Saturday, March 14, 2015

Mar 14 - Inflection point

Friday like much of the week was an interesting session.  A quick sell off which was largely reversed by a squeeze into the close.  Made the mistake of not pulling partial profits on the move down and ended up with only a tiny gain on the intraday short despite it being a big move.  As of now, I am flat as I don't see a big edge in either direction although I am favoring a bounce up on Monday more so in IWM/QQQ because of the positive divergence on the 30/ 60 min frames.  After this potential bounce, it will be hard to say what happens next.

On one hand, the bullish argument could say that this downtrend until Friday was marked by diminishing volume and a couple of solid spikes up Thurs and end of day Friday.  On the bearish side, there hasn't been such a strong volume spike that one would see with an intermediate term bottom.

Regarding FOMC, seems like most are expecting the 'patient' language to be removed or at least feel there is potential language to hint at rate increase.  So given that expectations are low, I would be more bullish going into this week.  Additionally being OPEX week, it adds some bullish seasonality.

But first, the bearish data.

Up/ down volume is fairly mixed, after distribution days similar to Friday's, the market has recovered 9 of 15 sessions but has had an intraday low lower than the previous close 12 out of 15 times.  So the bounces have occurred but often not vigorous ones.  The bearish scenarios in orange.

Although most situations where the stochs and CCI have bottomed out like this week, it has meant a solid bounce up.  Though  resting on the lower Bollinger, the increasing volume is a concern.

SPY is a little short of setting the indicators, namely the RSI to their typical bottoming area.  The dip in CCI is also a bit shallow although oversold.

And the bullish argument...
The short term time frame presents a pretty bullish divergence.  The past 2 spikes up have been solid.

Several times VIX has topped out like this and has gone down every time except once.

The $NYA, assuming we don't get a big fall like last fall, looks ready for a bounce.  There have been failures 3 out of 11 buy signals.

Transports also look close to confirming their buy signal although it is worrisome to see a down day so early off the bounce off the Bollinger.  This could be just a corrective bounce.

One striking chart seen on Sentimentrader's Optix indicator for SPY via Fat Pitch,based in part on fund flows and put/call ratios, is not at a level consistent with recent lows.

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