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Today´s Outlook
- Bullish %: 32.8
- Current reading is 73
Weekly Outlook
On Monday you have the daily and weekly in down trends; lower high, lower low. Friday was a doji which means to be prepared for a change in direction. On Friday the DI signaled a BUY. This makes sense as the beginning of the week in a downtrend should try for higher prices to be sold into later in the week. The weekly had a high of 1098.50; obviously you don’t want to exceed that high if the downtrend is to continue.
The limit to the weeks upside should be 1090 and 1097. Late week we will see if they sell it off again. Downside potential is 1066 and 1052. If 1052 breaks the Hindenburg is probably kicking in but with that signal so publicized I strongly doubt you’ll see that response until further upside is in.
Analysis
The market has nothing going for it technically. Low volume, weak internals, sells signals (Hindenburg, daily, weekly). Macro economics has nothing to offer. Low employment and not getting better, weak consumer spending, higher proposed taxes and health care costs are what we are seeing.
Structurally the transports and Dow are the ONLY items holding the market up while the sectors are systematically being sold. Mortgage rates are low but no one can qualify for one anyway and to make it worse the secondary market is still frozen. Commercial side is even worse than residential. There is enough news out there that 100% of economists polled have been wrong these past few weeks. Do you know why? They were wrong because the markets, all markets, are designed to go up.
It is human nature to survive the worst.
There is one real problem though and it is a lack of liquidity. There is plenty of money. What we face is an absolute fear that monies won’t be paid back and that is causing a lot of headaches. On a simple level you can say that 2000 contracts per minute or less is simply not a good environment to trade.
In August there have been 15 trading days, 11 of them have been doji days, a normal month would see 1 or 2. We had 4 trading days where price actually did something and out of those 4, two days saw most of the move occur overnight before going into doji like price action during regular trading hours. So I’m not insane for saying that this is not the best trading environment.
However as we come into September the volume will pick up and we will see direction. The definition of a pullback is price movement occurring on low volume. That is exactly what we are seeing now. I have long believed all major decisions come off the weekly chart. The weekly shows 1064 as a downward price channel. 1052 would be a complete breakdown.
There is an accurate old saying on the street: It takes days and weeks to form a bottom and only ONE day to change it.
Good luck with your trading! |
