SPX has fallen as far as it should if the bounce up to the .886 is going to happen. I was stopped out at 1452.50 and will look to establish a long position at the .500 at 1448.25 or midline at 1446.30. If it breaks those, there’s plenty more downside to come and I’ll play along on the short side.
continued for members…
UPDATE: 9:50 AM
Will take a stab at going long here at the .500 of 1448.25. Stops at the white channel mid-line around 1446.30.
UPDATE: 11:10 AM
Obviously stinking up the joint today… Got stopped out a second time in one day for the first time in ages. We broke the mid-line, triggering shorts for yours truly. The downside potential is there, as we discussed a couple of days ago. And, the .886 is looking very unlikely. Next potential support is the .618 of the last move higher at 1440.
Here’s the 60-min RSI, showing a likely continuation to the bottom of the yellow channel and establishment of a falling purple channel that’s a carbon copy of the last one that guided 1474 to 1430.
Of course, the last time 60-min RSI tagged the yellow channel bottom, it was at 1431. There was a little bounce, followed by establishment of negative divergence where SPX dipped to 1425.
UPDATE: 12:30 PM
Covering my shorts here at 1438. Want to examine something and I’m worried about a turn.
UPDATE: 12:57 PM
Taking a small long position here at 1437. Here’s what I’m seeing on other indices…
The Dow has reached major support from its LT channel.
Likewise the NDX.
The same on SPX. I’m probably early, and I’m not saying we can’t overshoot intra-day, but if we close above 1430ish, we should get a very significant bounce.
If we push lower than 1432, look for support at the .886 (of the latest move up) at 1429.92 or — it that fails — the white channel bottom (currently) at 1423.
UPDATE: 3:00 PM
This is by far my worst day of forecasting since calling the June bottom 20 points early [see: Why I’m Buying.] Thank God we were up a good bit coming into today. I’ll do a post mortem later, evaluating the endless ways I screwed the pooch today. But, for now, here’s another stab at where we are.
This is either a break of the channel or an intra-day push designed to shake out the bulls before another leg up. Many of you are familiar with Hanlon’s Razor:
Never attribute to malice that which can be adequately explained by stupidity.
There’s an exception, specifically for market makers. I’ll call it Pebblewriter’s Corollary:
When it comes to market makers, never attribute to randomness that which can easily be explained by malice.
In other words, figure out how the greatest possible number of investors possible would be screwed. That’s what you can expect — especially around OPEX.
NDX is approaching its 1.618 at 2668.46 – just a bit above the .618 of the last move up. This would make a nice bottom, and a bounce here should close back above the channel line for an intra-day tail that’ll be forgotten by this time next week. A close below the channel (2685ish), however, would be very bearish.
The Dow has been comparatively docile, retracing about .886 of the recent run up, and currently trading above its channel bottom — a nice base for a leg up.
COMP, if it hasn’t already bottomed, is within 10 points of support at 2990.
The medium-term picture is also very bullish.
RUT…who knows?… but it’s holding its wedge lower bound quite nicely — in addition to a trendline that’s pretty much the neckline of the big 2011 H&S pattern.
Bottom line, just about everything I watch has found support. So, I’m going into the weekend long. I hate missing the bottom (if that was it.) And, there’s always the possibility of some follow through lower intra-day Monday (margin calls if nothing else.) But, I think this is the right side of the ledger going forward.
UPDATE: 4:10 PM
I have a few things to attend to, but will have a thorough discussion of the day’s events either later this evening or tomorrow morning — including the very interesting AAPL chart.
Comments
19 responses to “Charts I’m Watching: Oct 19, 2012”
PW, Are you still planning to give us the post mortem for Friday, as well as your AAPL chart? Looking forward to both……
Yea good job in analysis, but it will be good if you can highlight your current status as it will be then fair for us to judge your records.
Pretty sure PW’s current status is long in to the weekend (3pm post) after buying in at 12:57pm. PW’s personal investments are normally in the blue highlight boxes but if it’s a fast market some times the update is posted and the highlight will get added later.
Hi,
I thought you were going to highlight in blue the current status/changes of your trades so we can easily track, learn and possibly trade from. It seems after a couple of stopped out trades, the latest status is long from 1437 with no target or stop highlighted.
Is this correct? and is there a better way to keep track of current/latest trades until it reaches the results section of your blog for the future?
I am not complaining, I am just trying to maximize the value of the subscription. It seems you have something good here but it’s hard to benefit from it the 1 week I have been a member.
Tks.
PW, aapl is at it’s lower bolinger band. With the IPAD mini rollout and earnings next week, could you please update your aapl chart/analysis?
Max pain point of 1450 did not seem to work this month. Don’t know the history of this indicator but it does not look worthy as a trading tool.
It hasn’t worked the last few months I was watching it. I agree it’s not a good indicator to use.
My favorite 60-min BB setup has not triggered yet, but a close inside the BB should get a rebound to touch the 20-SMA in the future. Also, the ADX 60-min levels are nearing 40 on the sell side (just like they were getting near 40 on the buy side a few days ago). If you aren’t looking to buy and sell in the next few minutes or hours, buying or selling when the 60-min ADX is 40+ in the opposite direction is a good swing trade. GLTA and TGIF
This is what a wave 3 to the down looks like… can everyone imagine a decline 2, 3 or 4 times larger? How about 20% in 1987…
google max pain options and a calculator is there. Type in SPY for the symbol (or any other you’d like to calculate) and the answer pops up in a graphic format.
I use optionpain.com
First I’ve heard of it- Thanks!
ewtnewbie-
mind if I ask how you compute max pain? I do have a method, but I think it’s pretty crude (kind of a back o’ the envelope, only without the envelope).
I like the call to go long at 1337, but I don’t see ANY negative divergences on ANY time frames. Yes, channel support is channel support–and has definitely given the market a stopping point (turn?). I’d like to see it work since I too am out of short ammo to sell back to the crowd.
So, ST long to capture possible move up to 1465 (.886 purple grid) with a longer expectation of moving lower with possible target to low 1400’s. Making sure I understand current thinking. Thanks!
That’s where I am, but I have to say I’m not feeling terribly confident at the moment. This has the feel of a basing for a move higher, but it’s clearly moved more than the most bullish scenario would have it. Perhaps related to max pain for OPEX as ewtnewbie mentions below.
Just checked up on things – doooh! Looks like oreo’s for me tonight 🙂
I have a swing put position that will cover the loss. Look for a small retrace to minimize damage… hopefully move back towards 1450 before the next move down
SPY max pain is $145 (close second is $145.50), so I’m expecting a close right here if the max pain theory holds. FYI.
Thanks.
No problem PW, always happy to help in any way I can.
I was short going in, took 1/3 profits off the table (a little early), but have stops set on the rest of the short and grabbed a little long in the mid-1448 level and will watch the 1446 level closely to decide if a punt is in order.
GLTA