Having read the last few bearish calls, I felt shaken enough in my long read to go back and re-look. Now of course, without quantifying a time frame, it is possible that the market is bullish and bearish at the same time-- so I will quantify my time frames.
1) S&P futures 30 minute bars: Last Friday (Jan 28), or more accurately, 12:00 Monday marked the low of the last intermediate bear move. The market had rallied (nearly non stop) from the previous low on October 18, 1999 until the intermediate top on Jan 3,2000. From the high set on Jan 3, the S&P had been in an intermediate bear move (a 50% or Fibonacci retracement of the bull move of 10/18 - 1/3). That bottom also corresponded to a test of the 200 day MA on the daily S&P cash. The spring-like bullish market action after retesting the bottom on Monday morning was (to me) further confirmation of the bottom being in.
From that point forward, the market went straight up through the close Wednesday and paused for a Fib retracement Thursday before rocketing northward again into the open of Friday. The retracement was triggered by the false rumors of the emergency Fed meeting regarding the inversion of the bond yield curve. (Rumor probably propogated by those institutions which were victims of a major short squeeze). When the rumor was proven to be false, the rally resumed. However, the retracement was too short lived and thus Friday's action was a reconsolidation and retracement to the Fib retrace of the second leg of this bull intermediate move. The retracement, this time took its course (although there was an absense of any real selling interest as we are still in the early phases of this bull move). When the retracement reached its 200MA30 (Fibonacci number as well) it bounced upward, closing just off the lows.
That having been said, I see Monday as another launch (not too unlike last Monday) which should carry the index futures to the next Fib extension of 1478 in either one or two more legs. For what it's worth, the 30 minute stochastics are in the oversold area and the somewhat bearish sentiment are bullish signals to me as well. The VIX.X is somewhat troubling, but having moved north of 22 takes the pressure off somewhat. Friday morning's gap in the VIX was rather odd. So, Monday will be very interesting. Certainly, internals are weak, but what else is new. If we traded the internals, we'd all be short and broke for the last year and a half.
Matt |
