Sunday, August 30, 2015

Rally Stalls Out

After all the volatility during the week, Friday's action was a little reprieve. Markets sit a point where shorts will fancy their chances, although further upside should not be viewed as surprising given the level of volatility markets experienced last week. If there is an indication bears are going to come back with a vengeance, it's that buying volume has been well down on prior selling.

The Nasdaq finished on former trading range support, turned resistance. Watch for a short squeeze from this level, up to the 200-day MA.

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Thursday, August 27, 2015

Shorts Rally - But For How Long?

A second day of gains keeps pressure on shorts in squeezing them out of their positions, but is also looking to sucker shorts into trying to second guess when this rally will end.

The S&P is heading fast towards 2,044. Given the speed at which it has enjoyed this advance it will be there by Tuesday! In reality, it will likely slow before it gets there. When markets do head lower it will be important they do so slowly to sow further doubt into shorts.

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Monday, August 24, 2015

Selling Pummels Markets

The third day of selling pushed markets deeper into oversold territory and potential long term 'buy' territory. In my 'bottom' tracker, the S&P is priced in the 90% zone (i.e. only 10% of historic prices relative to the 200-day MA have been worse), while the Nasdaq and Russell 2000 is in the 85% zone. It has been 4 years since markets have been this oversold.

The S&P made a picture perfect tag of the 10%, 200-day Envelope. Although with trading restrictions in place at market open it would have been difficult to get a fill at this price. But now is a time to be shopping for value in individual stocks

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Sunday, August 23, 2015

Near Term Oversold, S&P and Russell 2000 in "Accumulate" Zone

Friday's action washed out bulls and likely scared off any buy-the-dip players.  Longstanding trading ranges from 2015 were decisively breached on heavy volume. However, selling has reached a point where there is good chance of a rebound on Monday. Both the Russell 2000 and S&P reached the "Accumulate" marker, where long-term buyers can chase value in the market. The last time this scenario played for the S&P was November 2011, although it was October 2014 for the Russell 2000.

The S&P tagged the 5% envelope band of 200-day MA, an area which will give bulls a chance to mount a snap back rally to the 200-day MA, and a place where long term buyers can look to buy value in the market.

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