Market context
The early part of this coming week is likely to be placid. The majority of the actions will come starting Wednesday 9/18 with FOMC announcement at 2:00 PM EST. On Thursday, we have Jobless Claims report at 8:30 AM EST, and Existing Home Sales report at 10:00 AM EST. Friday 9/20 is Quadruple Witching day. Market index futures, market index options, stock options and stock futures all expire on Friday. Volatility is likely to increase as a result. Surge7 of the Up Trend that started on 12/26/18 is still going strong, though we are technically in Minor Dip2 of Surge7. Further below in this article, we will discuss when Minor Dip2 is likely to end. This may be of interest to you if you are waiting to buy the dip. The rest of this article covers: Table of support and resistance levels Updates from market internals Planning your trades Register your email here for full access to all our nightly analysis, trading plans and intraday updates. No credit card. All free.
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Surge7 of the Up Trend that started on 12/26/18 is still going strong. The upcoming important event is FOMC announcement next Wednesday 9/18.
Updates from market internals Market internals are all still bullish, but they are showing signs of easing up a bit on the bullishness. However, we don't have enough evidence yet that this is Minor Dip2. One of the challenges in identifying minor dips is that they are minor. Market internals are great at identifying major moves. They aren’t quite as sensitive to minor moves. We think that there is a high probability that stocks are going to have a very minor dip tomorrow Friday. And they are likely to resume the upward momentum quickly. You will have to decide whether or not it’s worth your effort to wiggle in and out of your core positions on such a minor move. The rest of this article covers: Table of support and resistance levels Planning your trades Register your email here for full access to all our nightly analysis, trading plans and intraday updates. No credit card. All free. Updates from market internals
The primary message from market internals is this. Surge7 has taken off for real, and market internals are showing very bullish readings. Tomorrow Thursday, we are likely to see prices gap up to Resistance1 level. They may pull back intraday to re-test Support1. However, with such current bullish readings, we don’t expect to see the start of Minor Dip2 just yet. The rest of this article covers: Table of support and resistance levels Planning your trades Register your email here for full access to all our nightly analysis, trading plans and intraday updates. No credit card. All free. Market context
Surge7 of the Up Trend (that started on 12/26/18) most likely has resumed today. Minor Dip1 of Surge7 came and went with minimal impact. We wrote this on Stocktwits earlier today, and it bears repeating for those who haven’t read it. It’s an important perspective to keep in mind. “Keep in mind that nailing the bottom of a Minor Dip is a difficult thing to do, primarily because it's minor. There's not enough supporting data from market internals to tell you exactly when to pull the trigger. Recall in our analysis we said that market internals are great for major moves, not so much the minor ones. So all you really have to go with are classic chart pattern analysis, and S/R levels. But don't get too hung up on nailing bottoms. If you sold yesterday, and buy back a bit lower today, and use partial entries to spread out your entry points, you'll do fine. This is Surge7. It's strong and it has the potential to surpass July high. So you are likely to make some decent profits even if you don't nail bottoms.” In a strong Surge within an Up Trend, it is very difficult to capitalize on every market move. The best strategy we have found is to keep some money in play constantly, while taking partial profits at the start of a Minor Dip, and re-enter at the end of the Minor Dip. That is why we have Core1, Core2 and Core3. Buy low. Sell high. Repeat. That is good enough to make consistent profits. The rest of this article covers: Table of support and resistance levels Updates from market internals Planning your trades Register your email here for full access to all our nightly analysis, trading plans and intraday updates. No credit card. All free. Market context
Stocks are currently in Surge7 of the Up Trend that started on 12/26/18. The upcoming important event on the horizon is FOMC meeting and announcement on September 17-18. Here is a useful assessment of the Fed actions from Wall Street Journal: "The Fed has through the course of the year seen fit to lower the expected path of interest rates. That has supported the economy,” Mr. Powell said during a moderated discussion in Zurich on Friday. “That’s one of the reasons why the outlook is still a favorable one despite these crosswinds we’ve been facing.” Mr. Powell’s comments implicitly acknowledged that investors’ expectations of easier Fed policy this year have buoyed financial markets and business sentiment and that failing to deliver at least partly on those expectations could damage that outlook. In short, the Fed has publicly acknowledged that they know the market wants more easy money to buffet against the wind of the tariff war. However, Mr. Powell also said “our labor market is in quite a strong position… We’re not forecasting or expecting a recession.” So if we have to take a SWAG (Scientific Wild Ass Guess), we would say that a 0.25% rate cut is very likely in September. A 0.5% rate cut is more doubtful. Whether or not this will wreck the rise of Surge7, it is hard to say at this point. However, we suspect that market internals will send out a message to say “bullish” or “bearish” as September 18 approaches. In the meantime, the question is how to trade between now and then. The rest of this article covers: Table of support and resistance levels Updates from market internals Planning your trades Register your email here for full access to all our nightly analysis, trading plans and intraday updates. No credit card. All free. Market context
The Up Trend that started on 12/26/18 has resumed. Surge7 has turbo charged its ascend today with a big gap up at open, supposedly due to strong ADP private job report, and the potential of trade talk being on again. Tomorrow Friday, we will get the official report on the employment situation at 8:30 AM EST. Also, Jerome Powell is due to speak at 12:30 PM EST. Both of these events have the ability to cause the next swing high or swing low. It’s hard to predict, so we simply have to rely on the message from market internals for our guidance. The rest of this article covers: Table of support and resistance levels Updates from market internals Planning your trades Register your email here for full access to all our nightly analysis, trading plans and intraday updates. No credit card. All free. Market context
Yesterday we wrote: “At this point, market internals are telling us that stocks are more primed for buying than selling. If the news tomorrow is positive, ... then stocks will simply take off.” Indeed that is what happened today. According to Bloomberg, supposedly stocks rebounded because “political tensions appeared to subside in Hong Kong, Italy and the U.K., while indicators in China and Europe hinted global economic growth may not be as bad as some expected.” But you, dear readers, knew stocks were poised to rise ahead of the news, because since August 29 market internals have been sending the message that Surge7 is arriving. Tonight during after hours, Asian stocks and US equity futures climbed after China said it will be holding trade talks with the US. This most likely will result in a gap up tomorrow for US stocks. The questions are: Where will resistance levels be next? How do we wisely ride Surge7 up? The rest of this article covers: Table of support and resistance levels Updates from market internals Planning your trades Register your email here for full access to all our nightly analysis, trading plans and intraday updates. No credit card. All free. Market context
According to Bloomberg today: “U.S. manufacturing is hurting. The ISM's purchasing managers' index unexpectedly fell to 49.1 in August, the first contraction in three years, on shrinking orders, production and hiring. New orders dropped to a more than seven-year low, while the production gauge shrank to the weakest level since the end of 2015.” This news was the negative catalyst that spurred the selling today. This was the selling that we discussed in our analysis last night. Market gave us plenty of warnings that this was coming based on the patterns formed by $VIX $VXN on Friday. We wrote: “on Friday 8/30, $VIX $VXN formed a “ready-to-rise” pattern. And we fully expect them to rise back up to re-test the highs of August 28.” And when volatility rises, stocks drop correspondingly. So are $VIX $VXN done rising and stocks done dropping for now? Today, market internals said: “Just a little bit more!” The rest of this article covers: Table of support and resistance levels Updates from market internals Planning your trades Register your email here for full access to all our nightly analysis, trading plans and intraday updates. No credit card. All free. Market context
This week is going to be critical in cementing the arrival of Surge7 and the resumption of the Up Trend. Here are key events for this week that may function as either positive or negative catalysts.
Interestingly, according to Bloomberg, JP Morgan just joined Bank of America, Goldman Sachs and other major investment banks in telling clients to start buying stocks again. They cited the following reasons:
Our readers had an early heads-up about this possible bullish turnaround. In our analysis posted on Wednesday evening 8/28, we explained why we think Major Pullback2 was winding down and Surge7 was likely to arrive soon. Stock market actions are only loosely based on economics. They are much more tightly coupled with the twin emotions of greed and fear. Various events tend to function as catalysts, but it’s the underlying emotions and psychology that will drive the reactions, and ultimately the directions of stock prices. Obviously it’s hard enough to analyze market events, much less deciphering market emotions. This is why we based our trading system on market internals. These are the highly reliable indicators of what’s really going on under the hood for stocks. And right now, market internals are saying “we are bullish with some caveats”. The rest of this article covers: Table of support and resistance levels Updates from market internals Planning your trades Register your email here for full access to all our nightly analysis, trading plans and intraday updates. No credit card. All free. |
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