$SPX Daily: The market is currently driven by debt ceiling talks. So let's look at the market in that view. Below, I've labelled my primary view of ABCDE. Wave A is half of wave C in time. A bottom to wave E in the next couple days would make Wave E = to Wave A and half of Wave C based on time. Ironically, I was looking for a potential high point a week ago on this time frame coming up, maybe the turning point is a bottom of some sorts, maybe the ABCDE. Something worth watching, but nothing I'm trading. It is a reason for me to keep the bearish trades light and short in duration. Price has 3 likely spots for the end of Wave E. Just below at price support and the lower BB, the 200 day MA or the bottom of the wedge. I think at least the 200 day MA.
$VIX: If I'm conceptualizing the end of Wave E into the $VIX, a bounce up to the first blue line might equal the market testing the 200 day MA. A move up to the top blue line might equal the market selling off down to the bottom wedge line. Again, just spit balling my primary view.
$CPC Daily EMA 5: Here's a little red flag. Bottoms typically see this chart peak over 1.05 to 1.10 while the MACD is over bought. Price is nowhere near that and the MACD is about to turn up. Interesting little red flag. It doesn't support a bottom in price! It would suggest for now that the market could easily test bottom wedge line.
My Watch List: I have 3 very aggressive bearish trading ideas:
CMG: Today's bounce stalled at the gap and then failed. Divergences in place with the MACD turning down. If the markets continue to stress about the debt deal this could sell off easily tomorrow. BBs are pinching so price should see movement soon.
SRS: It tried to break above cluster resistance today but failed. Divergences in place and BBs pinching so we should see price move soon.
WYNN: Price stalled at the channel and now the MACD is turning down with the BBs pinching.
From My Trading Desk: Early in the day we shorted a half position on CMG, as I wasn't believing in the early bounce in price. When SRS hit the upper BB and then started to fall we sold our position right at the 50 day MA for a 3% gain. I didn't have the time to watch the market most of the day and didn't want to stress over it. Late in the trading day, I bought back SRS. We almost shorted WYNN.
So, we are stuck in No Man's Land for now and the market is stressing over a debt deal. I still think we get one some time between now and mid August. That could spark a sharp relief rally. Until then, the markets could be on edge as they stress over the uncertainty of a debt deal and US default.
IF, the markets sell off tomorrow going into the weekend because traders do not want to be long over the weekend because there has yet to be a debt deal, I will probably close my bearish positions before the close on Friday. The thought is I don't want to carry a bearish trade into the weekend and see a resolution from Washington over the weekend followed by a large bounce in the market.
J.D. Rosendahl, Rosey
Thursday, July 28, 2011
|Stock Charts: Market Continues to Street Over Debt Deal Posted by J.D. Rosendahl at 4:15 PM||Print Page||Email This Post|
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