Good morning. Happy Wednesday.
The Asian/Pacific markets closed up across the board. Singapore rallied over 3%, and Hong Kong, India, South Korea and Taiwan gained over 1%. Europe is currently up across the board. No index is up 2% but several are up more than 1%. Futures here in the States point towards a solid gap up open for the cash market.
Why hsa the market moved up 6 of the last 7 days and 10 of the last 14? It doesn’t matter. I stated several times over the last couple weeks that everyone was bearish, and when everyone was stacked on one side of the marketm, surprises happen. I’ve also stated the biggest up days occur within downtrends and even when the market trends down, there are upward corrections that can last a couple weeks at a time. Be flexible, no matter how bearish you are.
Very quietly the indexes have made a higher high…the S&P is up almost 100 in just over a week. Nothing prompted the move…just a good old fashion imbalance of supply and demand. But volume has been on the lighter side, so although we shouldn’t fight it, we shouldn’t entirely trust it either. Wall St. is a big voting booth. More volume = more votes in favor of a move. This move hasn’t gotten enough votes to conclude a majority of the people are in favor of it. In 5 years we’ll look back at this time period and possibly draw different conclusions regarding volume because of high frequency trading, but for now, I still want to know if volume is expanding or contracting as prices move around.
Be flexible, be open minded. At the rate we’re going, it won’t be long before the indexes bump up against their previous support levels.
headlines at Yahoo Finance
today’s upgrades/downgrades
this week’s Earnings
this week’s Economic Numbers
0 thoughts on “Before the Open (Aug 31)”
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On the daily and weekly charts the indices, especially the Nasdq made a triple top, followed by a measured move drop, we are now putting in a double bottom.
The double bottom is playing out and need follow through. Our next challenge is the key support / resistance level at 2600 on the Nasdaq. Perhaps this will mark a new sideways range for weeks and months to come. Many new leadership stocks have been breaking to new highs over the last few days and week – ie DLTR JAZZ etc.
As for the actual and wannabe economists and market pundits they are again proving themselves to be fools and cons. And I submit they all go do something biologically impossible with themselves. We need to get past the poise, articulation and logic of eloquence and think for ourselves.
Take losses quickly and take incremental profits while following the trend. Best of luck.
Although not a day trader per se, I am an investor turned trader and do occasionally day trade the high beta stocks and ETFs. The markets and stocks are fractal. There are times to day trade to supplement or hedge longer swing and position trades. Even position type traders like William O’Neil in his book has acknowledged that swing trading down to the hourly charts are profitable.
Don’t cheat yourself of opportunities and best of luck.
Neal, I’ve been reading this column for some time, and I finally feel the need to make a comment. I don’t know about you, but for me, reading this column is free. It’s a service generously offered to the community by this good man, Jason Levitt. Nobody has put a gun to your head, forcing you to read it. If you think the advice stinks, stop reading the column and stop making rude comments. You’re a disgusting boor. Fuck off and start your own service and/or column if you think you’re so goddam smart.
let me guess neal,—-the trend–no not THE TREND,but the 4 day trend is why we will open up 100 points
my wise daytrader teacher told me as a daily set up action to always ask ur self
“what are the buyers /sellers thinking /doing
———-well its end month and those lying mutuals have to get their books fixed for end month
this is not a investors market—-u are not getting payed for the enourmous risk out there
2004-7 was —we had cleaned out all the tech junk and it was full stem ahead–curtisy greenspan
well thats enough –this is not a newsletter
but those methodone junkies will get heart from germany reducing some objection to a euro bond and progress from usa on a comitie to handle deficite
today will prob be a exhuastion up to end quarter
LIVE IN HOPE NEAL—NEVER LOOK AT UR OWN MINDSET–NEVER SELF ANALYIS—STAY FULLY INVESTED IN A BEAR MARKET —I DARE U
i will be looking for a completion to the exhustion today before i trade
Good gosh, use spell check so people know what you are talking about. Don’t be so lazy with your sentences.
This low volume equity market means pump and dump to me.
The TLT looks hot. Does that mean anything?
I don’t know why you guys feed Neal. Oh well.
RichE – you make a great point. It is best that we all ignore this boring individual.
We need a change that we can believe in.
Question of the day: Are the Beatles still
more popular than Jesus Christ as they once
were back in 1967? 2) I did bump into Ringo Starr
a few years ago at an AA meeting. He introduced
himself to me as Richard, his real birth name is:
(RichE, do you know?) HW
Why on earth would you want to discuss the esoteric on a trading blog?
Believe in change. It is constant and it (volatility) is what we trade.
No, I’m not Ringo Starr.
ESU1: Momentum slowing.
we are hitting some res areas–spx 1128-32–dji 700 ..oops 11700
am waiting for europe to finish exhausting—thats the driver
oh well its a mutuals day today –hedgies getting set to take mutuals to the cleaners again
mutuals/investors /retailers allways on wrong side
My guess, they’ll all load up on the close.
Neal, It’s like you’re trying to justify your existence.
Find yourself Neal.
Taking profits and it’s too early to go to lunch.
You don’t get your way so you go away. That’s dumb.
Jason,
does volume now matter or not? I remember posts you said it doen’t matter because it’s all about computer programs managing the portfolios. If stops were hit, stocks get sold. Now, in the uptrend, volume does matter again because of the voting booth?
To me, volume can only be explained AFTER something has happened and the markets HAVE moved. If the markets continue to move up, we could see more buyers because of the light volume now. Nobody want to be the last one to miss a great upmove. If the market breaks down again, we’ll argue that’s because nobody trusted the upmove and there are/were no buyers.
I watch volume but I don’t think it’s as important as it used to be because so much of it is just computers trading back and forth with each other.
The reason the market went up so much is that companies were making profits , there was a scare in the market and profits were taken. Now why did the US bigwigs not react immediately on the scare ? So the market would correct then stocks would be more buyable on some positive news. The trend is still up , we had a correction within an uptrend. I know Jason is an expert and I respect his work , but the market is driven on profits that companies are making , as long as interest rates are low and employment is down then working will work harder and for less pay as they have to. The market has been directed by news reports , not charting. Which is obvious by Jason’s reports about how there can be surprises. It’s just that easy 🙂
Neal is the one that’s saying it’s hard.
Pete M.
What do you see as the wave count on the monthly chart of the SPX?
Art
ArtS – I don’t know if this will answer your question. Since the MAR ’09 low, I can only see 3 waves up into the MAY SPX high. If I step back further and go back to calendar year 2000 (when I think we began a secular bear market), I still see wide swings made of complicated 3 wave patterns, i.e double zig zags and the like. Like everyone else, I can’t predict the future but I think we’re looking at another longer term 3 wave pattern to the downside developing over the next few years with a downside target of at least SPX 950 but perhaps as low as the MAR ’09 low of 667. If we get below that, as many bears (or at least some)expect, we could see 400, which represents a level where previous SECULAR undervaluations in the stock market occurred, e.g. the 1982 bottom. My target for this bear market leg down is SPX 800 (+/- 50pts).
That answers my question, Pete.
Art
Putting EW aside for a time, I find that it can be instructive to draw trend lines , look at moving averages & oscillators as you look at trading time frames. For instance, on the SPX daily chart, I see a flag formation forming off of the Aug low while the short term trend is positive as confirmed by the upswing in the 13 & 20 day EMAs. But, I see this within the context of an intermediate downtrend with resistance at the 50 day EMA (1235). At the same time, the all important (to me at least) 80 WEEK SMA continues to sit in sideways mode at 1210 which was tested here in the last hour of trading and held. In my opinion, all this tells me that the short term trend can continue higher but 1235 could be an area to watch for a downside reversal and a continuation of the intermediate downtrend on a FRI close below 1210.
Dave- The Market is directed by Fear and contagion….
Howard-I met Ringo 16 yrs ago at an AA mtg in London and he told me that his Higher Power was more popular than The Beatles….
Jay
Enter a trade where sensible potential reward far outweighs the risk.
If you have a fundamental reason to buy aswell that’s great but it doesn’t guarantee your stop won’t be hit before the value unfolds.
….and love ; /
Let me guess – did you daytraders press the short side after 1PM on a break to new intraday lows, and are you know pressing to break 1205 into the close before covering? Inquiring minds want to know?