Before the Open (Sep 23)

Posted on by Jason Leavitt

Good morning. Happy Friday.
Markets around the world continue to sell off. In the Asia/Pacific region, South Korea closed down almost 6%, Taiwan is down 3.5%, Japan is down 2% and several others are down at least 1%. In Europe, Switzerland is down 5.5%, Stockholm 3.4% and several others are down 2-3%. Futures here in the States point towards another relatively large gap down for the cash market.
I know I sound like a broken record, but at least I can’t be accused of being wishy-washy. The uptrend that began in March 2009 is over. A top has been put in place. A downtrend is underway. My long term bias is the the downside (it’s been to the downside for 7 weeks); my short term bias has jumped back and forth between up and down based on what was happening at that exact point in time. I believe lower prices are coming, possibly much lower prices.
To repeat what I wrote yesterday…when the market drops, there is no such thing as a safe-haven because everything gets pulled down. Traders sell their winners to pay for their losers or to cover margins calls. Nothing is immune. The strongest stocks…the strongest sectors…the companies that sell basic things we must continue to buy…the companies that are on the cutting edge of technology…it doesn’t matter…nothing is immune during a downtrend. You don’t get a pat on the back for only losing 10% when the market drops 30%. You may feel great for beating the market, but you’re still down. If you’re not comfortable playing the short side or buying reverse ETFs, sit on the sidelines. Your goal is to make money, but in times like this, your goal is to also not lose money.
Also..the big problem during the financial crisis (purely from a market movement standpoint) was leverage. Hedge funds that had $10 billion under management had $50 billion worth of positions. That meant if their portfolios dropped 20%, they’d be completely wiped out. The reason I say this is to remind you that you don’t know where an air pocket is. You don’t know when a fund will cross a threshold and suddenly have to dump billions of dollars of stocks [at the market]. When the market drops a couple days and you think it can’t go much lower, think again. It can. In fact it can go much lower. And if one fund liquidating causes another to cross a threshold, well, you get the picture. I’m not predicting this. I’m just saying be careful bottom fishing.
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 23)”

  1. This could possibly be a heavy whipsaw day today.
    I was up at 4am NYC time and the Dow futures were
    up +Dow 100, so the bulls might try to grab some
    of their territory back. I have been in cash
    the last two days because I know how quickly
    things can change. Especially on a Friday
    with little or news to guide this market. HW

  2. The big problem now: European Central Bank near bankrupt
    Deutsche Bank has calculated that the European Central Bank has 400 billion debt from four countries (Greece, Ireland, Portugal and Spain).
    Bank´s own funds are only 75 billion. If the ECB were to lose half of the countries’ debt loans, loan loss, the ECB would go bankrupt.
    Euro area debt nests have borrowed money from other member countries, at breakneck speed from a makeshift emergency fund, and the International Monetary Fund.
    When this is not enough, the European Central Bank has purchased the debt-country government bonds, and maintained their funding
    Greek debt is now € 340 billion.Taxpayers have to fund their european institutions with huge sums of money or the ECB will go to bankrupt.
    More information:
    A HOUSE BUILT ON SAND
    The ECB and the hidden cost of saving the euro
    http://www.openeurope.org.uk/research/ECBandtheeuro.pdf
    Greetings from Europe.
    Happy landings 😉

  3. Let’s see if I have this correct: China is buying U.S. Treasury Bonds
    thus bailing out the USA. Now Ben Bernanke is printing fresh dollars
    and injecting them into the ECB, thus bailing out Europe. And Finland,
    (where I lived for 1 year at age 23), wants collateral before lending
    any money to Greece. Funny thing, when I was in college I never learned
    about any topics on bailing out countries. But that of course was a
    long time ago, late 1970’s you see how things have changed now. HW

  9. RichE : hang tight until the afternoon session.
    Too much whipsaw today. Usually the Russel2k
    is a good barometer for where things are
    headed next. HW

  10. we got to y/days spx cash 1148 that PeteM was mentioning at europe opening today
    usa is currently trading europe ,that opened on a high and crashed,now retracing a bit till the 11.30 am close
    ndx100 is still in a fast wave 3 all others inc ndx composite are prob in a wave 5
    i like wave 3

  13. The rut. is sitting on long term support, but everything else is below support, easy to make money when the swings are so great, if you miss one, wait for the next.

  15. Seems as though all probable technical patterns (bullish H&S, maybe a small bullish triangle)pointing to further upside potential. I’m looking for EW to help point to upside targets perhaps coinciding with Fibonacci retracement levels. The broad upside SPX target could be just above today’s high to as high as 1180, but I think 1145 to the small gap fill around 1167 could be the most likely target area.
    I keep thinking how bearish the sentiment is. Under normal circumstances, that could spark a larger rally. But, this isn’t normal circumstances, in my opinon, so I’m inclined to sell into first sign of a resumption of longer term downtrend with stop loss above this rally high.

  17. AussieJS, RichE & Farmboy – regarding the H&S, there could be a larger one forming (yesterday’s left shoulder around SPX 1144) which, if proven valid, could project near the Fibo .618 retracement level around 1180. Just something to keep in mind if ths rally gathers more steam on further short covering.
    By the way, there’s a lot of chatter among the Wall Street BOYZ (who are paid to always be bullish) saying what a great buying opportunity this is! Some of my clients are asking the same thing based on this BS. I have to remind them that the BOYZ always say “buy” (or at least, “hold”) while the BOYZ “SELL”!

      1. Take a look at the 15 min chart. By the way, look at 15 min NDX chart for the same formation
        potential and note the huge gap (at least I show a gap on mine)that, if not filled, seems to be major bearish. Maybe AussieJS could comment on that.

        1. the h/s im looking at is from the aug low corrective pattern and is bearish with the necks broken this wed /thurs and blood driping all over the place
          we may be trying for a normal failed retest of the neck now to plug the blood drain
          see rut-ndx composit–spx-dji -all with terminal broken necks and should give us our downside targets—it also goes in with the destroyed triangles

          1. I see your H&S top formation with today’s rally to the neckline which has very bearish implications, since you can make the case for an EW 5 wave pattern down from SPX 1220 with this rally being a corrective 3 wave paatern back to retest the H&S neckline you’re pointing out.
            The only thing I would add is that, if you’re correct, we should see acceleration to the downside (a larger impulsive wave 3 in progress) either into today’s close or perhaps with a downside gap on MON. Perhaps if we take out today’s SPX 1121 low, it may signal that his rally ended at 1140 and that’s all there is to it, in which case I’d sell with a stop loss above today’s high. I guess it all depends on your trading time frame.

  19. those are not the real BOYZ,PeteM –they are the alpha long mutual only pension funds
    they have to have a closed mind bullish buy/hold/prey attitude like Neal had
    they beleive everything they are told by the fed and repeat them on t.v–i get so mad at them
    the real BOYZ–the hedgie insto banks are bearish and hedged short and producing downgrades
    these are the ones that move the market and trap the mutuals into a panic liquidation
    my guess is BIG BEAR till ur thanksgiving /holloween–when there will be a up move to get xmas bonuses

  22. We may completed the right shoulder of the shorter term bullish H&S I mentioned earlier today. A breakout above today’s high thus far would break through the H&S neckline I see on the 15 min chart.

  23. NDX, RUT & DOW showing same potentially short term bullish H&S pattern as SPX. AussieJS’ larger bearish H&S neckline looms just above, however. If you’re short, do you want to stay short over the weekend? If you think this was buying opporunity, do you want to stay long over the weekend? Well, do you feel lucky, trader?? The last 2 hours of trading today should be interesting!

  24. IWM has been lagging the Russell2k all day today significantly.
    I don’t know what the matrix is between the two. I thought they
    were supposed to be parallel with each other. HW

  25. While I’m not inclined to get long should the SPX close above 1140, I will sell a close (today only) below 1129 & place a stop loss at 1137. My thought is that the daily MACD (13,20,9) is on a sell signal as is the weekly MACD (13,34,9)and I’m only taking swing trade and longer term trades in the direction of the downside trend. However, I would love to see a short squeeze into the close, or early next week, to present a selling oppotunity at 1155 or higher.

  26. a bit late but the spx cash did get to 1148 on dax open y/day
    thats a cash futures cfd which is futures,plus/min fair value
    thats equiverlant to the real cash price
    the dax is still in downeard chanell,but had a open gap up high,went down to below prev low and a partial recovery
    will see how mon goes
    hava good w/e

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