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Last week saw massive selling pressure in all markets. The DOW led the way, selling off 4.19%. Right behind was the S & P 500, which was down 4.11%.
The NASD Composite was off 3.74%. And the QQQ was off 3.24.%.
For the week, the S & P 500 was down 118.47 points. The market closed at 2,767.10.
With such selling, the weekly price bar qualifies as a long range candle. And it closed at 30% of the bar, which means the odds of violating the low before the high is around 70%.
Resistance from the weekly bar is in the 2,803 to 2,822 area. Watch this area if the market does bounce.
The weekly low is 2,710.51. And Friday closed about 60 points above that level. So, the odds favor a test of the low.
Friday, the S & P 500 managed to bounce from its oversold condition.
We know the market was oversold on a short term basis because the S & P 500 fell under the lower extreme band on both the 30 minute and 60 minute charts.
Friday, the S & P 500 closed 38.76 points higher. It did manage to close at 81% of the daily bar.
Friday's daily bar also an inside bar. This is a bar with a lower high and higher low.
Watch for the breakout above the high or breakdown of the low. The high was 2,775.77 and the low was 2,729.44.
And Friday's midpoint of 2,752.61 should also be an inflection point for today.
The main question now, is this the end of the bull market? At least this is the question to ponder after a sell off the magnitude we got last week.
There are a couple of factors to consider. The first is that the 2,744.10 level should offer support. If this cannot hold, I would expect 2,695 to hold.
And with the market taking out 2,890, I would expect a retest of that area before this market climate changes.
Another fact to consider is that the upper band on the monthly chart is 2,722.11. And Friday's close of 2,767.13 was still about 45 points above the upper band.
As I have been saying, I would expect a close back inside the upper band for this market to roll over.
And finally, in this sell off, the market has had one selling climax. That was on Wednesday, October 10th when the down to up volume was 10.79.
Though one selling climax has the ability to turn the market, two would be even better.
I do believe the main argument for this market not to be shifting into a bear market is because the VIX has only run two levels. Two levels is a normal counter trend move.
A three-level move up to 31 would make me question if the market dynamics are shifting.
Also, the S & P 500 stalled at the midband on the daily chart, which is 2,733.31.
When it is approached from above, it should offer support. If the market does breach this level, the lower band is 2,470. The lower band is about 250 points lower and could be a target if the midband cannot hold.
2,752 should be a resistance level from Friday's daily bar.
This week, we start to see the number of companies reporting increasing.
We hear from GS, JPM, IBM and NFLX, just to name of few.
Here are the Key Levels for the Markets:
$VIX:
Major level: 25.00
Minor level: 23.44
Minor level: 20.31
Major level: 18.75 <
Minor level: 17.19
Minor level: 14.06 **
Major level: 12.50
Minor level: 10.94
Minor level: 7.81
Major level: 6.25
The VIX closed at 21.42. It dropped 14.69%.
Thursday, it took out the upper band on the daily chart and Friday it closed back inside.
The upper band is 25.42.
A close today under 23.44 and the VIX should drop to 18.75.
Also, I would expect the VIX to bounce around before it does start to drop again.
SPX:
Major level: 2,939.50
Minor level: 2,927.28
Minor level: 2,902.83
Major level: 2,890.60
Minor level: 2,878.40
Minor level: 2,854.00
Major level: 2,841.80
Minor level: 2,829.60
Minor level: 2,805.20
Major level: 2,793.00
Minor level: 2,780.78
Minor level: 2,756.33 **
Major level: 2,744.10
Minor level: 2,731.90 **
Minor level: 2,707.50
Major level: 2,695.30
The S & P 500 managed to reverse and close above the minor 2,756.33 level. This now implies that a close above 2,756.33 today and the S & P 500 should move up to 2,793.
This level is a level to watch today.
The midband on the daily is 2,733. Watch to see if the S & P 500 can hold this level.
The S & P 500 is trading under the lower band on the 60 minute. That level is 2,789. The S & P will need to clear this level to head higher.
QQQ:
Major level: 193.75
Minor level: 192.19
Minor level: 189.06
Major level: 187.50
Minor level: 185.94
Minor level: 182.81
Major level: 181.25
Minor level: 179.69
Minor level: 176.56
Major level: 175.00 **
Minor level: 173.44
Minor level: 170.31 <
Major level: 168.75
The QQQ closed at 174.32. The QQQ came within 14 cents of the 175 level. If it can clear 175, I would expect support there.
Short term, 173 should be a support area.
168.75 is a key level. If the QQQ has two closes under 168.75, it could drop to as low as 156.
IWM:
Major level: 168.75
Minor level: 167.19
Minor level: 164.06
Major level: 162.50
Minor level: 160.94
Minor level: 157.81
Major level: 156.25
Minor level: 154.69 **
Minor level: 151.56
Major level: 150.00
The IWM closed at 153.60. A close today under 154.69 and the IWM should test 150.
Probably the most oversold market.
Watch to see if the IWM can close above 154.69. Support should be at 151.56.
The lower band on the 60 minute is 156.00 and on the 30 minute is 152.54. Still under the lower band on the 60 minute.
TLT:
Major level: 115.63
Minor level: 115.24
Minor level: 114.45
Major level: 114.06
Minor level: 113.67
Minor level: 112.89
Major level: 112.50
The TLT closed at 114.47. For the day, the TLT dropped 40.
The TLT bounced from its oversold condition. The question is how high should this bounce go?
I think if the TLT can move up to the 117.19 level, a major bottom may be forming.
However, a retest of the lower band, which is 112.64 is possible.
Short term charts remain sharply bearish. Technical resistance is at 116.
GLD:
Major level: 117.19
Minor level: 116.80
Minor level: 116.02 **
Major level: 115.63 <
Minor level: 114.85
Minor level: 113.28
Major level: 112.50
Minor level: 111.72
Minor level: 110.16
Major level: 109.38
The GLD closed at 115.23. Like the TLT, the GLD bounced off its oversold condition.
I would not expect this bounce to move higher than 118.75.
Two closes above 116.02 and the GLD should test 118.75.
XLE:
Major level: 78.13
Minor level: 77.35
Minor level: 75.78
Major level: 75.00 <
Minor level: 74.22
Minor level: 72.66
Major level: 71.88 ****
Minor level: 71.10
Minor level: 69.53
Major level: 68.75
The XLE closed at 73. The XLE broke under the 75 support level.
If the XLE can hold 72.66, should retest 75.
We got a bounce as expected.
The 60 minute chart remains bullish.
FXY:
Major level: 85.94 <<
Minor level: 85.75
Minor level: 85.36
Major level: 85.16 **
Minor level: 84.97
Minor level: 84.58
Major level: 84.38
Minor level: 84.18
Minor level: 83.79
Major level: 83.59
The FXY closed at 85.18. The FXY is starting to still after the bounce.
The next level on the upside is 85.36. Two closes above 85.36 and the FXY should test 85.94.
Watch to see if the FXY can hold 84.97.
The 30 minute has crossed into an uptrend, suggesting that short term momentum is bullish. Technical support is at 84.64.
AAPL:
Major level: 231.25
Minor level: 229.69
Minor level: 226.56
Major level: 225.00
Minor level: 223.44
Minor level: 220.31
Major level: 218.75
Minor level: 217.19 <
Minor level: 214.06
Major level: 212.50 <<
Apple closed at 222.11. A close today above 220.31 and Apple could test 225.
Apple needs to clear 222.73 to move higher.
WATCH LIST:
Bullish Stocks: ESL, PEG, CHL, PYX, XOXO, NYT, VALE
Bearish Stocks: TSLA, FDX, BIDU, MMM, MLM, BABA, IBM, ITW, CB, SAGE, RCL, OLED, KLAC, ITW, KLAC
Be sure to check earnings release dates.
