I also reorganized my public StockCharts list, and I added some hourly charts. The link is in the "About Me" portion of the blog. Let me know if the one poor soul who reads this blog (i.e. me!) thinks the list should change. I am still short on time these days so I will be brief here.
A man I respect and listen to says that, barring a huge influx of foreign money into the markets like in 2006, things are going to roll over for a couple of weeks to the downside. Based on my own measurements, I agree.
First (and foremost) of all is the VIX. The VIX is moving in a normal way to indicate the first move (or wave) down has completed. We should expect at least two more waves, and so far the VIX is acting very normal to indicate this.
Secondly, during this whole rally five and ten year treasuries yields have declined as the market went up. That means less risky investments were being purchased reflecting a reluctance to assume risk, yet the market rallied on light volume. That is a bearish sign. Today, near the close, the treasury yields fell as the S&P 500 rose. That indicates a move to less risky investments as the market rallied. Again, not a good sign for the longs.
On the plus side, financials have really proved their strength, at least for now. They performed very well today. I do not plan on shorting XLF any longer and may instead go long XLF on a bounce play. This whole rally has now been very lopsided towards financials (see performance charts below).
On the flip side, energy and materials are leading the market lower. These may be good short candidates along with tech (QQQQ).
I am waiting on a VIX short signal or a move on the charts that indicates a top (although both will probably happen about the same time). Until then, I am patient.
So what to expect tomorrow? I personally expect a modestly lower open that will rally up to a high, maybe even today's high. On my SPY 10-minute chart, that would break the MACD trendline and do a retest on negative divergence. That would be the perfect short entry; we will see what happens.
Performance chart since the July low:
Performance chart over roughly the last twenty days:
Performance chart over the past two days:
Floor pivots for tomorrow:
| SPY | QQQQ | IWM | |
| R2: | 130.37 | 44.94 | 75.53 |
| R1: | 128.68 | 44.13 | 74.01 |
| PP: | 126.55 | 43.40 | 72.82 |
| S1: | 124.86 | 42.59 | 71.30 |
| S2: | 122.73 | 41.86 | 70.11 |
| XLB | XLE | XLF | |
| R2: | 39.10 | 71.56 | 24.33 |
| R1: | 38.13 | 69.75 | 23.50 |
| PP: | 37.46 | 68.49 | 22.68 |
| S1: | 36.49 | 66.68 | 21.85 |
| S2: | 35.82 | 65.42 | 21.03 |
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