After the close

I was hoping for a rally right into the close above SPX=1286 to touch 1292-1294, it didn't happen, the market reversed at the previous gap which turned into resistance for now. This left the internals still weak and NYMO did not print any better value --actually a worse value, but also an oversold value. I still see this as a wash out. But the internals calls for a retest, or likely a touch to 1250-1255 futures low in the next week or so. However I think today's bounce can continue for VST into tomorrow and it becomes quite critical how the market behaves around the 1286 gap tomorrow...

So, we may see lower lows, but I still think this is hammering a low rather than trending further down for weeks or months yet. Any selling pressure similar to Monday or Tuesday can obviously crash this market, but I think it is now highly unlikely. The current setup is still oversold, even after the intraday bounce. So, as I said, I think it hammers a low instead of crashing or continuing with the path down to hell.

Yesterday, NYMO printed a higher value than 2 days ago and today's gap down and rally was a pretty good setup for a massive reversal, it was cyclically the time, so I acted, but 1286 resistance held, which is the major gap that the market bounced a few times. So, now if it can trend above it, I would not be short. Today, the bears were able to hold the gap line and it was a bit unlikely to run above 1290s anyway. So, I think the bulls left the prices at the right place for the bears to refuel, while the bears pretty much fired their best shot with an huge gap down and got fried once again, and the bears are running on empty compared to $250B more POMOs to come, imho.

I am bullish into April, but I also see the possibility of a retest or slightly lower. The Japan situation may be used as an excuse for a lot of pumping, the wall of worry is pretty much rebuilt now. TWT...

Im looking for a break of 1300 soon, Japan market is up sizable and if they are stable, we'll surely gap up IMO , Just my opinion to be seen shortly.

Edited by Porky786, 15 March 2011 - 07:23 PM.

Im looking for a break of 1300 soon, Japan market is up sizable and if they are stable, we'll surely gap up IMO , Just my opinion to be seen shortly.

That sound logical jpn is +600......I think 1306.5 will be retested soon.

Anyhow, the breadth cycles are now turning and oversold. SO, you need the large caps to sell while the breadth to hold well for a new low. This can happen. HOWEVER, the large caps got nuked over the past 2 days and I am not sure the same horrific surprise will be there from here for such a selling pressure below 1280 gap support again down to 1250s. This means, the market may NOT manage to wash out TWICE. As I said, I am bullish from here into April, however, it won't be straight up, probably there will be an initial hesitation, actually next week looks volatile and only 60-65% chance to be up. I see the ridiculous new highs somewhere out there in April coming up. It will get harder from here, not easier as Fed will be also nearing the end of QE2. If the market goes straight up to new highs the complacency will also soar. This doesn't make the probability of the next new highs a lasting one. For now we have enough disbelief and a ton of Fed money to come...

Anyhow, the breadth cycles are now turning and oversold. SO, you need the large caps to sell while the breadth to hold well for a new low. This can happen. HOWEVER, the large caps got nuked over the past 2 days and I am not sure the same horrific surprise will be there from here for such a selling pressure below 1280 gap support again down to 1250s. This means, the market may NOT manage to wash out TWICE.

As I said, I am bullish from here into April, however, it won't be straight up, probably there will be an initial hesitation, actually next week looks volatile and only 60-65% chance to be up. I see the ridiculous new highs somewhere out there in April coming up. It will get harder from here, not easier as Fed will be also nearing the end of QE2. If the market goes straight up to new highs the complacency will also soar. This doesn't make the probability of the next new highs a lasting one.

For now we have enough disbelief and a ton of Fed money to come...

I am actually very bullish on the nikkei... I was bearish last week till yesterday.

I'm still bearish, but think we are in for one to two day bounce here......

Anyhow, the breadth cycles are now turning and oversold. SO, you need the large caps to sell while the breadth to hold well for a new low. This can happen. HOWEVER, the large caps got nuked over the past 2 days and I am not sure the same horrific surprise will be there from here for such a selling pressure below 1280 gap support again down to 1250s. This means, the market may NOT manage to wash out TWICE.

As I said, I am bullish from here into April, however, it won't be straight up, probably there will be an initial hesitation, actually next week looks volatile and only 60-65% chance to be up. I see the ridiculous new highs somewhere out there in April coming up. It will get harder from here, not easier as Fed will be also nearing the end of QE2. If the market goes straight up to new highs the complacency will also soar. This doesn't make the probability of the next new highs a lasting one.

For now we have enough disbelief and a ton of Fed money to come...

I am actually very bullish on the nikkei... I was bearish last week till yesterday.

I'm bullish VST and LT on Nikkei as the recent dump was event-reacting and overdone. Longer term, JP central bank will create a liquidity tsunami on japanese economy and the aftermath rebuilding means a red hot economy there.

Edited by redfoliage2, 15 March 2011 - 08:25 PM.

I think Nikkei can go lower... I would let the market work out some sort of basing first. I think Nikkei will decouple largely from the rest of the world indices. It may go lower now while everything else is going higher, and then it may go higher, while the rest of the world enters a bear market. Nikkei got nuked, it will remain in a different cycle now and this cycle is a bit now induced to the other indices as well, but probably not as much. US indices were already declining to a cycle low so this will make this bottom more lasting probably for now...

Nikkei got nuked...STOP saying that!

However I think today's bounce can continue for VST into tomorrow and it becomes quite critical how the market behaves around the 1286 gap tomorrow...

As you've said Arb, the only way to keep going down is to crash. The probability that we see a close below yesterdays open is about 1%. In fact, any move to yesterdays low (within 1 day) is a short term buy. I don't know if 1255ES is a LT low or not, but I plan to scale in while I sleep if they drop it overnight.

I placed buy orders in ES starting at 1268ES all the way down to 1255ES where if they all get filled I should have a basis of 1262ES.