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Stunning reversal as Bulls came back from the dead ....can shocked bears recover?


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#1 dTraderB

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Posted 23 October 2018 - 08:24 PM

Unless there is a similar Houdini trick from the bears to reverse today's stunning reversal, the ST low is in, at least until some external factor e.g. another fake Trade war move,  or the much anticipated China response (it will come), jolts the market into another leg down.  Nothing can be ruled in or ruled out in the current market environment.  

The Chinese seem to be a tad too desperate in serial attempts to stimulate their economy and prop up their market; what if they fail? Will that contagion spread to all of Asia, then Europe & US? 

 

Or, this actually means more than I think it is, and is bearish:

 

Wall St hit hard but major indices were able to bounce enormously from the lows (the SPX was down ~64 points or ~2.3% at the low but finished the day down ~15 points). BUT The main problem remains a breach in the earnings firewall, JPM says.

 

DqOD3zJXcAQDwPU.jpg

 



#2 Data

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Posted 23 October 2018 - 08:58 PM

Liquidity is being withdrawn

 

https://twitter.com/...815265043738624

 

There's also a large amount of supply in the US this week.

 

https://www.reuters....y-idUSKCN1MJ2NX

 

They did their job scaring money into bonds.



#3 dTraderB

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Posted 24 October 2018 - 06:35 AM

The restest is on.... I still am looking for successful restests and then a bounce to at least 2802.

 

Lots of warnings, gloom & doom, so there is extreme negativity, that is good for bottomming and basing but one cannot rule out another huge leg down to the 2018 lows 

 

Investors Fear More Pain in Lockstep Markets

Risky investments moving together again concerns some analysts. 

 

A red flag for investors of all stripes? Markets like stocks and commodities are moving in unison.

Lockstep moves are a worrying sign because they signal excessive optimism or fear in markets. They mean investors largely are buying or selling holdings all at once, rather than weighing fundamental information like earnings or supply and demand dynamics. Rising correlations also often presage more dramatic moves in either direction.

The rolling correlation between the S&P 500 and MSCI All Country World ex U.S. index has risen to 0.95 for the first time since February’s market selloff, according to Dow Jones Market Data, which looked at time spans of 20 days. The correlation between the S&P 500 and S&P GSCI commodity index has climbed near 0.8.

Correlation is measured on a scale of minus 1 to 1. A reading of minus 1 means two assets are moving perfectly in opposite directions, while a correlation of 1 means they are completely moving in tandem.

“The setup is for a little bit more pain,” said Francois Bourdon, global chief investment officer of Fiera Capital. “We think there’s a little more downside, especially for the hot segments of the market.”

The higher correlations are a shift from earlier this year when the link between U.S. stocks and other investments had essentially disappeared. Major equity benchmarks like the S&P 500 had surged ahead of global stocks and commodities—assets that are more sensitive to growth outside the U.S.

Now, the sudden return of lockstep moves could indicate that tightening U.S. monetary policy and slower global growth will push riskier investments even lower.

Risky assets and markets deemed safer are moving in opposite directions more frequently. The correlation between the S&P 500 and gold has fallen to minus 0.8 in recent sessions for the first time in a year. The relationships between stocks and other safer assets such as Treasurys and the dollar are also now negative.

That reinforces the view of some market watchers that investors will continue to favor so-called havens and dump riskier options. 

Despite the recent volatility, bullish investors and analysts believe positive earnings and economic data will become the focal points of markets again. And a resolution in the trade fight between the U.S. and China could also help stabilize price swings.

But in the meantime, it’s worthwhile for investors to continue watching the relationships across different markets.

Are you betting that risk assets will full further? Let the author know your thoughts at amrith.ramkumar@wsj.com. Emailed comments may be edited before publication in future newsletters, and please make sure to include your name and location.

 



#4 dTraderB

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Posted 24 October 2018 - 06:36 AM

  • On this day in 1929, the Dow closed down 2.1% on record volume of 12.895 million shares on “Black Thursday,” the first taste of the Great Crash. By 10:30 a.m., blue-chip stocks were dropping $5 to $10 with each trade, and the ticker tape was running 16 minutes late.  By lunchtime, RCA was down 35%, and Montgomery Ward had nose-dived 40%. A “bankers’ pool” was formed to put a floor under the plunging market. 
Key Events

Markit's flash manufacturing and services purchasing managers indexes for October are out at 9:45 a.m. ET.

U.S. new home sales for September, slated for 10 a.m., are expected to drop to an annual pace of 620,000 from 629,000 the prior month.

The Bank of Canada releases a policy statement at 10 a.m. A press conference follows at 11:15 a.m.

The Federal Reserve's beige book is out at 2 p.m.

We get a cacophony of Fed chatterSt. Louis's James Bullard speaks in Edinburgh, Scotland, at 11:30 a.m., Atlanta's Raphael Bostic speaks at Louisiana State University, Baton Rouge, at 1 p.m., Cleveland's Loretta Mester speaks at the Cornell Club in New York City at 1:10 p.m., governorLael Brainard speaks at a Council for Economic Education event at 7 p.m., and Kansas City's Esther George speaks in Sydney, Australia, at 8 p.m.



#5 cycletimer

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Posted 24 October 2018 - 06:55 AM

I’m looking for at least 2775, probably today. I’m Long $SPX calls from 2737 yesterday.

#6 dTraderB

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Posted 24 October 2018 - 07:31 AM

Thanks. I also think SPX will close above the 200ma @ 2768

 

But, there are many external factors influencing the markets & a crazy midterm election season, so I am laert to any move up or down.

 

SPX 2710 must hold on a closing basis



#7 dTraderB

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Posted 24 October 2018 - 08:10 AM

David Rosenberg @EconguyRosie
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Hey, Mr. President, ever think you're going to shift your complaining away from Powell and towards the real reason why rates are backing up?

 

DqRc0MFXQAATE4C.jpg



#8 dTraderB

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Posted 24 October 2018 - 08:25 AM

One good NQ short, followed by a long, and short, the latter two rather pathetic, averaging 3.25 points per lot. (2 lots only)

Waiting on the open

 

Holger Zschaepitz @Schuldensuehner
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The S&P 500 may not yet be in correction territory, but most stocks are already in correction or bear market. https://reut.rs/2R9uC0X 

 



#9 PrintFaster

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Posted 24 October 2018 - 09:16 AM

Devastating collapse in breadth continues

 



#10 K Wave

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Posted 24 October 2018 - 09:20 AM

Bear running outta time to get things moving any lower...

 

NQ 7160 area held last night, so bears still have the ball....but if we go back over 7150 today, then 7160 likely to be overrun which most likely would signal that swing bottom stick save at the cliff edge in place...

 

But if QQQ were to close under 170 today, then abyss door would be wide open...

 

Looks like potentially very pivotal day here today...this 172 area on QQQ where we are now could decide things...


The strength of Government lies in the people's ignorance, and the Government knows this, and will therefore always oppose true enlightenment. - Leo Tolstoy