INDEX UPDATE
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In light of the increased deterioration of the market internals, especially the NEW HIGHs/LOWs, I am becoming more bearish. This still does not mean that I am predicting a huge drop, but just that I am getting more and more negative technical signals supporting a bearish stance.
The NEW LOWs got to 163 which is the highest its been since the OCT, unless it improves significantly and is sustainable, it implies that the market is going lower. Lets give it a few days to see if it improves. If it gets worse, the market could drop significantly right here.
The CANDLESTICK reading is a BEARISH HARAMI where THUR was a BIG WHITE day and contained FRIDAYs BLACK day. It should come after an upswing, but this upswing was relatively minor. The reliability of HARAMIs are not that strong.
Most of my short-term technicals are still in the middle, so this is basicly FLIP-the-COIN territory.
It is apparent that many are getting nervous about the rising interest rates. The charts show that the rates are in an uptrend with FRIDAY setting a significant HIGHER HIGH. It is now the highest since OCT. My SHORT-TERM technicals now give the rates a CLASS SELL, implying that for the short-term it is near a peak and should drop within its upward trend. The buy-in point would be at tomorrow's highs, but since it is only a CLASS 2 it could go higher another day or so. I feel that once the rates dip, the stock market should bounce to the upside another time. So we could see another pop to the upside in the stock market as early as MONDAY and maybe as late as WED.
It is quite interesting how this STAIRSTEP is containing the DOW to the 9100-9400 approximate range, but I believe it will be dissolved soon to the downside in light of the deteriorating market internals.
If the market does dip more on TUE, I feel that the support in the 9050-9100 range should hold, which is near the LOWER TRENDLINE of the WEDGE. Then a bounce should occur if/when the interest rates dip, and the UPPER TINE of the MAIN DECLINING PITCHFORK should contain the upside(around 9350-9400 for next week).
In light of length of this STAIRSTEP, where we have been zig-zagging for 21 trading days, and the deteriorating market internals, I feel that the next short-term downswing cycle could be more significant, if it doesnt happen immediately.
Last week I got my CLASS 1 BUY SIGNAL and the reaction to it was slightly late which implied that the rebound could be weak and I did not act on it by buying CALLS. Then THUR I was kicking myself for not buying CALLs since the market was running hard, but on FRIDAY I was glad I didnt since alot of THURDAYs gains were given back, which is one confirmation that this rally should be weak. Hey, it may be over already. On a technical basis, until the recent lows are taken out to the downside, this rally is not negated since it could just be a mini-retest in the sense of time, not magnitude.
I feel that the 9350-9400 range would be a good place to initiate PUTs if it gets that high. I will probabily start initiating small PUTs positions near 9300.
have a nice weekend all |
