Patrick,
I am very interested in your pattern read for tomorrow. This is what I see after examining the charts in detail the last two days. I know, you will skip all this stuff as it is more than you want! :)
Trendlines: Again, depending upon whether it is drawn from the high on about July 20th using the data point on Aug 24th, or using the data point on Sept 21st (dates approximate as I am reading down on the chart without a grid) we either broke the trendline or did not. Anyway,...
Using the Aug 24th, we broke the trendline and today's action was a pull-back to the trendline. If this is the correct read, we bounce from here.
Using Sept 21st, we fell back from the trendline and are continuing lower. This does not mean we don't bounce, but does mean the downtrend is still in tact. This is the read that I prefer until proven otherwise.
The last two days have been weird from a TIKI/PREM/TICK action. However, as you recall short term tops and bottoms can be identified from extreme readings in those categories, preferably all three within a short period of time of each other. The best example of this was Monday when upon the drop after Greenspeak we saw readings of -28/-4.00/-875. -875 is not extreme, but close enough....The spoo bounced from 1045 to 1067 at which time we had the following +28/+14.00/+750. Again +750 was not extreme, but close enough. This caused the spoo to drop yet again. Further we had a TICK change of +1600 in an hour from 14:20 to 15:30 or so. That also indicated a downward move. Now, in hindsight I should have seen all of this happen and bought the low and sold the high! LOL!
Today....was not near as extreme, but still produced some good clues. At 12:00 we hve -950/-28 but nothing really significant on the PREM. Should have bounced, but did not. The downward movement was stalled and the spoo added a few points, but nothing significant. Not sure what to make of this exactly, but as we did not have all three categories, I guess it is not a big deal. Still expected more of a bounce at that point. This afternoon we had extreme TIKI readings both ways....+/-28. We have a TICK at +950 and a TICK movement from 15:15 to the last five minutes of +1350 or so. PREM was non-committal, although it did venture into rather negative territory as compared to fair value (not negative PREM, but negative compared to fair value....+4.90 or so) and this occurred around the -28 reading. The TICK today was so screwed up that I don't know if much can be made of it. It was not extreme, except for the late inning reading of +950. There was very little bounce from the low that the PREM/TIKI reading would have suggested.
Anyway, on to my read for tommorrow. I expect that we shall see a bounce either overnight or in the morning to about 1040-45. I do not expect to fill the gap, although anything is possible. Filling the gap would bring us back to test the trendline through Sept 21 date and that would be OK. From the 1040-45 level, I expect to see a down hard. I state this based on the TICK movement reading this afternoon of +1350 TICK points. If we then get through today's lows, we fall to 1000-1002. I know IKE likes the 1018 level, but I don't see that as an important level.
The reason for the bounce is two-fold. One we are bouncing off of the lower channel line on the flag from the first of Sept and two I believ the PREM of 4.90 and the TIKI reading of -28 should provide some bounce. Couple that with the five day TRIN over 6.00 and in the mid-three's today and the bounce comes a calling. At that point I expect the market to reverse hard to the downside and if we get through 1000-1002 in the next couple of days, I suspect the lows will be challenged with a vengence.
I will be looking for extreme positive readings in the TIKI/TICK/PREM to identify the top of this bounce. If they are there I will attempt to pick an entry within a half hour of the readings.
The TICK today bothers me. Why would we have a plus TICK movement and a downward SPOO movement. Not normal. The SPOO usually leads by a minute or two, but that is it. Today the TICK would keep on chugging up and the SPOO down. Doesn't make sense. Either the SPOO will lead this whole market down, as the trader I met on the floor suggested, or the whole market (as exhibited by the TICK) will spur the SPOO upwards.
For now, my read is up, probably into lunch-time or so and about mid-40's. This will cause people to breath a sigh of relief that the all is well with the world again, and then whamo....right back down. Tomorrow should end as a simple up-down pattern with an attempt at the close to bring it up, but we still end negative. Friday could be a big down day if that occurs and if we break 1000-02 at any point the next two days, we will see the lows once again. Seems too early for that, so I think that 1000-02 will hold this time around leaving the challenge of the lows to occur in late October.
Boy, and I did all that without a beer. What is wrong with me?
I don't know how much I will be able to contribute tomorrow. My day is filled with meeting and conference calls at various times throughout the day. I will enter the fray as I can, but might miss all the fun...
-Scott |
