Hi, I’m pebblewriter and I’m a chart geek. With that confession out of the way, I have to apologize. While some of my fellow chart geeks would love nothing more than twenty pages on the correlation between stocks and the core temperatures of migratory nematodes, others just want to know where the market’s heading today.
In broker school in the last century, they cautioned us that when someone asks what time it is, they’re probably not asking how a watch works. I will attempt to be more mindful of both audiences going forward and stifle my Faulknerian tendencies.
I went long at yesterday’s bounce off the dashed, red channel line yesterday (1331ish), but with the understanding that a break of the trend line will likely send SPX down to test the big purple rising channel line — currently around 1316. I raised my stops a bit from 1324 to 1329.
I’m cautious about laying out these “rules” as gospel. They’re not. Quite often, when my evil plans aren’t coming together, I’ll search around for some corroborating evidence (well, first I’ll reach for some Oreos, depending on how badly I blew it.) Bottom line, I sometimes change my mind and give the markets a little more breathing room than I originally planned.
Stops are a wonderful thing, but they’re often just a (necessary) substitute for common sense and clarity of thinking. Market makers are very prone to pushing markets around just enough to screw all the investors with stops (in all the logical places) before allowing a more sensible move to develop.
So, if you want to have some context to what’s going on, read more than just the headlines — mine or anyone else’s. Sometimes it helps to know how the watch works. We’ll both sleep better.
There are no shortage of reasons for the market to crash here and now, plunging to below zero and not surfacing again until it pops out in Tian’anmen. But, I see more and more groundwork being laid for QE. Witness this story in last night’s NY Times.
I think we’re fast approaching the “pull out all the stops” stage of the market where careers are at stake in New York, London, Tokyo, Hong Kong, Singapore, Shanghai, Paris, Frankfurt, Sydney and Amsterdam — not to mention DC and a few other key capitols.
more in a few…
UPDATE: 2:00 PM
We’re getting a decent bounce here. The key, as always, is where we close.
I was asked below about AAPL. The short answer is yes, I watch it just about every day. No other volatile stock has as much sway in the markets. If the market is able to rally on a day when AAPL is tanking, for instance, it says a lot about the market’s inner strength.
Here’s the heat map TOS produced for NDX at 10am this morning:
I had a feeling we were in for something big last week when AAPL failed to extend the rising wedge (accented in yellow) and break through the latest white channel line off the April highs.And, rarely has AAPL’s RSI chart been clearer. Note the dashed red line running across the top of the latest peak, and the white channel lines that caught the downside this morning.