Before the Open (Aug 17)

Posted on by Jason Leavitt

Good morning. Happy Wednesday.
The Asian/Pacific markets closed mixed…only Australia (up 1.3%) moved more than 1%. Europe is currently mixed with a bullish bias. Futures here in the States point towards a positive open for the cash market.

Over the last 8 days the market has been up 4 and down 4, and the net change has been very little. There has been lots of movement for short term traders or day traders to play with but not much for swing traders. That’s just the way it goes. Swing traders trade aggressively when there is a directional move but have to significantly shorten up their time frames when the near term isn’t clear. Such is the current situtaion.
Until proven otherwise, my overall bias is to the downside, but short term we are in no-man’s land. A high-percentage, favorable risk/reward short is somewhere near prior support (near SPX 1260). A high-percentage long is somewhere near last week’s low (near SPX 1100). I use the word “somewhere” on purpose. The market isn’t going to go to an exact level, wait for you to enter and then reverse. You may have to scale in as those levels are approached and then put a stop beyond those levels.
Said another way, favorable risk/reward set ups don’t exist right now – at least not to the degree I want to see them. With volatility being high, the intraday ranges being big and support and resistance being far away, it’s hard to give a swing trade a chance to work out because the noise of the market can easily stop you out.
Don’t over trade. Don’t chop your account. Better set ups are coming for those who have the patience to wait.
headlines at Yahoo Finance
today’s upgrades/downgrades
this week’s Earnings
this week’s Economic Numbers

0 thoughts on “Before the Open (Aug 17)”

  1. yeild spreads in usa approach those in japan—zombie land
    do yanks want to be trated as zombies–pay ur debts –bankrupt the banks with mark to fantasy balance sheets inc govt

  3. AussieJS – (Neal this will give you a headache, so please don’t read it!)I posed a question to you late in the day yesterday regarding your EW anlysis that we’re in a wave 2. As you probably know, you can put 10 EW followers in a room and get 10 different interpretations of the wave count. Can you give everyone an idea where wave 1 down began and ended (using SPX)? I’m assuming you counted an 5 internal wave structure for wave 1 down. Where do you see wave 2 ending?

    1. Hi Pete
      i did answer after hours y/day
      i was commenting on the ndx100 obviously being in wave 2
      new high -streight down -now up
      once those worms get into the apples it will be wave 3
      re spx and dji–im in the same boat as u –could be either or
      if it goes above the .382 or a third retracement its more likly a 2 and will go to the 618
      or that 7 something
      one thing i will point out from 2008 panic 3—they are streight down only waves in it are
      intraday and we did have a few little minior ups intraday for a complete 5
      but i dont think the down was any way big enough
      my target for this impulsive wave is mar 09 low then a wave 2
      one way also of deciding if its impulsive–any up cannot last more than 4 days or its corrective
      so far maybe so good but today would need to be down -especially as we have just gone marginally higher than y/day

      1. AussieJS – I hear you. From a longer term perspective we may be on the same page except that I see the wave structure since calendar year 2000 as being a series of larger 3 wave patterns and this move down from SPX 1370 begins another larger 3 wave pattern downward – first to 1000-1050 with an intervening rally and then down to test the MAR ’09 low. This will be the defaltionary recognition leg but I don’t rule out a breach of the ’09 low at some later point. It’s just that I don’t see the beginning of a Prechter 3rd of a 3rd of a …. to oblivion beginning on this move down.

        1. this one is from awesome –one of my dead cats
          he agrees with u that the may 2 top was end of wave 2 up–long term
          but then we had a little irish jig corrective to aug and wave 1 of 3 started aug
          with a 1 of 1 now a 2 of 1 next a 3 of 1 and no stop till wave 2 of 3
          now do u see why i prefer the daytrading casino

  4. Neal – again, please disregard this! If anyone’s interested, take a look at the SPX HOURLY chart today and you’ll see the potential for an expanded top (megaphone pattern). I point it out only because I’ve mentioned previously that, in my opinon, the SPX 1200-1220 would be difficult to overcome on this rally.
    To tie this comment in with my question to Aussie JS previously, it’s my opinion that we’ve only completed 3 EW waves down off of SPX 1370 and we’re in either wave 4 of 5 waves down or something still bullish, i.e. a 3 wave correction completed at SPX 1100 (which would agree with Neal’s argument to buy now in expectation of DOW 12,000 or higher). If I’m correct, we’ll go lower from 1200-1220 (maybe 1260) to the 1000-1050 area before we can get a more substantial rally.

    1. i just had a look at spx dji on a different computer as i wont touch my short term 1-5 min charts on esignal where i have cash /futures–currently short
      longer term –how about we started wave 1 in aug and this little irrational deadcat bounce is 2 –ending now and we go into 3 of 1 now ending just above mar 09 low then 4 /5
      im sure we could manipulate may 2 to aug as a abc or xyz or oop
      back to trading
      might be time to close scalp–nope still letting it ride

    1. AussieJS – I was traveling on an appt and caught Chuck’s comments over the radio. Did you notice how he kept coming back to inflation as his primary concern, almost like he dreads the cost of Philly cheesteak hoagies going up in price? I’ve tried to convince him that his concern should be deflation and that BEN is right to fear deflation but has the wrong remedy. Ben thinks he can somehow expand the balance sheet faster than American citizens can destroy $$ through deleveraging. None of these guys get it, which is scary. Until debt is restructured, the tax code is changed to a flat rate structure with loopholes closed, and entitlements sized to the ability to finance them through PRODUCTIVE GDP growth, the USA is on a downward path – which translates into “sell the intermediate rallies”!
      By the way, I declined his request to come back on a consulting basis. I think he just wanted to get free cheestakes! They’ll have to deal with the Wall Street BOYZ all by themselves from here on through the coming downleg I’m seeing ahead

      1. agreed Pete –only way to fix usa is bankrupt it
        the faster the better then we can have a real rally and i can change gender and become a bull
        its a shame the fed wont have any money left for real stimulation,when its really needed
        i think those investors are taking profits today after their averaging down and before the financial transaction tax the germans/french propose

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