3:26pm
Let’s all welcome BIDU to the short list (overbought list) at $427.50. GOOG, BIDU, AMZN, SBUX, JPM (maybe WYNN again? not sure).
2:49pm
The market is still not doing anything, and there is nothing really to comment about… rememeber that financials earnings are going into next week and the financials are not strong here… also remember next week is options expiration, this will be a crazy week.
1:04am
It’s tough to tell where the market is going to go from here on out. We do have a DOJI candle on a lot of the daily chart of many indices. But, technically the bulls have every easy passage to go to 1075 and potentially break out to 1090 after that. The bears can drop this market to 1020 and still not create any damage. However, if the bears do drop us below 1047, I will be a lot more in favor of a potential reversal in the markets. As of right now, you gotta remain slightly bullish here with selective shorts from the overbought list: JPM, AMZN and GOOG.
Here’s a 10 minute SPX… as you can see a break of the 1062-1063 level would be the first level for the bears to overcome. 1054, would be the second, and 1047 the third. A fall of 3% should technically NOT create a panic for the bulls.
Tomorrow we have important trade data before market opens I believe.
How does this site still have a following? You’ve been bearish for several months now LOL!!!!
Hey Idan, i know that you are still bearish, do you think we are going to hit new lows? if so how do you explain the 200 Day moving average? after we broke that this market rallied way too fast in my opinion. But before we can be bearish i would like to see the 200 dma break support. Please give me your thoughts. Thanks.
Hit new lows?
How about re-testing 985.
How about breaking 1020
How about breaking 870 WHICH IS IMPOSSIBLE I MUST SAY
How about retesting March lows! EW analysts suggest that!
Well.. we are highs of the years and GS, C, BAC have not even reported their earnings yet!
How much trading revenue will GS generate this quarter?
I say 150 million a day.
Yes I am bearish over the longer term… but still netural/bullish in the short term.
The trading compared to 1929 is very very similar… only in 1929 we only fell 50% and then rallied 50%, and then hit new lows. .. 2008 we fell 64%.. so we can rally as high as 61.8% before going to new lows.
Sorry i meant 50% retracement.. not 50% rally.
yeah i understand that, but the thing is that during the great depression. that 50% rally never broke the 200 DMA. after it broke it represented a new bull rally just like what happened in 2002. after it broke 200 dma. a bull market occured. dont get me wrong, i think this is a bs suckers rally. but this rally can last another year or two before we see the true effects of the bear.
stockman, 200 dma has little significance in this liquidity driven rally…which will continue into yr-end. just sell some puts and sleep well…world is meant to get better, not worse
wake up and smell the coffee! we are in a trending ‘holy cow’ market! be long or be wrong~
Being bullish would have been more helpful very soon after we bounced off the 50s, not 50 S&P points later. I’ve gotta hand it to Zee and bullish bear, they made the right call at exactly the time when everyone would have said the opposite, good contrarianism. Now with so many perma bears like Idan and Guy Adami turning nuteral/bullish and everyone on CNBC screaming Dow 10k, S&P 1,100-1,120, the VIX crashing, the $CPCE at very low levels, little put protection, enthusiasm about earnings like crazy after AA, and a dollar with 97% bears, I would say being bullish is dangerous. Could I see some low volume push on Monday given that it is Columbus day and there is no news? Sure. But how about the rest of the week? Well, on earnings you better kick some ass big time if you want to see your shares continue to rocket. Everyone thinks JPM/GS will beat… so how much of the beat is already priced in? Maybe all of it… maybe we just sell the news. Look at AA. They rallied on earnings day, but have traded back since. The market is all but certain they are going to see great earnings because of Alcoa. Are Alcoa’s dynamics the same as they are for banks? NO! Technology? NO! Some earnings also may well be non-events. Intel for example already basically gave you the lowdown when they guided up in August. Let’s also not forget, though earnings will likely dominate, we do also have retail sales on Wednesday, which despite chain store sales, is still likely to be very bad given the end of cash for clunkers. Philly Fed/Empire Manufacturing/Industrial Production are all also on deck. Empire may be good due to the new orders component on the prior survey, but Philly Fed and Industrial Production may well be poor. ISM new orders/inventory ratio for Sept certainly didn’t suggest that manufacturing would paint a pretty picture in October. I’m not saying I am right. I should have gone long when we tested the 50s, thats for sure and I have to credit bullish bear and Zee. However if you believe in contrarianism at all this is not at all the time to be bullish. There are a ton of bulls out there since Wednesday and the data that I am seeing in the options market suggests very little caution in the markets. IF and I will definately reiterate IF we get some downside it could be very ugly, very quickly given all this bullishness and seeming lack of protection. Another interesting phenomina that I have noticed is a real lack of upside call activity either. Clearly with the put/call ratio being what it is, you would expect a ton of call activity in expectation of upside surprises for earnings. I am not seeing that by and large. I am seeing the absence of protective put buying and that is skewing the put/call ratio heavily in favor of calls, but looking at a number of key stocks you aren’t seeing outsized call buying. I don’t see a ton of volume that is larger than open interest for a number of key names like JPM/GS/BAC. That suggests to me 1 of 2 possibilities… Either market participants expect earnings to be a non-event or they are not buying the calls but instead they are just buying the equity outright. Given one’s ability to define risk more accutely with options than with common, this could also set the markets up for danger if things don’t turn out as expected.
This next week is going to be crazy to be sure. I did see dojis on a number of big names, like GS/OIH/GE, but of course we have seen alot of techical patterns come to nothing lately, so not sure what to make of that. Again Columbus day is also likely to be pretty low volume, so that may be positive for the markets, but I wouldnt necessarily draw that conclusion. The dollar of course will also continue to take center stage. The Japanese Finance Minister did reiterate on a trip to the Phillipeans that he may take steps to weaken the Yen though did not want to use the word “intervention.” So far I have only seen that in a Manila paper, could help to strengthen the dollar, but we will really be waiting for the BOJ decision Monday night. Other Asian Central Banks could also continue their interventions. With a bank holiday in the US/Canada/Japan on Monday it is possible they could push up the dollar if they continue that intervention on Sunday night in a low volume environment. The dollar will continue to remain critical as it exerts a negative correlation to the S&P. I think traders brushed off Friday’s move as temporary, but if we get more dollar strength, particularly if we can push back above 77 on the DXY the markets should fall.
I am not saying we don’t get to 1090-1120, or above 10k on the Dow… we absolutely could. But the level of bullishness, the level of self assuredness amongst the bulls that this will be a repeat of Q2 earnings, the number of perma bears going bull, the extrapolation from AA that the rest of earnings season will be great, the seeming lack of protective put buying as exhibited by the crushing of the VIX and the skewed put/call ratio, the fragility of the market to this crazy carry trade and the level of extreme bearishness on the dollar, all of these things should make one wary if they are at all a contrarian. Perhaps everything will come to pass as the bulls believe. Earnings will knock everyone’s socks off and we will go to 1,120 next week. Maybe that will happen. We went up 50 S&P points this week, why not again next week, right? Maybe so. But realize that it is a very, very dangerous game you are playing if you believe that without reservation. The market is very dependant on continued dollar weakness, if dollar rallies gold and oil will get crushed and the stock market will be sent into a tailspin as a result. If earnings do not beat, or frankly if they don’t beat as much as the optimists think they will, the market could be sent into a tailspin. If retail sales and industrial production miss, the market could be sent into a tailspin. Particularly, particularly given the lack of protection that seems to be out there, likely because of the number of times the bulls have been saved lately, if we get some serious downside momentum the markets could get into real trouble, real fast. Do we fall next week? I don’t know to be honest. But I do think that what could seem like a minor bump in the road could send the market down alot faster than we might expect given lofty expectations and a boatload of complacency. Thow some stops on if you are long if you haven’t already.
Mark – Good analysis. It is time to get very cautious.
One thing I am watching carefully is bond prices. TBT (20+ years treasury ultrashort ETF) broke its decling trendline on very heavy volume. Treasury bond prices have stopped falling and have started rising. This data is available at Bloomberg’s site http://www.bloomberg.com/markets/rates/index.html
Rising interest rates are good for dollar and bad for gold and commodities.
What a fantastic analysis, Mark! Well done,,,well done. I am privileged to have come upon your essay.
Regards,,,,
Thanks, be careful, in either direction, we could go either way. I think the downside risk is high, but lets caution that that does not mean it will come to fruition, lets be open minded to either possibility.
The situation with treasuries is interesting, I’ve read a few different articles about it and I am still not sure what to think. Zee/Bullish Bear were saying 1090+ on Thursday post Alcoa. The reason why we never got that high those days was because of that 30yr auction.. I think CNBC’s Rick Santelli gave it a C, but at any rate it came in at high yield, lower bid to cover than the recent average, pretty low indirect bid. That caused a sell-off in treasuries Thur/Friday.
What are the ramifications of this? Well…. if the 30yr continues to sell off, yield continues to increase, mortgage rates are going to go higher. Not good for the housing recovery. However if the long end moves up and the short end stays low, thats good for banks as they can make $$ on the spread btw the long and short end of the curve. I’ve seen some articles that say the short end is going to ssell off soon too though. If rates just push up in general, ya, thats not good for the recovery. What would be a real disaster though is if one of the treasury auctions seriously didn’t go so hot. Ilike bid to cover under 2. That would really, really freak out the market as questions would arise about foreign willingness to fund perpetual US indebtedness.
I read somewhere over a month ago that new cash in-flows to mutual funds were at record levels as the rally pulls more retail investors and their cash back in to the market.
Some (me included) think that the Big Boyz are planning this in order to sell off their shares bought during all of those ‘stick saves’ in the summer that kept the rally going to the bag-holders.
Those banking on a severe pull-back are probably not wrong, just very early. The ‘other shoe’ could drop any time – perhaps the post-earnings profit-taking accelerates into a mini-crash, perhaps H1N1 and 18% U6 numbers crush holiday retail, perhaps the dollar does rally, perhaps, perhaps, perhaps.
The bottom line here is that I, who have missed the rally being all-cash except for a few small plays, are getting tempted in on the long-side. Multiply me by a million and that spells TOP and DANGER.
The panic buying that defines an imminent rally reversal may be at hand, or it may wait until December, but I for one simply cannot see the vertical ascent continuing indefinitely…
Thanks everyone for the contributions..
I called for a top by OPEX. last week, however, after looking at some charts.. this turning date is NOT accurate since it is 31 trading day cycle.
31 Trading Days is 1.5 months.. it’s just not a nice number… and it has a lot of standard deviation error..
If we so happen to top on OPEX/post-OPEX. (OCT16/OCT19). great.. however..a better indication to going short is for this event to happen which I expect could potentially happen late this week or early next week.
:: the market surges 25 points(s&p) in 1 day and at the same time , the market is making record highs. That is the time to short. IMO anything in the low 1100 on oct16/19 would provide a good return/risk on your buck.::
Here is how I got my OPEX Date for the top::
The market will make a fairly large bottom by November (6% sell off at least) (this is a known fact).. The market has to top in theory before a bottom.. So we analyze cycles, and historically, the tops happens 11 trading days before the sell-off commences. Therefore (November) -11 trading days = October 16th/October 19th will be the top.
In essence, one can only take home 2 things from market cycles for this month.
1) ‘The last week of October will be bearish in nature’ , because the market will want to make a large bottom (>6% sell off) by first week of November’.
2) In-order for the market to bottom, the market has to top beforehand.. ‘theoretically the market should top 11 trading days before the bottom–October 16th/October 19th should be the top–however; as explained in this post.. the degree of accuracy of calling half cycles is not too reliable.
“The market will make a fairly large bottom by November (this is a known fact)…” I’m sorry Zee but when has anything about the future ever been a known fact.
Mark.. you are RIGHT. Yet I am RIGHT too.
You have to assume certain FACTS will be constant in the cycle functions.. One that previous market price action WILL repeat itself into the future.
Secondly, you have to assume the following: no major interest rate changes.. no major wars.. no major natural disasters… etc..
The sell-off preceding the bottom will be ~6%.
Does history always repeat? No, but it often rhymes. Or in this case, it just might “reflect.”
To analyze a futures market based on cycles, it is necessary to isolate the dominant cycles affecting price activity. Once these dominant cycles have been identified, future price expectations can be established by combining the effects of these dominant cycles. Long-term cycles, such as the yearly cycles identified by the Foundation for the Study of Cycles, tell you the direction of the overall price trend. Shorter cycles, weekly and daily, can then be used to determine when long-term cycles have topped or bottomed and when to enter and exit a market.
Nobody can forecast with 100% certainty that a market top or bottom will happen on this or that day at exactly this or that price. Such certainty belongs to God alone. However, it is possible to forecast market tops and bottoms with a very high degree of accuracy and with a very small margin for error.
Every trader that uses a price chart and plots lines, indicators or anything else on what is clearly historical price data is in fact suggesting that historical price is key to discovering what is likely to occur in the future. Otherwise, why bother reading a price chart since it only provides information on what ‘has already occurred’?
Therefore why do you even do technical analysis?
I am able to predict the past with 95% cert.
Is that good enough?
We are headed lower, mucho lowero, this was a continuation fake
out.
Any day with bullish bear posting 45 times or more is.
There are several books on the subject of ‘detrending’ cycles from price data. Most would find this to be an extremely technical subject and requiring a strong understanding of mathematics. While detrending provides excellent advantages in forecasting, there are some random elements that keep even this approach honest from cornering any market
Q3 GDP is at the end of this month, some economists I know think it will be way lower than the street consensus.
Mark, which econos do you ‘know’?
Any relation to jane mansfield?
She had a nice set of triangles!!
J/K mark, your comments are amongst the more lucid here.
But if you are related to jane, lock ur daughters up!!!