Well, this sure is fun stuff. I am about over my not shorting the SPOOs today when I felt they should be shorted and missing a nice chunk of what turned out to be a 20 point move. Even the middle 1/2 would have made me happy....ah, such is life.....tomorrow is another day and that is the point of this post! :)
Working off of MACD divergences only on the ES8Z chart this is what I see. I will add a few thoughts to the bottom on some other things.
On a 1 minute chart there is a bullish divergence that reared its head around the 1175 level this afternoon. The market closed higher by 7 points or so, so the divergence was certainly active.
However, on the 2 minute, 5 minute, 10 minute, 30, 60 and 120 minute there is a longer term bearish divergence set-up which should be resolved to the downside very soon, IMO. The bullish divergence on the 1 minute chart disappears once you get to the 5 minute chart. I take this to mean the main direction will be lower, although there might be some up-side action left to the bullish divergence yet tomorrow morning.
The other thing that makes me think there might be some up-side is that the TICKS set a low today of -1168. Although not as extreme as I have seen them, that is getting there. The PREM set a low of -2.08, which also not real extreme is slightly extreme. These two things should provide some support and buying to push the averages back up, but that might have been satisfied by the move from 1175 to 1184.
On the 120 minute chart the bearish divergence goes all the way back to the 10/19 starting date and runs through today. The points of interest are as follows:
10/19 MACD +20 SPOO +1090
11/09 MACD +12 SPOO +1150
11/23 MACD +12 SPOO +1193
12/08 MACD +05 SPOO +1196
This seems to indicate, at least to me the path of least resistance is lower. I would suggest that we might see a bit higher in the morning, maybe to 1190/92 ES8Z and then it is down from there. I would not be surprised to see the down begin after the Chicago lunch hour at around 1 pm CST.
My gutt thinks we might be down off the open, but my charts indicate a touch higher prices.
The bearish divergence that shows on the Futures chart is just as apparent on the SPX.X chart.
For some reason the date of 12/10 is sticking in my mind. I cannot remember where or who stated that date as the beginning of the next downturn, but it sticks there, FWIW.
The cumulative A/D indicator that GZ uses is about to turn negative and will do so on the tenth unless advances outnumber decliners by a wide margin over the next two days.
What would it take for me to change my mind in thinking that this goose is finally cooked? I am not sure....much better internals for one. I would like to see advancers start to outpace decliners on a regular basis. I would like to see 1196 taken out on the ES8Z contract very soon, or 1208 on the ES9H contract. I would like to see the SPX set new highs.
The INDU is lagging on this run and already looks cooked. The same bearish divergence since mid-OCT is on the INDU chart and today the MACD could not even get above the zero line, as it is on the SPOO and SPX chart.
In short, the party is over in my book. But remember, my bias is lower as I don't believe this market. That colors my view and quite possibly my reads. As much as one tries, it is hard to step back from one's overall opinion.
-Scott |
