Markets – Macro – Technicals

Some Positives

positivesJust a quick post as we are heading toward a well deserved vacation. 2015 has been a great, but also a very demanding trading year. One may have even gotten the larger moves right, but trading them is nonetheless a challenge.

For ourselves we had tightened our trading process over 2014 and it has worked greatly on some levels, but also presented a challenge for those not able to stay glued to the screens full time. Many of the big moves happen overnight as stop runs to the upside and downside can leave people staring at stopped out positions by the time they wake up and algos hunt for stops on a regular basis. It often doesn’t seem fair, but there is no point in moaning about it. We need to trade the markets we have not the markets we want to have.

Trading is not an easy business and it continues to evolve as markets are changing. If you used the same process in 2015 as in 2014 you likely had very different results to show. And we think 2016 will be no exception, hence we are also introducing further process upgrades which we will announce in the New Year. 2016 no doubt will challenge everyone’s trading skill set and we are excited about meeting that challenge.

Yet 2015 still has a few days left in it and yesterday in technical charts I outlined some of the big structural concerns in the weekly charts (Dec. 19, 2015).

But if one looks closely Friday’s OPEX dump also showed some potential positives that I want to highlight here. Ironically most of the positives I’m seeing center around all the negatives we have been observing, the lack of participation, junk, high yield, etc.

Now it’s entirely possible we can continue to see further selling (there’s a major open gap at 1950 $SPX for example) and tax loss liquidations can be notoriously unpredictable, but given positive seasonality starting this week and the signs of oversold conditions in many individual issues, markets may still have a rally surprise in store at some point. Still Mella is a looking at a long term $VIX chart that suggests 2016 could be a wild roller coaster ride.

We shall see, and for us at least, most of the next few days we shall observe from a distance until the New Year.

In the meantime, a big thanks to all our members who made 2015 such a great community, but also everyone that interacts with us on the public twitter feeds and finds value in our content/analysis.

We wish you a wonderful holiday season and look forward to a great 2016.

Mella and Northy


The potential positives:

Sudden upticks and/or positive divergence in HILO, JNK, RSP, INSAX & $NYAD:

NYHILO JNKD RSP

INSAX

NYAD

$NYSI is oversold:

NYSI W

$SPX continues to be in range with multiple trend lines acting as support and resistance. Friday’s OPEX close painted a massive volume bar not unlike those associated with previous bottoms. In September this type of volume bar was followed by a bit more downside before rebounding:

SPX T

One other chart of note: Potential bullish patterns forming on both $SPX and stocks below their 200MA:

SPX 200

With 60% of $SPX stocks below their 200MA it’s a pretty tough showing for long funds in 2015. As I said yesterday, these markets could use some magic. Perhaps these charts above hint that some magic may yet be in store. But the structural challenges remain and will not be easily reversed. But that’s a 2016 debate.

Have a safe and enjoyable holiday season!

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