Borrowed an idea from Bulkowski, with the rounded top, mirror formation as theory #1. Then the pitchfork trend now in play continues, #2. Then #3, consider the trend line support, curiously bouncing off yesterday that line. The green triangle is the area to watch for me anyways. China is the wild card, for breaking news. Retail sales numbers also a force, a beat says FED can tighten in Sept, a disappoint, another reason to wait until December. But when does the market take bad news as bad news again for the economy and tie it to the markets. With money managers chasing yield desperately, stock buy backs are the new bubble. When it becomes obvious that a major stock will fall too fast, too much, and buy backs are so obvious as their only support, speculators expect the buy back, and have been buying that dip moment/pivot. But when that buy back doesn't work, because it is so obvious, that's when buy backs become bad news, and the shorts finally win. Also options expiration Fridays now become a huge tension moment with so many shorts doing option shorts to gain even more leverage for yield purposes, that's where I get scared and fear is a factor. When everyone is using options for leverage and yield, and with the bond market so Illiquid, and everyone doing their thing on the same side of the boat, that's when the boat capsizes, and we could get a double wammy. Be careful out there. Bring your umbrella,booties, and rain gear. End of the day, this market is so heavy, its on artificial life support, down is like gravity now, after perhaps this short bounce.
Comments
claydoctor
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We have reached the pattern end, and huge support level today. Now what? Going to spend the weekend figuring it out, hope. Hope all of profitted from VXX as I did these past two days.
claydoctor
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so we are well on way to this destination. breaking 2040 was huge, and closed under. World markets are paniced, and fearful. A 10% correction from the May 18th high very possible now, in short time. Let see. oil nations, weak already, as oil price is lower, they may break, currency falls hard, last attempt to survive. Now with dollar down, we will see. If dollar and oil both go down together, that is a bad portend for the near future.
IvanLabrie
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When everything is so scary...I want to do the opposite and go long.
I'm waiting for confirmation atm.
Nice breakdown.
claydoctor
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Right now, any trade is a gamble I think, until whatever pattern rules the day becomes at least partially clear. Watching the retail sales numbers out in about 10 minutes. That could drive the day.
IvanLabrie
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Indeed.
ida.pagnottella
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I would agree, but with so must intervention and interference from central banks in the markets, I'm afraid that the usual logic of being a contrarian when everyone else is too afraid or too optimistic probably will not work. The markets are a game of human psychology, and the central banks have messed around ,so now I fear that the only rule that works is there are no more rules. Normal times will return, but now the logic is : can they manipulate more or not?