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Morning Call: Close Day, Low Has Not Been Seen

We gaped down this morning. There is no sign of a low as of yet, IMO. The low thus far us 887on SP and 8578 on the Dow. I believe neither is the low we will see. We are currently about 8630 on the Dow. There is a lot of support in this area I believe, but my readers know i view support as temporary until they give it up.

This is a close day now. Therefore, we may see extreme volatility into the close if this reverses. I would not expect a reversal today, more likely tomorrow, but anything is always possible. I still believe as I mentioned at the beginning of the month that we would likely not see 1050 in November. Therefore, I believe the odds favor that we have already seen the November high.

Anyhow, this is a gap trend day down, thus far. You have to be very, very careful long today as these days tend to close at the low of the day. If we cannot close positive, the odds strongly favor making the days low in the last 5 minutes of trading. The close is all that matters today - so get ready for late volatility if we reverse - if.

This sideways action since the open means that this is timing and I believe we will see another push lower here. If they wanted to reverse the selling they had their chance early. The pressure should build here with time.

I am not exactly sure where the true open was, it is probably around 8730 on the Dow. That has to be cleared on any move higher today. Traders will sit on shorts unless that open is cleared. This is why I need my futures charts again so i can see the true open range and not the nonsense posted on charts. Charts say we opened at 8864. Did we open at 8864? Uhh no.

Market Recap: Open Sold, “Blind Buyers” Above 900 Once Again

Well today was the classic gap open that was sold. Many of these days close at the low of the day. However, there continues to be blind buying above 900 regardless of what the charts say. This has continued from the Thursday’s close, Friday and today. They are not going to give up this nonsense until they get crushed.Friday’s low held by a thread, but even that was likely not enough to push through 900 as I consider Friday’s low completely meaningless.

I mentioned at the open that the gap was sold - and down she went, as was predictable. It reversed above 910 at 913 as i thought was likely. It ran to 927 and reversed again and ran all the way to 907 and change as a low. Then the same nonsense came in “buy above 900″. These lows are simply not believable. Big number? Buying at that number? This reminds me exactly of when they bought at 1200 on the SP and I continued to call it complete nonsense and predetermined.

At any rate, tomorrow may get very volatile, depending on where we open and what happens early. If we open flat to higher, I am very skeptical to say the least. If we open lower, then we need to reverse early in the day I believe to contain the selling. 900 on the SP continues to have buyers. How long that will last I am not sure. It is frustrating as it is simply buying on a big number. Today’s high is very important going forward, but would be far more important if we had made this high tomorrow. Either way, there will be caution in that area.

Keep in mind that today was not what I wanted to see to truly take this down in coming days, but could still happen. What I wanted to happen was to trade modestly higher today and reverse off a new high tomorrow. If that had happened, we would likely see a lot of pressure the rest of the week and 900 would be likely long gone. Today’s action, while an issue, is not what i consider a true reversal, although it was a rejection in price on an intraday basis. Therefore, it is about as clear as mud here and the intraday charts should continue to dictate - unless we clear 900 to the downside.

Morning Call: Open Sold

The gap higher this morning was sold. Whether that will be the high for the day I am unsure. The SMA lines are mixed in here. We are above the shorter term lines now, and we may bounce off weakness early. When the opens are sold it creates an issue on the futures charts at the early high and we likely need a reversal off a low to be long this. Yesterday’s low is likely key if we challenge negative, especially late. If we do close negative, while technically not a close day, we may try and clear yesterday’s low tomorrow. So the close is somewhat important today, probably.

I am very skeptical of Friday’s move and consider it a bounce off support and short covering. My guess is the extreme move higher on Oct. 28th caught traders by surprise and left them short near 900 and they likely covered and caused the bounce Friday. That likely won’t happen if we revisit that issue.

Normally when these gaps are sold we will test flat or negative before the day is done. Whether it reverses at flat is the question.

1:27 Update: I mentioned in comments that I believed that 910 HAS to hold today and if people wanted to be long this thing, that is the number, in my humble opinion. If that clears, then 900 better hold, especially in the last hour, or down 500 today would be my first 3 guesses. Keep in mind that many of these days close at or near the low of the day - so a big rout here is not impossible.

3:02 Update: 910 has cleared. It made a reversal attempt earlier above 910 at 913, which I predicted, ran to 927 and reversed. It is “possible” it could contain selling here above 900, not sure… but generally days like today, as i said early on, close at or near the low. This may get ugly here if 900 is taken out. 900 was NOT important, as I said last week. It is a big number and psychological, nothing more. At any rate, it is possible selling will stop here today as people consider 900 important. Personally I think it is 100% nonsense and cannot be defended long term unless we close positive today, IMO. We also have Friday’s low, which I still consider complete nonsense also, but it is there.

Market Recap: Trend Break, “Blind” Buying Above 900

I am flabbergasted by the close today. It clearly looked like they were going to try and sell this down into the close. It shot down to 910, which I said was support, bounced and then took off, presumably on short covering. The longs were simply not going to give this nonsense up unless 900 cleared and it was a simple as that, regardless of what everything else said. Sometimes things are more simple than they appear. I never believe in support moves, especially when they are directly on big numbers like this. I believe this move is complete nonsense, but I am a bit shocked by the strength of the close today so what do I know.

Here is why I always strongly suggest that charts matter more than news, in general. We clearly had a trend break and longs were sitting on 900. I get all that. However, unemployment is skyrocketing and news broke today that GM, possibly Ford, and I would guess Chrysler, may be running through their cash far faster than thought. GM lost a mere $4 billion and said it may not have enough cash to operate in just a few months “unless fundamentals turn around”. Newsflash to the far less than genius management: It isn’t going to happen. I posted many months ago that this was a horribly managed company and that they should have fired anyone that has even smelled a management job there. This industry is beginning to remind me of the airlines but with worse management.

10 million people unemployed and will get far worse? Shrug, who cares about reality when we have a trend break. Comical.

Market Update: Trend Break

What we have here today I believe is simply a trend break. This is going to be a difficult day to predict as we still have zero firm lows of any kind. My guess is this will be a temporary move and a rejection of the highs seen will likely come probably Monday or Tuesday. Tuesday ideally. As far as today, the intraday chart should dictate this as it is not a close day. We would likely have to significantly get below yesterday’s low to cause pressure as this would break the trend line.

If this trend break is going to hold today, we should give a strong reversal above today’s low. I believe this move today should be limited to the upside, most likely. The chart says it is far too early to take this up with any confidence at all and we have no lows below.

The problem with parabolic moves, in either direction, like we say the last two days to the downside is there are zero firm lows and zero firm highs. Yesterday was all trend, no rejections. So there is no firm low and no firm high - until one is created. This will likely trade on sma lines and i despise that type of a move, as I often mention, because once they reverse, down she goes.

To keep this simple, this trend break suggests the trade is long above yesterday’s lows. I think it is as simple as that. If we get much below yesterday’s low, we may see panic. This is why news is not that important, in general. Should we be going up today with brutal news? No way. Does it matter? No.

Market Recap: Trend Day Down, Watch Tomorrow

Well, the market today was mostly a typical trend day down. The gap down was initially bought early, but that low was quickly taken out. If they wanted to reverse this selling i believe they had to do it early on. These days tend to close at or near the low of the day and being long is risky. Normally on days like today, the gap is sold and that creates a firm high of the day. That wasn’t the case today. The early attempt at buying the gap failed almost immediately and that was it.

Tomorrow could be a different matter. If we gap down tomorrow I believe we may reverse the selling.  If we open up, I am very skeptical it can last. We need a firm low above the low as I see things. I still think it is very unlikely we have seen the “ultimate” low, but who cares, for now. Anyhow, if we open up tomorrow, I believe early strength will be sold once the run stops. If we open down, the gap reaction will likely once again tell the story here. If we gap down and it is bought early on, I believe we will close positive.

Market Update: Trend Day Down Thus Far

We are obviously having severe weakness, but I still see no signs of a low. In addition, many of these type of days close at or near the low of the day. We would have to close positive today for any signal to be given that this is a decent low, which seems very unlikely. It appears that a decent low will likely be made on Monday at the earliest. There is a lot of seperation from the moving averages here, so it is possible that we could see bounces, but without a firm low, they will likely be sold into.

Again, as I repeatedly warned there is nothing to stop any fall above the lows and this drop and yesterday’s is not surprising. Trying to pick a low to be long days like this is generally a suckers bet - unless there is chance at positive into the close. If the market even sniffs that an hour before the close, we will see extreme volatility late.

Morning Call: Futures Down, Close Day

Today will be a close day as the futures are down this morning after more bad economic releases and warnings about retail sales. Why anyone is long retail here is beyond me. Anyhow, this is will be a close day and my readers know what means - close volatility is likely. Watch this gap and see if it is bought or sold. If it is sold, the market is clearly in trouble today. If the gap is bought it will make this a bit more complicated as the moving averages will want to force this lower early on. I personally would be a bit skeptical if we reverse today, but it is possible. My guess is traders want to get far away from 1000 on the SP here. 9350 and 980 were lids on the market for 3 hours yesterday. Those areas will likely be key today if it attempts to reverse.  We will see.

Market Recap: My Noon Call That We Had Not Seen The Lows Was On The Money

It was somewhat of a difficult day, especially early on as it continued to try and reverse on every new low because of support and moving averages. Once I saw that the early low had been taken out and we bounced higher without a firm low, I smelled trouble and posted to “sell any and all strength here”. I also said near the open that “if we were going to see pressure it would likely come late - depending on where we are”. That proved also correct as we traded essentially sideways for 3 hours. This action normally spells trouble and I mentioned that I did not like this sideways action and normally leads to another leg down late once the moving averages catch up. This is basically what happened. Once the support and moving average traders could not reverse it, down she went into the close.

Again, when you see no firm low on selling pressure, like today, and then sideways action after a drop, like today, and the moving averages are above  - it normally is trouble. It tells me that traders are waiting for the moving averages to “catch up” to the down move and take it down more. If they wanted to reverse the selling today it should have come earlier in the day - when the moving averages provided little resistance. Once I saw sideways below the moving averages above for 3 hours, I thought big trouble was likely late and we got it. This is why i said “if we are going to see pressure, it should come late”.

Tomorrow may get very volatile depending on where we are at the open. If we spike lower here, it is a “close day”. I would like to see a rejection of some hard selling and a reversal, but I am very skeptical it can happen tomorrow. Many moves last 3 days, but this is not required for tomorrow because of the size of the drop today. If we open slightly higher tomorrow, I would be very skeptical, at best and early strength is likely to be sold.

What other free site will come out and make a stand that “the lows have not been seen”? None. You normally have to pay to understand “the game”. The market dropped nearly 300 points after that call. I am not always right as everything always depends, but I did call that we were going lower. How low was the only question.

Market Update: We Have Not Seen The Lows

We have not seen the lows of the day, IMO. Any and all real strength should be sold into here unless we clear these lows and reverse first. This is timing only and everything higher here should be considered a bounce, as I see things. The lows thus far are 983 on the SP and 9413 on the Dow. The odds these are the lows is slim and none, IMO.

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