Before the Open (Oct 13)

Posted on by Jason Leavitt

Good morning. Happy Thursday.
The Asian/Pacific markets closed mixed and with a bullish slant. Hong Kong rallied more than 2%. Indonesia and Malaysia more than 1%. Europe is currently down across the board (except for Austria). France, Germany, Amsterdam, Norway, Stockholm and London are down 1% or more. Futures here in the States point towards a negative open for the cash market.
On an intermediate term basis, the market is in consolidation mode. It’s been range bound for over two months. We gotten several rallies and several sell-offs, many gaps, many sudden moves, several sudden reversals, and in the end the indexes are largely unchanged since the first week of August. Considering how bad the news has been (US debt being downgraded, financial problems in Europe, signs China is slowing, high unemployment) the performance hasn’t been too bad (relatively speaking).
On a short term basis, the market has moved gone up 6 of 7 days. It’s moved from a new low to the upper part of its range in a little more than a week. Stocks that no one wanted at 15 last week are now being bought for 18. The market is due for a rest…especially considering the proximity to the highs, some resistance levels above and the beginning of earnings season.
I see no reason to be aggressive here in either direction. The risk/rewards are not great. Manage what you have and otherwise be conservative. 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 (Oct 13)”

  1. The initial pullback will be perceived as a healthy one
    and CNBC will promote it as another buying opportunity.
    However, by this afternoon the market might show it’s
    hand and turn otherwise bearish. Already looked at
    charts for OIH and USO so most likely will set up
    some sort of a short position in the oil sector today.

    1. RichE – I was thinking SPX 1182, but we’re close enough. As I mentioned in my comment late yesterday, I got the set up I was looking for in the last 1/2 hr to put my last 1/3 position at 1209. The set up came from my EW interpretation of 5 waves down on the 5 min chart. Today I’m watching the 15 min chart where I think we have completed 5 waves down this morning or ar in a 4th wave with perhaps a test of your/my support to complete wave 5.
      For me here’s where it gets hairy. If I’m on track with my EW interpretation, after some backing and filling in the low 1190s, we should see further acceleration downside or I have to rethink what’s going on. Because my overall full short position averages out to 1143, I have to protect myself and reduce my exposure if I’m seeing signs of meaningful support at 1180/82 down to 1164.

  4. Duck, Duck RichE how old are you? 8? 9? When you signed
    the account agreement with your broker you were supposed
    to put down your true age. Right? HW

  5. On hindsight, I should have covered my SPX 1209 short position on the breakout of the “head & shoulders” formation that developed earlier today from the intraday low, but I’m giving this move off of today’s low some latitude. However, I’ve got to leave my desk soon for an appointment so I’m placing an order to cover my 1209 short position at breakeven. If we’re going to accelerate downward, it should occur after 2PM – as it may be doing as I write this..

  6. The small “head & shoulders” bottom I mentioned previously projected a further rally to around the intraday high at SPX 1207+, while a .618 retrace from yesterday’s high to today’s low is the 1209 area. If SPX fails to get below 1197 in this last 1/2 hour, I may close out my 1209 short position rather than hold it overnight. Having had the opportunity to accelerate downward today and not doing so(or at least finishing at the lower end of the today’s trading range) tells me it may not be wise to hold on to all of my short position.

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