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Market Recap: Rally Fails

Today was a typical gap day down until late afternoon. We had zero decent lows, a trend break, and I mentioned that if 896 cleared some shorts would cover. Cover they did as it shot up all the way to 905. I then said “if 905 clears, we should see 917″. 905 cleared and it made a high of 917.15 before reversing.

The attempt at a late rally did not surprise me, at all as it was a close day. What I did not like, on any level, was the lack of a low. The move was entirely based on a trend break and short covering that got out of hand. I still believe we have to clear 884 and reverse if we are too make a low to attempt to take out 1044. We STILL have no decent lows above the low on the SP - zero. This thing is a complete house of cards.

If you notice all of the volatility came in the last 2 hours. Before that it barely moved. It was a “close day”, and everyone was waiting to see if it would reverse. The key to understanding today was once 905 cleared, we would likely see 917 or higher. Point being, just because a gap is filled does not mean it will rally from there. It means it could. There were two problems - it strongly rejected 917 and we had no firm low - the move was not supported by anything.

I view all moves above 884 as nonsense and non supported. However, it is possible the market will continue to trade on trend lines here. I do not like trend lines, on any level. They are the same as moving averages - temporary. We will see.

The market appears to be at a critical stage in the next few days. We are either going to break to the upside or it is going to challenge the lows. Considering we have no rejection of any low, of any kind, my personal guess is a breakdown. But I am not sure and my guess is the traders are not sure also.

We are near the low put in on the financials, so there should be an attempt to hold this area. This is possibly why the downside was limited today. Traders are most likely watching the low put in on financials and we are very close. In addition, Goldman made a reversal attempt today. If we are going to move higher here, the GS low has to hold I believe, so keep an eye on it. That should be the “tell” on where we are going near term. If this GS low is taken out, then we will likely take out the lows put in on financials and the market is likely in trouble.

Therefore, if you think we are going up here, then the trade should be long GS right here above 66.68. Personally I am very skeptical of the market and even more skeptical of the SP low put in and I do not believe the SP low will hold long term. What I would like to see to be long this train wreck is another gap down tomorrow and then have the gap bought and make this simple for a change.

Market Recap: Half Right

We made exactly zero firm lows today. I mentioned that we might see strength on a trend break and if 8654 cleared on the Dow, shorts should cover. They did. It spiked to 8864 before reversing. I then said” if we clear 905 on the SP we should see 917″. We did. I then said “896 HAS to hold to take out 917″. It didn’t, and we closed weak. I dislike “close days” in a huge way as short covering can dictate the action and often will. It tried today, but failed.

I still see zero lows of importance above the ultimate lows seen These moves have been based on moving averages and trend breaks, nothing more. I personally consider both to be complete nonsense and guessing. If you want to guess at this market, good luck with that. The World Series of Poker ended last night and you should have entered. Not my thing but fun.

At any rate, if they want to make this CLEAR, they will open tomorrow below 884 and that low bought. If that happens, the trade is long. If they open this flat to higher, I am once again very, very  skeptical.

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.

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 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.

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.

Market Update: Short Covering House Of Cards Continues

This market is an unbelievable house of cards. I have said many times that there is nothing to stop the fall all the way to near the lows - once we do eventually reverse. This move is election day short covering. How to trade this, I am not sure. They sold the open, we went lower, then cleared the high. That leaves no points to be long on future weakness, as I see things. But I also said that today may not trade like a “normal’ day, and it clearly hasn’t.

If this was a normal day, I would expect this gap to fill and that means it would fill into the close, most likely. Either way, this issue will be revisted I believe - eventually. Once this election is over, and we see weakness, the shorts will rip this thing apart. When that will happen, I am not sure.

Market Update: Open Sold, Close Day

If not for the election day, I would say extreme caution here, especially late in the day. I believe this open was sold, but I missed the true open. If this open was sold, and i believe it was, then “normally” that could be the high of the day. At the very least, the entire gap should eventually fill. If it doesn’t not fill early, then watch out for it to fill at the close. We HAVE to clear 9520 on the Dow and 988 on the SP or this will likely sell down into the close. If we can clear those highs, it will free up the chart. However, I do not like opens like this, on any level. If it was not election day, traders would shred this thing right here and we would likely go negative.

At the very least, this is not a typical trend day. This gap would “normally” fill here I believe if a normal day. If today will act as a normal day I am not sure. I am guessing the shorts will sit on the sidelines here until after the election.

Update: The highs have cleared. Unfortunately, I have no idea where the low is if we reverse. Selling the open and then clearing the highs like this is only because of election day. This normally does not happen or at least is somewhat unusual and is generally a short covering pop that creates a huge house of cards for late day selling. That may not happen today, but your guess is as good as mine.

Morning Call: Manufucturing Worse Level Since 1982

The ISM manufacturing just came out and was a whopping 38.9. Merely the worst reading since 1982. The market however is likely to gave a long bias early on today and weakness will try and bounce, at least for now. The sma’s are going to try and hold this market here and we have the election. I would guess the election coming up will be like a fed day, shorts will likely wait this out. But I am just guessing. Once the election is over we will see the true direction here.

With that said, Fridays high is an issue on an intraday chart.

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