News Gap

Political News spiked it lower over the weekend and price tested the 50 day. It reversed perfectly at this reference, then moved higher during the morning session, only to be rejected at Friday's range lows.  Then it balanced for rest of the session.

I just cannot help myself but to feel a long bias with a mechanical test and rejection of the 50 day.  Like where were any real sellers if a visual reference like this magically turns price?  More political bad news could keep the trend lower, but any good news at this point, could mean a mega-pop.

We all know that it's the goal to spend this country right into the ground, and then deal with the problems -- by asking everyone for more money.  Or just plain confiscating it.

The Republicans look so stupid fighting for sanity when we all know that they are just as bad as the Democrats with spending.

It's all game over, just a matter of time.  The lunatics are at the controls.

Down Day, But No Follow Through

The liquidity-sucking 20 day was tagged today 1st hour, and R2 was tagged to the tick, with an immediate reversal (Much like last Thursday's R2 Reversal action.) And like last Thursday, the plan of attack after mechanical references turning price so perfectly 1st hour, was to buy pullbacks and stay long while the price action remained positive. And of course, not to expect new lows.

The crew here (there are many of us swimming around with each other, mind you) gleamed price action showing it's negative hand at 11:00, with emerging markets in a firm trend down, the VIX screaming higher, and TICK featuring a momentum diverge at range highs. These clues were enough to get us short and ride the recently reoccurring pattern of up moves getting swatted by longer time frame participants.

But, alas, the buyers came in after a bit of selling  (and we expected them to, as the lows were such high odds to be in for the day) and the market closed near highs.  Typical balance Friday type of day.

Although today was a down day, the balanced nature of it gives the buyers excellent chance for upside Monday potential.

4 Days of Balance

Yet another prior day range 1st hour reversal trade!

The last three days have offered many repeatable trading opportunities with volatility.  It does not get much better than this. The minor low and high trades have been setting up perfectly. Somebody better tell the programs that they are getting too obvious!

Morning look above minor high previous day's range crushed right back to range lows and then gap fill.  Gap fill entry offered nice points back to value area high.  Re-test of lows afternoon, and fresh minor low failure, a nice long (almost just like yesterday, mind you). And a host of other major indexes were severely diverged at this time, and this added even bigger odds to this reversal trade idea.

Today added more fuel to some sort of upside attempt I think now.
Although sellers have swatted all upside pushes, sellers have not been able to pull off a decent down day in which now is 4 days of balance.

But we go with a breakout of either direction as major political news is looming...

Same Movie

Same movie yet again today.  A minor look down below yesterday's range lows at 7:30 gets bought for a spunky 10 point rally higher. Today's reversal pattern even featured lower momentum in TICK and sediment to boot as compared to yesterday.  Risk sectors leading, defensive sectors lagging.

Then, right on cue, the move up stalled right at the minor high of the overnight session and tanked back to lows.

Maybe I've not had enough vitamin C today, but sure seems like these patterns repeat.  And repeat.

I think that it's the longer term sellers taking control and playing chicken with the laggard morning buyers.  But, the flip side could argue that sellers are not firmly taking control of this thing and are due for a news squeeze.

I'm going out on a dangerous limb by saying that this market goes lower.  And if it bounces, it's going to fail.  There I said it, and will fess up if wrong.

Rotating Inside Range Day

An initial balance look down and minor low of yesterday's range lows powered a nifty reversal higher.  Seen that movie before?

And here is the second movie of the day: The move from the lows, ran to 1700, rinsed it to 1701, then reversed it hard --  at 11:00 PT, a common reversal time for counter trend moves against the daily trend. Can the programs be any more transparent?

Like we mentioned yesterday, if monthly money is selling, the rally's will get swatted -- just like they were again today today.

But today was just an inside day and downwards momentum weakened -- stuff that can get a buy program or two all brazen-like as odds shifted back away from the sellers somewhat. Plus, 1700 is holding.  Should a bounce not take hold, the gap zones we pointed out yesterday down below are in the cross-hairs of the sellers.

Low Confidence Sell Day

Morning move down to 1689.50 stopped to the TICK at R2. Programs are more obsessed with floor trader pivot references now that ever.  And when you see an extended move down print a reversal pattern TO THE TICK at R2, (right at 8:00 too) you can pretty much forget about hanging on to any downside continuation biases and possibly look for short covering opportunities to get long.

After the lows were in today, it was just a slow grinder higher, and then a slow grinder lower into the close.  

If our topping thesis is valid, bounces will get sold, like they did today.

I think further looking down is on tap for tomorrow as the plethora of moving averages just beneath will be liquidity zones.   But a few days of down in a bull market is always susceptible to a snap back.

And if this piece, about record inflows last week is true, then watch out as a whole lot of laggard longs could be hitting their stops soon.

This is a very good example of sell day in a down trend.  Utilities leading, and financials at the bottom of the heap.

Spike Reversal Back To 1700

Well, well...what do you know?

We mentioned that the fed spike "did not sit well in our gut" and it turns out that this was the correct analysis.  Pure, zoomer, liquidation spikes like that so many times get re-traced.  It's the nature of the beast, because they are so short-covering-based, sucking buying power out of the market.

Yesterday's balance (and failure to punch higher) was a major signal to confirm the prior day's exhaustion.  And the steady grinder down action today hit the obvious destination of 1700 and near full re-trace of the fed madness spike.  And it was steady with high volume, indicating heavy institutional forces were at the helm.

The programs will be locked in on 1700, so a bounce of some variety will be likely on Monday. If a bounce higher materializes and then fails, and 1700 gets taken out again, potentially watch out for a move back down to the 1680 zone gap and then the 1665 zone gap.  Lowest odds scenario is a never ending bull market bounce punch higher.  But we have scene that movie before, so you never know.

On that note, October is looming.  Can the buyers pull another rabbit out of their hat yet again?  Sure, but Wednesday's happy little panic event has all of the earmarks of ushering in a major top.  Or at least a major corrective down leg.  As we will point out, the monthly chart is nothing but a minor high of the 2000 all time highs. And any reader of this blog knows that the minor high pattern can be one of the most pounced upon reversal patterns -- on all time frames.   Buyers have to watch their back at this zone in a major way.

TaperLess!

Geez, Scott-Trader: "no selling = buyers winding up again" -- where did you get your crystal ball from?  I want one of those!

Shorts were wiped out today in a panic, crushing, move to new highs, and a firm clearing of the 1700 level.

Our Federal Reserve announced today that it's going to keep the 85 billion dollars per month of robbing Peter to pay Paul, uh I mean buying it's own bonds, game going.  That's right folks, epic financial insanity is not going away, apparently, anytime soon.

It seems as though they feel "our economy still needs it".  With unemployment at 7%, real estate markets booming higher, and the stock market at all time highs, one would think that now's a decent time to knock off the insanity.  And to stop robbing the freaking hen house!

But no.  These mongers are going to keep pressing, and push it until End Game Times.

Today's panic could indicate a blow off top.  Or it could indicate that a fresh new auction leg has been ushered in.  So which is it?

I think that shorts have a little bit more pain to endure, and the last long laggards need to get on board.  I think that it's high odds today signaled exhaustion, or very close to it.

Victory buyers!

Inside range day with consolidation in the upper range of what is now 2 days of balance. Looks like a rather good edge for buyers to look it higher yet again.  Although it could be pointed out that the buyers didn't take control and just nail it higher.  But the pattern has been "no sellers = buyers winding up yet again".   And I'm not forgetting that this is the 1700 zone.  You just have to respect a monster reference zone like this -- and not get too carried away with predictions.

What's typical about today's structure, after a low confidence push lower the prior day, is to be on watch for the mid-session balance to be high odds for a upside push as yesterday's laggard sellers simply were put in the hot seat yet again.  And they had no choice but to puke it up.  The 5 minute confirmed this fact.

Seems simple really!

Perfect Trading Day

Like we pointed out last night, a look above 1700 and a minor high of the prior swing high and fail, would indicate a high odds sell day. Sometimes the crew here at the Scott-Trader blog is just plain right!

With the daily minor high failure printing today, the sellers have a green light to follow through.  Quite the visual failure today.  Or, they can pop it back up, as selling was relatively benign.

There were nice trading opportunities today and we will feature the metrics.

Friday Continuation Action

Downside In A Minimal Way

I personally do not like TIME, but feast your eyes upon this month's cover.  This stuff is just so crazy perfect to indicate a sell off.  It will probably go up higher to confirm the party.  But this is never good 99% of the time.  So we will see, won't we?

Mind you, we cannot brag much about our downside call yesterday. It was just an inside range day.  But the C period minor high look above the previous range highs on, again, decreased momentum was a superlative short entry.

But there was no real downside going on as volume never picked up (and it decreased in fact) and yesterday's value area low was it.

So today's action just makes me wonder if the buy programs show their stuff again tomorrow.   I'm worried about downside, but am more respectful of the fact that sellers don't have anything to hang their hat upon at this point.

Upside attempt tomorrow?