A Day in Review: Oct 26, 2016

This is an excerpt of the intraday comments and trade advices from The Big Picture posted on Oct 26, 2016.  I’m posting it here for those interested in how the site works and the types of information offered each day. 

It was a good day — not the best, but not the worst.  We capitalized on a short opened the previous session at 2145.54, covering at 2132.66 for 12.88 points.  We rode the subsequent long position 12.99 points higher to 2145.65.

Next came two attempts to play bounces at support that didn’t hold.  These cost us 0.91 points.  And, we closed out the session with a gain of 5.26.  All together: 30.22 points or 1.41% in our theoretical, unleveraged portfolio mirroring the S&P 500 index.

Read on for details…


Oil broke down as expected yesterday, leading stocks lower after a week of trying to retrace losses from earlier this month. It occurred despite an impressive spike in USDJPY, which should be concerning to central planners.

Since oil first peaked on Oct 10, equities have had a tough time of it. As we discussed in Welcome to Peak Oil, it will continue to be a problem.

2016-10-26-cl-v-es-60-0615We’ll take a look at why, and what it might portend for equities over the coming weeks.

continued for members

Today’s initial target: look for SPX to sell off to the purple .886 at 2132.91 this morning. Though, the channel bottom at 2131ish looks like a slightly better fit.2016-10-26-spx-60-0600CL is backtesting the falling white channel top, but has an EIA inventory report coming out at 10:30. 2016-10-26-cl-60-0600 And, USDJPY is trying to transition from the falling red channel into the rising white channel.2016-10-26-usdjpy-60-0605


SPX reached the .886, but could have a little further to go. I’d go long here with relatively loose stops. Targets: SMA10 at 2139.21, SMA100 at 2143.89, the white .786 at 2157.86, and the SMA50 at 2158.70.2016-10-26-spx-60-0636USDJPY has reacted off the rising purple TL — also the rising white channel midline. If it slips, the SMA10 is just below at 103.94.2016-10-26-usdjpy-60-0640Note that CL isn’t reacting much here at the channel top. If the EIA report echoes yesterday’s API, we can expect to see it break down, taking stocks with.2016-10-26-cl-60-0641UPDATE: 10:33 AM

Pretty positive report, as enough to get CL up to backtest its neckline. If it can pop through, even for a little while, this would help stocks greatly. USDJPY is also ramping…just because.2016-10-26-cl-60-0732 2016-10-26-usdjpy-60-0734 2016-10-26-spx-60-0734


UPDATE: 11:07 AM

SPX just shot up to our second upside target — the SMA100 — and is approaching the two midlines and the SMA5 200 and the red .618. I’d take profits here and wait for the short term SMAs to catch up.


2016-10-26-cl-60-0806 2016-10-26-vix-60-0805

UPDATE: 12:09 PM

Back to long here at 2142.39, as SPX is sort of backtesting the falling white channel. More importantly, it has support from the SMA5 20 now. Obviously, the lack of a full backtest means it might not take off at this very point. I can imagine it dithering around and backtesting the SMA10 at 2139.21, as the upward trajectory if it rises from here gets SPX to 2157-2160 a little too soon.


UPDATE: 12:29 PM

Losing ground here. Back to cash at 2142.54, as it appears we need more of a backtest.2016-10-26-spx-5-0934USDJPY is ramping like crazy, but just ran into its .618. 2016-10-26-usdjpy-5-0936Together with CL’s continuing weakness, it’s not enough to turn SPX right now.2016-10-26-cl-60-0928UPDATE: 1:15 PM

Backtest and SMA10 in one. Long here at 2139.19. The bulls really need this to hold.2016-10-26-spx-5-1015Note that VIX has reached its SMA100 — should see a sharp reversal.2016-10-26-vix-5-1017I’d say we should see DB pop up to 15.04 on a backtest of the broken white channel while tagging the red channel top again. But, the news hasn’t been very positive today, and Q3 earnings are due out tomorrow…

2016-10-26-db-60-1022UPDATE: 1:42 PM

It’s not holding. Back to cash here at 2138.13. 2138.04 should be support. But, if it were, 2132 would have held on ES and VIX wouldn’t have just made a new high, and USDJPY wouldn’t be swooning. Now, I’m wondering if we’ll get the white channel bottom tag we should have made this morning. It didn’t miss by much, but maybe it was enough to require another leg down. If SPX can hold 2138, I’ll get bullish again (at least, for 2157.) Otherwise, the sidelines seems like a very reasonable place to be.2016-10-26-spx-5-1042

2016-10-26-vix-5-1044 2016-10-26-es-5-1043 2016-10-26-sudjpy-5-1047UPDATE: 2:10 PM

I’ll take another shot at a bounce here off the 2134.72 2015 high. Back to long at 2135.36 with tight stops.2016-10-26-spx-15-1109DB is testing its SMA5 200 on a TL from Monday night’s lows. Perhaps it’ll get a bounce here.2016-10-26-db-5-1116If SPX doesn’t hold, ES suggests a sell off of another 14-17 points to ES 2117 or 2112, about 2119-2122 on SPX.2016-10-26-es-60-1117UPDATE: 3:50 PM

Back to cash here at 2140.62.

2016-10-26-spx-5-1250Maybe there’s more upside ahead, but momentum looks really lousy here. So, this is either a real good head fake, or some amazingly positive news will come out in the next few hours, or VIX is about to get hammered…or, there’s more downside to come. We’re still up handsomely, so I’d rather bank that and not have to worry about it overnight.2016-10-26-vix-5-1251

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