$SPX 60 Minute: The alternative correctional form might be some form of wedge or diagonal. The daily MACD is just beginning to roll over, and if the MACD is going unwind on the daily chart, we need a lot more time for this correctional phase to support that. A wedge of some kind would better facilitate the time component then an ABC. Below is a little visual of an ending diagonal that could last the rest of this month into early December. Green lines are fib. retracement levels.
$SPX Daily: Little divergences on the RSI and MACD with the MACD trying to roll. Below 1,219, and we have cluster support around 1,190 +/- 10 points.
UUP: Once again, a rising dollar equals a falling stock market. We had a little bull flag break out today with a gap to close right above us. Plenty of room on the RSI to support further increases.
AAPL: This back an forth between gaps will not last much longer, a break in direction is forth coming.
IBM: If I put the pitchforks on IBM we see cluster support below. That would support the continuation of a correctional phase in Mr. Market.
My Watch List: Back on the short side!
MCD: I know, you're surprised to see this market favorite on as a short candidate, but we have divergences forming, and the RSI stalled well below the 70 line. That's a bearish clue. MACD is at levels where price has faded in the past. A break below the prior peak is a nice trigger. We took a 1/3 position short today, just keeping it light and simple.
M: I'm not a big fan of retail, they are my focal point for the short side trade. We have divergences on the RSI, while price failed at an over head resistance line. Below the prior peak is a nice trigger.
JWN Weekly: This retail stock closely mirrors the retail index in structure. Price has stalled at a major prior peak in a potential ending diagonal pattern with divergences on the weekly chart, and the RSI failed to touch 70, a bearish indicator the stock is tired. This is a natural place to trade the fade.
DECK: We held onto our full short from a week ago because the prior few days looked a little bearish flag like. As such, price followed through by falling hard today. Classic technical analysis. Below the prior peak is a nice trigger.
This is why I short this stock. A huge set of divergences on the monthly RSI, with an extremely over bought MACD. However, it could take a few more months to finally turn the monthly MACD over, this time frame works slowly, and this supports a more in and out trading on the short side of this stock until we see greater technical damage.
RL: Possible ending diagonal in play. Divergences on the RSI. Price closed very near the prior peak today, so a little more downside should free the stock up to trade down to the bottom part of the diagonal.
WFM: We have a half short position from a few weeks ago, and I've held it because the form looks like an ending diagonal. Divergences forming and we are almost to the lower diagonal line! Will it hold or break? We should know soon. Since we are this close, I would wait for the break.
From My Trading Desk: An active day to say the least. We had a full short from a week ago on DECK that we closed for a 2% gain. And we scalped a small gain by shorting RL. We also scalped DECK later in the day for another nice gain.
We did take new fractional shorts on MCD, M, and JWN today, and increased our long on FTEK, but that is still a small long position.
Since I'm still trading under the primary view of a correctional phase down, which is either a wave B, 2, or X, I'm not terribly crazy about a lot of full short positions because the time and depth of this phase could be brief. Mr. Market is just to driven by news from Europe for a lot of aggressive positions. We have to manage against that stress and risk by playing small ball.
Happy Trading
J.D. Rosendahl, Rosey