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Equity Update

Tyler Durden's picture
Submitted by Tyler Durden on 11/06/2009 14:38 -0500



Submitted by Nic Lenoir of ICAP

We are reaching the target levels we have been waiting for all week in equities to initiate shorts.

S&P futures traded at 1,070.5 We can see on the 180-minute chart that we have a clean a-b-c with c = a and a 61.8% retracement. Now we need to go break 1,026/1,029 to further accelerate and go test 943/875.

The Bovespa has a very similar structure, we have reached the 61.8% retracement in a-b-c with c=a as well.

The Dax, which has been one of our key indicators due to its very technically friendly trading patterns, has only retraced 38.2%, but the pattern there again is very clean. If anything if we turned here it would be very bearish. Originally we had thought we would possibly see 5,600, which would have been more in line with the size of the bounce observed in other markets.

Last we point out the Nasdaq, where we also have a 61.8% retracement. The market looks like it is drawing a H&S pattern, which means we could possibly see another 1/1.5% upside before turning. It is rare for a market to turn on a dime, so maybe more consolidation Monday and/or Tuesday is to be expected before the proper selling begins. After all Monday have been low volume and boring, so it would fit the profile.

Focus on the downside on 1,026/29 for the S&P future, the 100-dma for the Dax, and a close below 1,650 on the Nasdaq. A break below this level would confirm our favored scenario at the moment of further downside. We see 10% to 12% before the next support from here if the move is confirmed, which would mean for the Nasdaq to test the 1,510/1,565 zone at the minimum.

Good luck trading,

Nic

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by QevolveQ
on Fri, 11/06/2009 - 14:53
#122667

Agree that we will head lower eventually, but first the market is setting up to take out recent highs above 1100 S&P. This will occur between now & Nov OPEX in 2 weeks. This I am sure of, after that the picture is less clear but I also expect we head to 1020 area SPX.

by E pluribus unum
on Fri, 11/06/2009 - 16:32
#122819

The markets don't go down - EVER. They are just like real estate - they know only one direction

by tradertim
on Fri, 11/06/2009 - 14:55
#122671

mark hulbert from marketwatch.com, pointed out today that:

"In fact, the level of bullishness right now among short-term stock market timing services has fallen back to levels last seen in March, when the Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (INDU 10,008, +1.97, +0.02%) was more than two thousand points lower.

This is all good news, according to contrarian analysis, since the market likes to climb a wall of worry."

"The average recommended equity exposure among a group of short-term market timing services is just 3.2% right now. The last time the Dow was above 10,000, two weeks ago, this average stood at 25.8%."

"So, in effect, the market has figured out how to gain more than 30% while simultaneously preventing any net new converts to the bullish camp."

i agree with mark that this is not the best time to be shorting this market. also, we are entering a historically bullish time for the markets..from november to april.

but good luck with your shorts. :))

by Sec.NotSure
on Fri, 11/06/2009 - 15:39
#122744

"This is all good news, according to contrarian analysis, since the market likes to climb a wall of worry."

I love that phrase. My reply is....

You should worry about your portfolio, because as long as you do... it will go up. It is when you stop worrying about your portfolio...that well...you should start to worry.. because it may go down. However, since you have started to worry about not worrying, you have restarted the cycle and the market continues to go up. That is why this market does not go down. The worry is in perpetuity

by Edna R. Rider
on Fri, 11/06/2009 - 16:06
#122786

Lead by what sector(s)?

by Apocolypse_yesterday
on Fri, 11/06/2009 - 15:04
#122685

Consumer credit down $14.8B vs. $12B last month and $10B estimate.

 

Must be good sign for consumer spending.....

by Anonymous
on Fri, 11/06/2009 - 15:09
#122691

I do not know for confumer spending but I do not it is to be great news for the financial markets!

by Anonymous
on Fri, 11/06/2009 - 15:53
#122764

Wow - market up after that news. Never thought I'd live to see hyperinflation - but it looks like I'm getting my wish....

by Racer
on Fri, 11/06/2009 - 16:55
#122854

Not a cat in hell's chance the market will go down, GS is only chart painting to sucker more shorts in.. they had to give a pretend dip because shorts had given up playing the suicide role every day, so they had to lure some more in and what better way that a nice drop for a day or so and then paint a H&S pattern and get the bears drooling and sucked in big time.... all the better to squeeze you dry said the big bad squid to the three hungry bears as it slurped and wrapped it's tentacles around them every tighter till their voices got higher and higher with fear and dread and then they had no more breath left in them and fell to the ground dead along with all the other bear corpses

by Lionhead
on Fri, 11/06/2009 - 18:04
#122958

Thanks Nic; enjoying your posts everyday. Keep 'em comin'.....

by Stoploss
on Fri, 11/06/2009 - 18:27
#123003

Good info as usual Nic. Keep it coming.  Yesterday, all was well, until the reality of the employment numbers set in late session. I enjoy the " bear killers " on this site, since they obviously havent figured out how to play this wonderful volatility. As a trader, i dont have time to worry about my portfolio because im too busy making money. Too bad so sad bear killers, there are two sides to a trade. I have never seen a butterfly actually fly with one wing. Anyone??  Over analysis will kill you every time. Ride the wave, this is a surfers market, fwiw.

by Anonymous
on Fri, 11/06/2009 - 20:00
#123111

The number of times the bears were dead certain of a H&S or a fortress resistance or the end of an abc wave or a bearish wedge or a leading diagonal, only to be proven totally wrong tells you either their technique is flawed in the current situation, or the bears are just talking and not putting their money where their mouth is, or there are very powerful invisible hands creating head-fakes and then over-powering them each time. Bears are just like bulls, living on HOPE everyday, not very sure of what they are talking about, re-drawing their charts and re-inventing stories everyday.

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