Pre-Market Brief

Good morning. Futures are moderately lower, sp -4pts, we're set to open around 1608. However, futures earlier tested the sp'1598 level, and apparently held. With Japan -843pts (6.4%), its not entirely surprising we look set to open weak.


sp'60min

vix'60min

Summary

Its pretty simple for today..and tomorrow.

Any break <1598..and this market unravels. There is simply NO significant support until the lower weekly bollinger - currently 1480 (but rising).

If 1687 was the top, then we are in the early phase of a wave'3, and it would be fierce. I see some claim we might get stuck around 1570/50..or the 1530s (April low), but in all recent multi-week down cycles, that is simply not how its played out.

A loss of 1598 is the last line for the bulls.
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Saying all that, the hourly index charts are very low on the cycle. The price action is very similar to last Wed/early Thursday.

So..lets see how the day proceeds.

*there is mid-sized QE-pomo today - the first in 5 days, along with an array of econ-data.


8.39am.. Jobs and retail data come in slightly better than market expected, so..the main indexes are still holding together.

Looks like we'll open with a buffer of 7-10pts above the key 1598 low.

9.33am.. well, we're opening flat..so..now we'll see if the bulls can rally this nonsense back upward.


9.40am.  sp'1608..well, thats still 10pts away from the critical zone.

Considering the 15/60min cycles, bulls should be relieved at this rather quiet open...I know I am.

 First upside target is sp'1620/25


9.45am...sp'1611..here is the thing. Even if the bulls manage a rally, its going to take at least 4-6 hours to get any initial bullish signals.

Could be a VERY long day for those anxiously waiting to get away from the critical low.

*I remain long, seeking an exit on the next bounce.

Bears trying to seize control

With the market failing to hold opening gains, the bears quickly seized control, and ground the market lower across almost the entire day. The close of sp'1612 is a mere 14pts above the critical low of 1598. Bears are on the edge of a massive break through.


sp'weekly

sp'weekly7 'the high is in'

Summary

So...what to say about today? Well, I will say I am surprised that the bears are managing as well as they are. There certainly isn't anything scary in terms of econ-news out there. Is the market simply exhausted after its 7-8 month up cycle? Probably, but baring a break <1598, there is still the chance of another up cycle before this nonsense is conclusively done.

Of course, the bigger weekly cycles have been rolling lower on the MACD (green bar histogram) cycle for the past four weeks, so its not like the current equity weakness is entirely surprising.

Best guess remains..we hold the line of 1598. I'm trading it that way, am long (again) from earlier today, but if we break <1598, then its arguably a case of 'sell at any price'.


Looking ahead

There is an array of econ-data tomorrow, including retail sales. Bears should be mindful that for the first time since last Thursday, there is a mid-sized QE of around $3bn.

Overnight futures trading will be important, but even more so, how we open tomorrow. Even a moderate gap lower in the 1605 area will put the market in imminent danger of a critical break down.






The bears have had another good run from 1648 down to 1610, good short-stops will be important. If the bulls do somehow magically ramp again, look for a daily close >1630.

Goodnight from London

Daily Index Cycle update

The main indexes all opened moderately higher, but were utterly unable to hold the gains, and the bears took control of the day. The sp' closed -13.6pts @ 1612. The critical line in the sand is just 14pts lower. Any hourly/daily close <1598, and this market is in massive trouble.


Sp'daily5

Summary

Today was indeed another pretty dynamic trading day. Those opening gains of sp'10pts to 1637 sure look a long way up now. It makes me wonder how many retail traders were chasing the open higher in the mid 1630s, and are still holding long at today's close.

The daily close of 1612 put in a very bearish candle, confirming the previous two days of weakness.

The 50 day MA @ 1610 did appear to hold today, but really, the only important level now is 1598.
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Overnight futures trading will be very important. The market only needs to get whacked -1%, and the key low is taken out, and we might see a rather fierce cascade lower.

In favour of the bulls though, the current hourly charts are very low in terms of the MACD cycle, and we're due a bounce of some degree.
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a little more later...