Today the market pulled back further and all sectors have a moderate correction without making a significant lower low. Simply judging from the daily chart, the up trend is intact and the intermediate trend should continue. The EOD sell off finally came back, which makes me wonder if institutional buys become more cautious and may be unconfident to the coming days. The after-market bottom-fishing is also rather weak compare with previous days.
Wave counting: currently the preferred counting is the primary wave (2) in the form 5-3-5 corrective wave, in other words, SPX is in wave B correction and the wave C will be started a few days later to reach the final top. For the target of the pullback, note that: MA 50 is at ~790; the previous swing low is at ~780. Both levels provide strong support. Assume this counting is correction and the length of wave C is no less than wave A, then the final target will be 946. With the assumption of the intermediate term up trend, the first warning will be SPX under 780, and 770 will be the last fence of bulls.
On the following chart, it seems the target of the pullback would be 810 or below. However the consolidation will continue before the trend is clearly and materially reversed to the down. The “SPX EMA crossover” chart shows a sell signal but I suspect it won’t last very long. Note that on 1.0.3 S&P 500 SPDRs (SPY 30 min), the gap has been filled, STO is approaching to the oversold level, however both fast and slow MACD give a sell signal. Tomorrow I expect a further pullback, U-turn, and steady rise at the end of day to finish the wave B of the primary wave (2).
XLF and SKF: On the daily chart, XLF does not seem being weakened. The upside resistance is still not taken out however it’s necessary to take immediate action once it breaks out. SKF hourly chart shows a falling wedge pattern, and it closed right at the resistance. It’s going to have a big movement very soon but let’s hope the direction is at the upside.
Crude oil: the daily chart still looks bullish since it’s right at the ascending trend line and the support level. If the crude oil sells off and dives under $45, the intermediate term rally of the broad market could terminate prematurely. On the hourly chart, it seems the futures is at a weak support and will approach to a more sensible one by dropping $1 further.
US dollar: the rise of US dollar is no good to the stock market. On the daily chart of US dollar index futures, the short-term descending trend line is being challenged, and the technical indicators show an uptrend. The key level is at 85.64-85.65, which is where it collapsed and kissed back. By taking out this overhead resistance, bears will control the entire market firmly.
Gold: The one day wonder might be a sign of worsened sentiment of the early stage of kiss-goodbye. The trend is down.
Market breadth: the market breadth data (UVOL/DVOL, ADVN/DECN) shows that today’s market is weaker than yesterday. Note that 2.8.0 CBOE Options Equity Put/Call Ratio is at the edge of the breakout, any further drop of the market could possibly cause the rise of CPCE and signal the intermediate-term top. 2.8.1 CBOE Options Total Put/Call Ratio has no firework setup, and this is encouraging for bears.
No comments:
Post a Comment