Here is a 5 minute bar chart of today's e-mini day session. I went long at the first red arrow because a modest selling climax developed (green arrows) close to my estimate for the day's low. The market meandered a while and then went lower but on low volume.Things got interesting when the market developed a wide range up bar (dashed blue arrow) which I thought was a prelude to an upside, high volume breakout above the dashed green line. The very next bar did break above that line, but was narrower than the preceding bar and showed a very obvious volume increase - but closed only unchanged and below the breakout level. This was a warning sign. The subsequent drop retracing much of the range of the very wide range up bar was yet another warning of weakness to come. So I sold my long unit at the second red arrow.
It now looks like the e-minis will drop to 690 or so before a tradeable rally can develop. The market has dropped 10% in only three trading sessions. At this rate it will be below 600 by the end of the week!
6 comments:
well its an infinite series..we can keep going down 4% for ever==and as a trader you can keep making 4 percent for ever==so why bother :-)
Aren't we due for a mega oversold bounce? Down 9 out of 10 days, down almost 20% over the past 3 weeks? Even if we're going lower there has to be a bounce someplace here, doesn't it?
Hi Carl
i mentioned the bear cycles the other day in relation to both the 1987 and 1929 crash . the end of that cycle is friday 6th monday 9th and the stock market is melting down so it must be respected.
personally im dipping my hand into the longside and covering my bearish positions through out this week yet ill tell you it is hard taking a bullish stance today in the face of this cycle , but it is exactly what i am doing .
Joe
I'm not sure the market can make any advance until the short-on-uptick rule is reinstated. The bears can raid any stock they want with impunity and there appears to be no end in sight.
I believe in rationality but i think this market has proven that its controlled by the Smart MOney.
They have always called for a 650 and it seems that any figure in the around there is a decent print.
WHat i like about this cascading crash of the market is that it will shut the morons on CNBC..the cramers, power lunch, fast money,street signs etc.
My take would be that the market would make a 100 point swing from this level with 800 being a potential target
i added to my leveraged fund, paid for in cash, long position today with june calls. my work shows we are going for a classic gannian double straight to the 6/5 spx gap at 1400.
fwiw.
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