Market Direction: If We Move Higher Here
October 23, 2008 7:22 PM
If the market can hold today’s low, and clear today’s high, then the market should be in good shape here for a move higher tomorrow. Therefore, if we open lower tomorrow, look to be long above today’s low. If it does not hold, then the market is clearly in trouble, IMO. The lows have been tested enough to avoid pushing far below them, as I see things.
Depending on the news, it is possible to gap higher at the open. Be careful chasing it early if that happens as the SMA’s suggest this will take some time. In addition, extreme caution near 930 as another key SMA line is in that area. The first visit to that line will probably be rejected. A key high is likely 9380 on the Dow. There is likely to be some caution there unless it clears.
The ranges are continuing to tighten even though we still see 400 point swings. They should continue to tighten as todays lows and 9380 seems to be where the market should trade - for now.
Keep in mind I said if. There is not a compelling reason to buy the market here regardless of the hype. The market can only go higher long term if earnings go higher. And that seems very unlikely.
Update: The low taken out at the open, so this didn;’t come into play
Market Post: “If You Want To Be Brave, Long Right Here”
October 23, 2008 4:00 PM
Well, I said that there should be big volatility into the close and we got it. The Dow rallied about 450 points in 30 minutes. I posted at 2:30 EST that “if you want to be brave, long right here”. Then I posted “we may rally hard into the close if this is the low”. I almost took it but I did not think we could go positive before the close and I knew that was crucial. Wrong. The market took off above 858 like a rocket. It sold down to 860, 858 held and off it went. That is why I mentioned that I hate days like today when the close is all that matters as huge swings in the last 30 minutes can happen. I had the number to be long, should just stop thinking and take it and see if it holds. My bad.
I also mentioned recently that I did not like any of the intraday lows for the move higher and it appeared to be a short covering house of cards. Well, I was right. However, we do have an important low now, today’s low. It is important both on an intraday basis and for daily traders because of the close.
Frustrating to say the least as I had to number off today’s low and knew it had to hold and the market was very likely to break one way or another big into the close. Ugh.
This is why “close” days are very, very difficult. 865 seemed to be crucial on the SP UNLESS we could go positive on the day. That is why never simply short the market when an area clears as it may depend on what happens later. It isn’t that simple, unfortunately. Also, you have to understand the significance of what I call a “close” day. On those days, it generally will get VERY volatile in the last hour. Today was not a close day early until we cleared 865. Then it was.
Market Update: SP 865 Has Cleared, 8165 On Dow Is All That’s Left
October 23, 2008 2:24 PM
I mentioned that I viewed 865 on the SP as a critical low. It has cleared. The only thing supporting the market from a very brutal selloff, IMO, is 8176 on the Dow. If we get under that then we may see outright panic. The ONLY way today would prove important on the SP is if we rally into the close and finish positive. Other than that scenario, I do NOT like any lows on the SP here, including the 839 low.
2:37 Update: It is trying to reverse above the low of 858. We have to close the day above 900, IMO, or any move higher today is meaningless as i see things. Therefore, today is now a close day, where it was not earlier.
Market Update: Intraday Trading Day
October 23, 2008 12:02 PM
Today is not a “close” day. Therefore the intraday charts will dictate here. Currently we have a reversal off the low and the high. technically, the low does not qualify as a reversal point when looking at more than one days chart, but it is a rejection of today’s low. Therefore, one of them will likely clear before the day is over. The first visit to test the low, if it does, is likely to hold. If it cannot, we will likely see more trouble, especially late.Look for a reversal above the low, if we get there.
12:22 Update: We have a reversal off the high, as mentioned, and have fallen below key sma’s. We have to get a firm low here to be long as i see things. We might get one near today’s low. IMO, we would need to make anew recent low after 12:30 EST and reject it, to maybe put in today’s low as this does not look good right now.
12:43 Update: Down to 884. As i said in my intraday comments, we HAD to go lower, and we have. Whether we can reverse, I am not sure. Keep in mind, if we do clear 865 today and cannot immediately reverse and go positive, this may get very ugly.
Market Update: Not Good, Trend Day
October 22, 2008 12:17 PM
The severe weakness is a bit surprising - for today. I thought we would at least attempt to have a mini rally with AAPL leading the way. However we gapped down because of the massive loss from Wachovia and earnings warnings from most companies, thus far. Earnings do not matter right now - it is guidance. That tells me the market is weaker than I had even thought. If AAPL blowing out the number cannot lift the markets, not much can. Be careful and have exact points to hold if long. My call to be long ADI is still valid. The market needs to hold its current low, especially into the close. If that low clears late, the market is in trouble, most likely.
This gap down appears to be have been sold at the open and days like this generally close at or near the low of the day. So be careful and know when you are wrong. The only thing stopping the fall today is 865 on the SP. We do have a reversal off today’s low which has held for over an hour.
Again, “normally” I would say long above today’s low, BUT gap days that are sold tend to close lower late. So you have to be careful on anything today. I also do NOT like the sideways action since making the low. Generally this creates more selling and another leg down once the sma’s catch up to the move down.
Morning Call: Open Bought
October 21, 2008 11:30 AM
The open was bought, therefore to get more pressure we need to get under the low and we should see more pressure. I am not a fan of any lows we have put in, in the cash market in the last several days. The moves higher appear to be short coveing and/or sma related. Once this ends, we may see more selling pressure, possibly late in the late. But it depends on where we are and when. Today is not a close day so the intraday charts will dictate the moves today.
Market Update: Not Sure Of Close Action
October 20, 2008 2:51 PM
The market open low was bought, but since it has been difficult to call. There is no sign of a high as of yet. It appears that if we get under 9000 into the close there may be some selling pressure. American Express reports after the bell and I would guess people are leary of what they will have to say.
Market Open: Close Is All That Matters
October 17, 2008 10:54 AM
The early low was bought against a key SMA. I am never a big fan of sma bounces as I have been mentioning when it turns there is nothing to stop the fall. Bu that is what is going on off the early low as I see things. In addition, the low was near a trend break line so there were likely buyers there also. Whether that low can hold today I am not sure. This is a close day so the buying/selling action could pick up steam in the last hour. It is also option expiration day and those days can make unpredictable moves. The bias seems to have changed to buy dips however, for now.
The ranges will continue to narrow as we have Friday’s low (which I personally do not love, long term) and yesterday’s low, most probably, as benchmarks to the downside and Tuesday’s high to the upside that should be a lid. Therefore, the ranges should continue to narrow until we clear them.
Morning Call: Open Bought, Skeptical
October 16, 2008 9:59 AM
I mentioned last night that today’s trade and direction was likely to be “unclean” unlike the last few days. Meaning the direction would likely be far less clear depending on the open. Well, the open was bought after spiking a bit lower and may make this difficult. I will have to wait this out as I am skeptical, at best. We will see their resolve on this if we go negative, especially late. Sorry not much help here but this is going to be a difficult day and intraday charts will be needed to know where the trade is - or isn’t.
Right now the trade is long above 8481 on the Dow. Whether that can hold is another story. We will see. I would like a reversal off a high to be short this, but we do not have one. Otherwise we would likely see pressure here. There is no firm number for traders to be short so jerky action here is likely. Even if we get under the low it “might” reverse again as this is not clear - yet.
Tomorrow’s Direction
October 16, 2008 12:28 AM
Both today and yesterday traded as they “should”. Yesterday we had a gap higher that was sold and today we had a gap lower that was sold. Both closed at the low which is generally what happens. Tomorrow will be far more difficult. The futures are down about 100 tonight last I looked. Not really that important. The market may sell down and see serious pressure tomorrow or may not. My first guess is that it will but it will depend on the size of the gap down and the reaction off that gap. If we only gap down 100 at the open I do not think the gap will be important.
Therefore, I won’t know where we are going until i see what is going on tomorrow and even then we are far more likely to get some jerky action and won’t be as “clean” as the last few days.
However, I have mentioned that I do not believe we have seen the ultimate low regardless of the nonsense they are saying on tv. I do not believe it for a variety of reasons. I have said for nearly a year that people were dead wrong and did not understand the severity of the financial problems and did not understand that this is a fundamental downturn and NOT a cyclical one. I have made this point many times over the last 6 months while most everyone alive disagreed with me. Unfortunately I have been correct and believe I will continue to be correct. This is not over by a long way. There are trillions of credit default swaps that could easily implode the financial system still. In addition, we STILL have not really addressed the100’s of billions in bad mortgages. They still exist, they have simply given the banks money to cover their losses on them. AND we have not even counted the ultimate losses on normal loans that will be created when the recession hits full stride.
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