Wednesday, September 23, 2015

Sept 22 - Potential temporary bounce

Today was another weird day like Monday, very tight range and not much conviction either way.  When there is low volume and most of the movement is generated by gaps, I get a bit nervous there might be an opposite move.

We broke the rising wedge/ flag on the daily that everyone and their pet hamster were pointing to as the beginning of the next leg down, with most thinking a moderate overshoot of previous lows.  It was almost as if the bears were expecting a violent whirlpool and the panicked sellers to get flushed into the netherworld.  My gut tells me that would be too easy.

But instead we got this...Who knows maybe tomorrow the clog will suddenly disappear and we will wake up to hear a big woosh as the markets hurtle down.

The bears can point to this as a decent indicator that lows will be retested.
 We have a potential buy signal on the 60 min frame.  If we were to go up to the underside of the rising diagonal, it probably would bring stochs/ CCI to overbought, making things more attractive for shorting.
 On the 30 min frame, we also have a buy signal with maybe 1.5-2 days of bounce before becoming overbought and also more favorable short setup.
 SPY still showing a sell signal but printed a hammer and even less volume than the previous 2 down days.  Usually a warning sign.
 VIX printing another black reversal candle.
In short, looking to watch the strength of this potential bounce and reinitiate shorts Thurs/ Fri.

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Jan 20 - Equities caution signal, short SPY, NFLX

Call buying has come back and very good chance of a pullback here