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After gapping up at the open almost 24 points, the S & P 500 spent the rest of the day not only giving up those gains but closing 17.44 points to the downside.
The S & P 500 closed at 2,641.25. But more on that in a bit.
I mentioned that I did not feel this correction was over just yet and a few days back I stated that upmoves in downmarkets tend to be sharp. I said at the time that these upmoves are designed to get you long before they take the market lower again.
And yesterday, I did say that there we are getting close to the end of this correction. But, we are not quite there yet. We have not seen a major flus-hout day.
In fact, yesterday's down to up volume was only 1.47. And we have had one selling climax in this downtrend. And that was on October 10th.
One of the major bearish scenarios at the moment is that it does certainly appear that the S & P 500 will close under the upper band on the monthly chart.
It looked like yesterday's early rally would try and challenge that level. But it failed.
The upper band is 2,718.35 and yesterday's close of 2,641.25 was 77.10 points under that level.
So, to recoup that level, the market will have to rally over 77 points in two days.
Even if the S & P 500 does recoup the upper band, it would have to rally almost 168 points in two days for the October monthly bar not to be bearish.
A 168 point rally would put the monthly bar at its midband.
Yesterday's close was the first close under 2,646.50. This is an important level and how the market trades around this level should tell us where the market should go.
If the S & P 500 closes under 2,646.50 today, I would fully expect a drop to 2,500.
And higher levels would be resistance.
If this happens, it would extend the sell off another 150 points, give or take.
The sentiment indicators are oversold. The bullish percent index now reads 31%. And the lower band on the daily chart is 32.13%.
The percent of stocks under their 200 day moving average now reads 34.40. And the lower band is 41.54.
So, you can see how oversold these indicators are.
These indicators can go under the 20 level and are considered oversold when they are under 20.
At the major bottom in 2009, the bullish index read 1.60. And the percent of stocks under their 200 day moving average hit a low of 5%.
Finally, the daily chart is close to crossing into a downtrend. The 200 ema is 2,755.97 and the 253 day average is 2,740.79.
This is definitely something to monitor.
Resistance from yesterday's daily bar is in the 2,655 to 2,662 area.
Earnings continue this week. Tuesday we will hear from Facebook and BIDU. And Thursday, we will hear from Apple.
Continue to monitor the levels as I mentioned.
Here are the Key Levels for the Markets:
$VIX:
Major level: 31.25
Minor level: 29.69
Minor level: 26.56
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
The VIX closed at 24.73. The 25 level continues to act as resistance. I would still expect it to offer resistance but a breakout above 25 would indicate it should head higher.
The upper band is 26.39 and should be resistance.
23.44 should offer support. A break under this level and it should continue lower. 26.56 is minor resistance.
A turn to bear market would be indicated if the VIX ran to 31.25.
SPX:
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
Minor level: 2,683.10
Minor level: 2,658.70 <
Major level: 2,646.50 **
Minor level: 2,634.30
Minor level: 2,609.90
Major level: 2,597.70
2,646.50 is the major level to watch. If the S & P 500 closed under 2,646.50 today, I would expect a drop to 2,597.70.
2,700 should be resistance. And 2,627 should as well be.
The S & P 500 should head higher this morning.
QQQ:
Minor level: 179.69
Minor level: 176.56
Major level: 175.00
Minor level: 173.44
Minor level: 170.31
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
The QQQ closed at 163.23. The QQQ is just under the midband on the daily chart. That level is 168.13. And the QQQ broke under it. I would expect it to act as resistance.
165.63 is a minor support level.
At this point, I would expect major resistance at 168.75 and 175.
Resistance from yesterday's daily bar is in the 165 area.
IWM:
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 <
Minor level: 148.44
Minor level: 145.31
Major level: 143.75 ***
The IWM closed at 146.67. 150 should be resistance now for the IWM.
I would expect a push down to 143.75.
And 143.75 is a key level. Two closes under that level, a drop to 125 is possible.
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 114.73. Biased for a test 115.63.
The TLT would have to move up to 117.19 for the downtrend to be over.
The 114.06 level should offer support. If the TLT can clear 114.84, it should head higher.
GLD:
Major level: 118.75
Minor level: 117.97
Minor level: 116.41
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 116.31. Biased for a test of 118.75.
At this point, 115.63 should offer support. To head higher, the GLD would need to clear 116.41.
Daily trend remains bearish but the 60 minute chart is bullish. The GLD should bounce until the 60 minute comes in alignment with the daily chart.
XLE:
Minor level: 72.66
Major level: 71.88
Minor level: 71.10
Minor level: 69.53
Major level: 68.75
Minor level: 67.97
Minor level: 66.41
Major level: 65.63
Minor level: 64.85 **
Minor level: 63.28
Major level: 62.50
The XLE closed at 65.24. Two closes under 64.85 and the XLE should test 62.50.
64.06 is a minor support level. A break under this level and the XLE should continue lower.
65.41 is the lower band on the 60 minute chart. And the XLE is sitting right on it. A bounce should be expected. 67.19 could offer minor resistance on a bounce.
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 85.01. Two closes under 84.97 and it should drop to 84.38.
85.16 should offer minor resistance. And 85.35 as well.
84.77 is minor support.
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 212.24. Short term, Apple is oversold but I would stand aside until after earnings.
209.38 is minor support. And 215.63 should offer resistance.
Best to avoid until a valid market reversal is in place.
WATCH LIST:
Bullish Stocks: AMT, PG, LW, WPC, O, PEG, SAVE, TWTR, KDP
Bearish Stocks: LMT, ANET, GS, FDX, BIDU, MMM, GD, BABA, DE, CMI, CAT, FANG, URI, RCL, ALL, SWKS, JACK, CELG, GILD
Be sure to check earnings release dates.
