Before the Open (Sep 1)

Posted on by Jason Leavitt

Good morning. Happy Thursday.
The Asian/Pacific markets closed mixed and with an up bias. India and Japan rallied more than 1%. Europe is currently mostly down. Germany is down almost 2%. Futures here in the States point towards a negative open for the cash market.

August is in the books. All the indexes (except the Russell) closed above their 20-month MA on the monthly charts…not bad considering where the indexes were two weeks ago.
The Nas bumped up against its previous support level yesterday but got rejected. The Nas 100 is within its large consolidation pattern (albeit near the bottom). The other indexes have room to move.
The market has moved up 7 of 8 days and 11 of 15. The biggest rallies always ocurr when the market trends down, and within a downtrend, there will always be bounces that last a couple weeks or even a couple months. So given my shorter term trading time frame, even within a downtrend, I’ll be long just as often as I’m short. Hence why we’ve had so many good long set ups to trade the last week. I keep looking for them becuase they’re out there and there’s money to be made.
There’s lots of econ news out this morning and then of course the employment numbers tomorrow. Then we have a 3-day weekend. The market is in the midst of a nice winning streak, but volume has generally been on the lighter side. It picked up yesterday. Earlier in the week I was looking for volume to confirm the move up. Now I’m looking for volume to signal a blow-off top. Volume that occurs suddenly late in a move tells me the the shorts are panicking and the late-to-the-party bulls are buying at any price because they’re afraid to miss the ride.
We’ve had some nice moves the last two weeks. Many of our long trades have hit there targets, and we have many less good set ups to play with. Considering the winning streak and jobs report that lingers, this isn’t a time for big bets. The indexes will stay volatile for a while, so it shouldn’t be an issue to shift into conservative mode from time to time. More after the open.
headlines at Yahoo Finance
today’s upgrades/downgrades
this week’s Earnings
this week’s Economic Numbers

0 thoughts on “Before the Open (Sep 1)”

  4. Well let’s get real about the rockers from the 1960’s
    They are either all dead by now or you will find them
    in some sort of a 12 step program. I have seen quite
    a few of them including Daryl Strawberry about
    7 years ago. HW

  6. There once was man from Chicago
    Who fancied himself an investor
    He followed the FED wherever it led
    “Don’t fight the FED”, was what he said
    Then alas & alack, he woke up one day
    Only to find out the FED was passe
    He ranted and raved all day into night
    But no one cared to listen about his his sad plight

    1. PeteM your days as a rock star are behind you, but with permission
      of the author I will pass along your lyrical content to a blues buddy
      of mine here in NYC. A guy by the name of Popa Chubby, a/k/a/
      Ted Horowitz born and raised in the Bronx. HW

  10. The SPX seems range bound between 1210 & 1230, perhaps marking time into tomorrow’s unemployment numbers. Given Howard’s thesis that the market loves to rally into month’s end and into holidays, we should probably give the short term bullish trend more time and room to mount another test of 1230 and then the 50 day EMA at 1235. A reversal from that level followed by a sharp 5 wave move down through 1210 may mark the end of this rally off of 1122. However, there’s still enough bearish sentiment to spark an even higher rally through 1235 with the next resistance in the 1260 area +/- 5 pts. A further rally into that area would reinforce my idea that we’ve experienced a 3 wave pattern from the MAY SPX 1370 high and are now in a 3 wave pattern from the AUG 1101 low, i.e. wave A down from 1370, wave B in progress to be followed by wave C below 1101.
    Not to put too fine a point on this, but I’m assuming that those who see 5 EW waves down, see the EW high as being 1356 (not 1370 as I favor) and have counted 5 waves down from that level which makes this rally a wave 2. Either way, we’re both expecting the next move to be down to new lows below 1101. If that occurs, we’ll have another clue as to the longer term wave structure. It’s not a contest to prove who is right, it’s simply a way to measure the more probable reward versus the risk which enables one to trade the proper size with proper stop loss based on trading capital.

    1. i favour the start of wave 3 or sub 5 or C to be at todays highs
      europe is in minus growth –todays figures and the insto sell of has started inc euro
      ftse and usa to follow

      1. I agree that the SPX is overpriced. I keep reading that some “analysts” regard the SPX as fairly valued or even at the most attractive valuations since 1982! Huh!? That’s the type of analysis you typically see on CNBC.
        The best analysis I’ve seen (supported by well reasoned interpretation of facts) puts a reasonable valuation of SPX at maximum of 950. An undervaluation comparable to 1982 is more like 400. Which begs the question, if we’re in a “recession” (controlled depression?) unlike any since post WWII which were all inventory driven unlike this “recession”which is debt driven – is SPX 400 that extreme? Unfortunately, with the FED & GOV actions since 2008, perhaps we shouldn’t rule it out! As I said yesterday, my downside is SPX 800 +/- 50 pts.

    3. My handwritten notes from yesterday target the 1235-1240 area
      which was a combination of my own thinking plus everything
      else that I saw posted on other websites, blogs, etc. HW

  12. maybe neals right.
    i noticed a strange thing the other day looking at the spx chart. we had a huge rally of 666. then a week or so ago near the lows we pulled back 6.66% a bit freaky. maybe that means another big rally? maybe the mark of the beast.
    also i think if you look over history every election year ended as an up year.
    just a thought

    1. I think you’re alluding to the infamous EW “ending diagonal” aka “wedge”. Yep, we had a smaller degree pattern earlier this week. To complete this larger pattern, we would ideally rally again through 1230 to make a new high before breaking down to 1122, where I think this pattern started, in my opinion.

        1. I hate to waffle on this,but I will. The ending diagonal pattern that I mentioned would have begun at 1122 and if so, I wouldn’t dismiss it as being over or resolvedto the downside unless and until we broke through 1190 BEFORE making a new high above 1130.
          On a separate note (ending diagonal patterns aside)to my way of thinking I’m looking at 1190 and 1230 as becoming more significant. Sitting in the middle of that range is my good friend, the 80 week SMA at 1210. If we get above 1230 (and 1190 isn’t boken first)on a favorably construed unemployment report, I’d look at a downside reversal through 1210 as a sign of a potential top. If we break through 1190 first, I’d see a a rally failure back to 1210 as a sign that 1230 may prove to be a double top.

          1. Today 10:00-12:30 ESU1 5 minute: The 12:30 close was 50% of the 10:00 bar giving the pattern a pointy feel.

    1. To those who follow technical analysis, Jason’s comments are consistent and well thought out. His weekend comments have often pointed out things that I’ve overlooked or add something to my technical analysis tools. You can’t ask more for more than that, in my opinon.

  18. I’ll be out-of-pocket tomorrow.
    This week’s high 1225 is a higher-high. I think the market will go down to 1170 and reverse. That would be a higher-low. If 1170 doesn’t hold then it’s all over. Hopefully those in charge will come to their senses before then, but at this point I have no faith. I truly don’t believe they get it.
    Have a nice Labor Day weekend.

  19. Jason
    I am with you I would not bet the farm right now but this uptrend is too weak. I don’t see a lot of upside right now unless you look at the total PC ratio which is still sky high and VIX is falling nicely. My analysis reeks of the similarities of this and the fall of 1998 double bottom. That said if the lows hold I am going back long again. The gap up of Aug 22 and subsequent fall really has me from going long. As you always say wait for your pitch.

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