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Bounce, then down again....into midterms


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#1 dTraderB

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Posted 30 October 2018 - 07:24 PM

SPX closed almost 3% from this October low and the upward momentum can keep the rally going for a session or two, if so long.

VIX and VXX are still relatively high.

 

Monday's high is the nearest resistance, followed by SPX 2735/40 and then the tough & thick resistance zone 2790/2800. 

Support at SPX 2660/65 and the recent low SPX 2600/05

 

However, the mist likely path after that is down into the midterms and then.....?? It all depends on the election result and any possible geopolitical event. 

 

I am not certain that the GOP losing the House will lead to more declines; in fact, there might be a huge relief rally. 

 

The market makes a fool of many of us, especially when we tend to think the market will do the obvious! 


Edited by dTraderB, 30 October 2018 - 07:25 PM.


#2 qqqqtrdr

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Posted 30 October 2018 - 07:38 PM

Growth in Japan was down more than expected, so I do see weakening internals...    Short Term I still have us being oversold, so I don't think the upside is necessarily done yet either....   We are seeing weakening in Housing, maybe Autos as well, but I don't think we have enough information to say it is a trend yet...      We had Q4 GDP at 2.7% vs 3.7% in Q3...   

 

Regardless the US is staying strong economically at the moment, but will the rest of the world bring us down as their numbers are not so stellar...   I think it might...



#3 dTraderB

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Posted 30 October 2018 - 08:30 PM

There has to be a catalyst that will bring in buyers in droves and change the bearish tone in the market. 

 

There has to be a psychological change, a sentiment change, that will give bulls the edge. 

 

It could be that 2 or 3 days of  higher daily closes will do that but the bulls do not seem to have the motivation for that, at this time. 

 

A bullish catalyst could be the midterm election results; it could be good news on the trade war; it could be a hint or signal from the Fed that their policy is not cast in stone.....

 

But rallies are being sold, daily ranges are above average, and the dip buyers seem to be afraid to committ totally. 

 

All this can change in a few days... HOW? 



#4 dTraderB

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Posted 30 October 2018 - 08:33 PM

What makes Tuesday’s rebound different

By Jani Ziedins | End of Day Analysis

 

Screen-Shot-2018-10-30-at-6.00.49-PM-2.pFree After-Hours Analysis:

There is a good chance that weeks from now we will look back at this Tuesday as a key turning point in S&P 500. It was only the second time the index finished in the green in the last ten sessions, but that’s not the only thing that made it feel different. Volume has been ramping up over the previous six sessions and Tuesday’s rebound was the highest of them all. Clearly, something big is happening, the only question is what.

If there is one thing both bulls and bears can agree on, it is that markets don’t move in straight lines. It has been a brutal October for stocks. At the very least, a near-term bounce is overdue. After definitively undercutting the early October lows and setting off a tidal wave of panicked defensive selling, this is about as good of a double-bottom setup as we will ever see.

While nothing in the market is ever certain, double bottoms are some of the most resilient bottoming signals the market gives us. Prices undercut the prior lows, triggering an avalanche of reactionary selling. But rather than trigger the next leg lower, that dip is the last gasp of defensive selling. Once we run out of emotional sellers, supply dries up and prices rebound.

Monday’s frighteningly horrific collapse was as bad as it gets. We opened green, but it was downhill from there and by early afternoon, the index shed more than 100-points. But what if that really was “as bad as it gets”? Maybe, just maybe, that was the worst and everything will get better from here. As the saying goes, it is darkest just before the dawn.

As I already stated, both bulls and bears can agree a bounce is coming. And most bears will even concede that the biggest bounces come in bear markets. This means that no matter which side of the bear/bull debate you stand on, there is an excellent chance this market is ripe for a sharp move higher.

2,700 is the next most obvious price target. But the market likes symmetry and a rebound to 2,700 doesn’t even come close to matching the intensity of October’s selloff. While we could pause and even retrench a little at 2,700 over the next few days, the most likely target for this rebound is the 200dma/2,800/2,820 region the previous bounce stalled at in mid-October. Even rising up to and above the 50dma and the start of this selloff near 2,870 is on the table.

But just like how selloffs don’t go in straights lines, neither do recoveries. After recovering 200-points from the selloff’s lows, it will be time for another dip. How big of a dip depends on which side of the bear/bull debate you fall on, but at least both sides can agree that a bounce and a dip are still ahead of us. We can argue about the magnitude after we get there.

If a person wants a preview of what this looks like, scroll your favorite charting software a little to the left and see what took place this spring. A big crash in February, a sharp rebound from the lows, and a pullback from the rebound’s highs. Predicting the market isn’t hard. That’s because it keeps doing the same thing over and over again. The challenge is getting the timing right.

There are no guarantees in the market and the best we can do trade when the odds are stacked in our favor. This selloff is ripe for a bounce and right now that is the high probability trade. If it doesn’t work out this time, we retrench and try again.



#5 dTraderB

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Posted 30 October 2018 - 08:44 PM

China reports lower-than-expected manufacturing growth in October
  • China's official manufacturing Purchasing Managers' Index (PMI) was 50.2 — lower than the 50.6 analysts analysts expected in a Reuters poll and down from 50.8 in September.

https://www.cnbc.com...or-october.html



#6 dTraderB

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Posted 30 October 2018 - 08:48 PM

‘Godfather’ of chart analysis says ‘damage done to the stock market’ is much, much worse’ than anyone is talking about

Acampora tells MarketWatch that the action under way in the stock market reminds him of the 1987 crash

https://www.marketwa...ory_top_stories



#7 dTraderB

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Posted 30 October 2018 - 08:50 PM

Stock strategist who saw market correction now predicts 10% to 14% rally — and a fizzle in 2019

The bull market is alive, and there’s more upside ahead.

That’s according to Hayes Martin, president of advisory firm Market Extremes, who in early October hit the bull’s eye (or should I say “bear’s eye”) in predicting an imminent correction in which the market averages would drop between 8% and 13%. 

https://www.marketwa...2019-2018-10-30



#8 dTraderB

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Posted 30 October 2018 - 08:53 PM

I want to buy this stock

 

Harlan Sur upgraded the chip maker to Overweight and although he lowered the target price, the analyst sees shares up 37% from Monday’s close.



#9 dTraderB

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Posted 30 October 2018 - 08:54 PM

After withstanding a midday barrage of selling, stocks closed near their highs of the day.



#10 dTraderB

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Posted 30 October 2018 - 09:05 PM

The 5 Kinds of Bounces
 
  • October 30th, 2018 
  •  
  • Charlie Bilello

In a little over a month, the S&P 500 has declined more than 11%, giving back all of its gains on the year.

bounce2.png

This is the largest decline since … well, earlier this year. Corrections in markets are the norm, not the exception. Since March 2009, there have been 23 of them…

 

https://pensionpartn...nds-of-bounces/