Abbreviated update today as I just back from the CNBC interview in London (clip below): My plan here is actually quite simple: Wait for a setup and keep the remainder positions running as is. Fact is we still haven’t had a basic technical correction of this rally. This here was another minor pullback of 2.5% so far. We keep having minor pullbacks that last a day or two, but no real confirmed break yet. Now that may change at any time, but until we do, bounces are day trading opportunities which everyone of course is free to pursue. The 15 min RSI does provide these opportunities and it did again yesterday and they also signal to scale out of the active positions as we did again yesterday:
None of the big charts are oversold and all have room to go lower, but that has been the case for quite some time now.
The best long set up I can envision for this week remains the 2737-2752 zone. This is where I would look to close the remaining active positions and look to play hedge long $SPX while running the swings. Whether we get this level this week I can’t say. It makes sense to see that zone, but markets may have different idea.
Again 5 points of confluence there: 50MA, 200MA, .236 fib, lower Bollinger band and the open gap. So it’s pretty interesting as a magnet and bounce zone.
But it implies the wedge would be broken if that happens:
Signal charts continue to confirm the sell case with room to the downside:
But $NYMO remains in moderate oversold so has room for bounces:
But note $RUT has found a bit of support:
But the daily is not oversold.
Neither is the 2 hour on $SPX:
But they can also bounce this from here:
Note the RSI at the 50 zone, that game was played last summer.
And note banks are getting oversold and are subject to bounces if there’s relief on the yield curve or yields themselves:
And hence a flush to the buy zone would leave these even more oversold and support a potential long play there:
Note MACD continues to drive lower while $NDX has not yet quite reached the lower trend line:
So bears are so close, but also still oh so far from confirmation.
In overnight we see another large gap building in time for Turnaround Tuesday.
But price remains below the $ES broken channel and could potentially set up for a small rising wedge:
Sellers obviously need to prevent a recapture of the trend line, break the wedge and force new lows otherwise the drift up resumes again its standard program.
Hence patience is my mantra with a plan where to get active on the hedge long front.
If they bounce it they bounce it. Key remains to lock in gains while positioning for a larger sell which is what we’ve been doing.
Tops are processes.
Here’s the interview from this morning:
Categories: Test 2