INDEX UPDATE
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My CLASS SELL for the overall market set yesterday's highs (8080) as the top of this upswing. Intraday the market was weakening, but in the last 20 minutes there was huge buying, which appeared to be orchestrated for whatever reason. It did make me worry about SEPT PUTs since there are only 2 days left.
Right now the futures are down 13 and the international markets are down hard, so it appears for now that the CLASS SELL may be working.
If we do head down, which is likely, the next question is how much.
I see a support at 7850, and the short-term key support is at 7700. If 7700 is pierced to the downside, it appears the 7500 support will be retested, and if that is pierced then it would imply that 7400 may not hold. So for now 7700 is a key support. I have estimated that this specific down cycle should last 4-6 days, but of course it will depend on how fast it drops. Just on a mathematical calculation the downside potential of this specific downswing is huge (800-1100 DOW points). Im not saying it will go that low, just that the downside potential is huge.
Previously, I noticed the HEAD and SHOULDERs pattern which I believe is still possible, and unfortunately it does imply a break of 7400.
It still needs to be remembered that this is expiration week so there still may be artifical attempts to hold the market up. Subjectively, I have the belief, and call me crazy, but the more the market is artificially tampered with the more negative it can get - call it a YING/YANG or ZEN thing. If the market is held up this week from dropping too much, watch out for next week. I would not interpret small declines/up moves today and tomorrow as good - just that the piper will be paid next week and, unfortunately, he may get a bonus.
As I indicated yesterday, I did not want to see the market runup alot more since it would imply a technical breakout which would be bad in a negative market. The rubberband/guitar string effect. The best thing that could happen was for the market to pullback some, to say 7000-8000 range, set a base and move up from there. Too many just want to see a straight up move, which I believe is not healthy but I guess when it comes to ones money most just want it now, not considering effects down the road. I am a firm believer that if we did not run up so hard in JULY, we may not have pulled back this far, but who will ever know. Just call me crazy and I that I dont have a clue what Im talking about.
I make the most money in a trading range market, so I am not wishing for a huge dump.
Seeya |
