Don't Bottom Pick

I'd be willing to give 80% odds that this little lift in the futures is quickly sold off at the market open.  A lot of people seem to want to be optimistic here, but there is little technical reason for a bottom.  Everything has room to run further IMO.  Some people say that acceleration won't occur unless a downgrade is announced, but I would disagree.  In 2011, the official downgrade announcement came only a two trading days before the short term bottom was in.

4-4.5?? That blue pill won't be much help.

4-4.5 has been a level where the $BPSPX:$VIX (BPSPX divided by the VIX) has fallen in a big way in the past.  It would be very easy to draw an analogue to the debt downgrade in 2011.  There have been threats of a new downgrade and I believe any confirmation of that type would accelerate selling into a sharp point suited for big gains in short-term buying.

I am getting ahead of myself speculating the degree of this potential round of selling.  Any word of a positive deal could easily launch the market higher overnight.  My sense of the motivations leans toward no deal before the new year and no deal before market declines.

All that being said.  If the market is tired of the upside, this relatively subdued selling could in fact be the calm before the storm.

Adult Swim!

These are good levels to sell.  End year down from here.

Kwestion of the Week

Are we grinding higher or gearing up for another move to the downside? 
It seems like we're just spinning our wheels here.  If we've got a date with the bottom of the channel we've been running up, that's somewhere around 1340.  If we're grinding higher, we want to see a close above this upper trend line of the channel.  If this move up has been a B wave in a correction then there's a considerable drop ahead.

They say things like bad things happen in threes.  Maybe that's like an impulse to the downside for markets...  I just feel like everything goes great for a while and then BAM!  Everything falls apart all at once.

The Fed and EU didn't make me feel any better about being long.  It made me feel like the markets were going to force them to take action.

Challenge accepted.

Dear BearPig,
  This is how I count the move.  Double zig-zag.  Spy looks worse because of the gaps.  Watch the futures.

Hard to hold from where I recommended going long, but in the green.

Trying to stay on the sunny side

A while back I made a conscious decision not to be as vociferous with my opinions on market direction.  I still feel that decision makes sense, but I'm back today whether it be due to pride or boredom.

I think a lot of the negative outlooks on the market are a bit dogmatic while they are definitely based in reality and a somewhat compelling elliott wave count.  Speaking about market signals, the size of the leg down in SPX points was not as severe as what we have seen in previous summer selloffs and the VIX was significantly more subdued.  In short, the fear just wasn't there.  There is a case to say that that leaves plenty of room to the downside, but I lean to the other side of that premise.

I think there is a significant chance of retaking the highs in April, and I think today is a decent spot to trade against a move in that direction.  I could be a bit premature in thinking that we have a bottom here, if I'm early but still correct I could see the bottom in a matter of days.  Anything further than that or significantly deeper would raise doubt to my trade.

We recently had a 20 day/50 day cross in the SPX daily and we fell back into the 50 day as they crossed.  I find that this is typical and this point provides decent support in an uptrend.  Hanging near the 20 week moving average (though under) gives some support.  There are also some significant horizontal resistance zones across the indexes at this level.  The VIX has sold off from its extremes and is bumping up into the 20 day and 20 week moving averages.  The NYMO has worked off a significant amount of its extreme readings.  IYT and IYR are still hanging high having not been affected much during the summer selloff. 

I'm not as concerned with a count here because if we have put in local lows on June 4th, then you could expect a murky start higher.  If there is further correction from April or the start of a larger downtrend, we know the levels where that trade becomes apparent.

There are compelling arguments to both sides of the trade, but having just endured a 4 day move down into significant support I am compelled to go long.

As always, manage your trade.  Know your levels and good luck.

Whoa Whoa

It's a little too bearish out there for me... I'd take a stab at the long side from here.