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What a weird week it was...Jiggy is the way I would describe it...A lot of wild intraday swings, without any actual movement by the end of the week...Many of the daily candlesticks were Doji's, which can signal a lot of indecision, or signal the beginning of a reversal of trend...Anyone that bought the top of the spike on Thursday thinking the market was going to run up some more because it was breaking out above the old Resistance Level was in for an unpleasant surprise, since it looks to me like it was just another Pump Before The Dump...
Basically, the $SPX is consolidating in an uptrend after a huge rally the entire month of September...This is usually Bullish chart pattern, and looks like an Ascending Triangle, but the divergences I see in the CCI and the MACD Histogram tell another story...A break below the 1130 level of Support would make the chart pattern a Bearish Double-Top, which should yield down to about the 200MA at 1118...If it closes below the closing price from seven sessions ago (when it dropped for three days in a row), the potential yield down would take it to about the 50MA at 1105...
The "Money Indicators" I use are Chaikin Money Flow (CMF), On Balance Volume (OBV), and Accumulation/Distribution (A/D)...The first two are showing signs of weakness...
The weekly chart shows a perfectly formed Doji candlestick for the week...That can mean a period of indecision, or the beginning of a reversal of the uptrend...
My weekly chart shows that the three Money Indicators (CMF, OBV, A/D) all showed downticks this week...The price is bumping it's head up against the upper Bollinger Band, so any more progress to the upside (if there is any) will be much more difficult...It did close above the 5 Moving Average this week, but if it ever closes below it, this rally will officially be over IMO...Stochastics (STO) is in Overbought territory, and if the fast line crosses down through the slow line, that would be Bearish...All three parts of the MACD look Bullish, but the ADX (black line) is showing the uptrend is losing strength...The DI's of the ADX are converging in a Bullish manner, but the Relative Strength Index (RSI) downticked this week...(more comments below this chart)...
October is historically the weakest month of the year...If I had made some good profits in September, I'd be taking them right about now, and getting ready to go Short again...If the $SPX closed above the close from last week (9/24), that Short position would be a mistake, and I'd Cover it and go Long again...
If I had no position right now, I surely wouldn't be going Long here after such a big move up with only one pullback that set up a single major Support Level at 1125 during the entire month of September...It's because of such a vertical move up the whole month that sets the stage for a very hard fall in October...If 1125 fails to hold Support, watch out below!...IMO
But...The mid-term elections are about a month away, and the market has been propped up by the powers that be so that they don't look so bad before the election...I call the rally during September the "teflon rally", because the market let a lot of bad news slip right off it's back, and rallied hard on the slightest hint of good news, which wasn't that great IMHO...
This article offers a very good explanation for why the market reacted the way it did during the month of September.
And this article and my perceptions are in complete agreement...Here is the concluding paragraph:
When the market starts to act like this - when there's this "invisible hand" that magically levitates things, when people resort to disseminating outright lies about the market or specific companies and do so to counteract actual bad news that would otherwise result in moves down, it is a sign of desperation - there are people with money and power who are on the wrong side of the bet and they are willing to deceive you and rip you off outright to avoid being the one with the bag.I don't have time to look to see if any important 3rd Quarter Earnings Reports are due out next week, since it's that time of year again soon...We're all packed up, and it's time for a quick vacation to New Orleans for the weekend...Alcoa officially kicks off earnings season when they report on October 7th which is next Thursday...If I have time on Sunday, I'll edit this post to show any Earnings and Economic Reports of importance coming up next week...
Have a Great weekend everyone...
zigzagman
Tom
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