm carrying the world at times.
... always good to hear from some of you out there.
Goodnight from London
