Wednesday, September 30, 2015

Sept 30 - Potential bottom in equities

I have been thinking that it was likely we were going to get a retest of lows and I couldn't help getting that nagging feeling that too many people were including myself.  In addition, today we got potential bottoming set ups on a few indexes, the NYA, IWM, and the hated biotechs IBB.

Towards close I very reluctantly pulled off my short positions and went flat.  By end of the day, there were way too many buy signals on the daily for some indexes/ sectors to go short.  Who knows many we do get that big retest of lows but I would be violating my own system (one of the best long setups I have used over the years has been a low volume retest with positive divergence + stoch/ CCI cross) to stay short.

So on to the indexes that were starting to spook me out.

$NYA has a convincing set up and I often cross reference SPY/ SPX with this index as a bellweather for the market in general.  Stochs/ CCI leading out of oversold territory, positive divergence, and lower volume on retest all check.
 Small caps with the same setup although price action wasn't explosive.  But it looks like enough and if it isn't doesn't look set to fall much further.
 IBB sold off on lighter volume yesterday and has huge positive divergence.

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