Friday, September 11, 2015

Very little change

A week with a bit of gains but this doesn't affect the long term at all. More exactly, after making a lower low last week we saw another lower high this week. It is possible to see a fresh lower low next week that is going to put bulls in an even worse situation that they are already in.

However, the decision to not raise the rates this month is more likely to lift the market pretty dramatically, at least for one day. If the gains are going to hold or not... this is a separate issue. Market is not down at the moment due to rumors that the Feds may increase the rates, is down because China and the emerging markets are in trouble and because some European economies are struggling as well. A rate increase will give bulls one more reason to trim their shares so I don't think this is going to happen.

Technically, market is looking pretty bad at the moment. If SPX it's going to plunge bellow the bull market uptrend line (around 1,800) the panic will set in and more likely we'll going see the beginning of a new bear market. 

This week is going to be decisive for the long term. A close bellow SMA 120 would be a very serious warning in my view and one bellow 1,800, not necessarily this week but at any time in the future will be THE sell signal. But let's not anticipate. Once indexes are touching very important technical levels they tend to bounce first even for a short period of time. 

To get rid of this long term bearishness bulls need to stop SPX making lower highs and lower lows on weekly chart. A close above 2,000 will do the trick according to the weekly chart.

On shorter time frames, hourly chart, it looks like SPX is not going anywhere. Despite these crazy intra-day or day to day swings, SPX has traded for more than two weeks in the 1,915-1,990 range. Any close above or bellow this trading range would be significative on intermediate time frame. 

In conclusion, market most likely will remain volatile until Feds meeting. Once the decision is going to be in, 99% chance they won't raise the rates, market will make a decision and most likely is going to go out of the trading range one way or the other. 

Even if the market is going to rally on intermediate time frame, without a clear higher high, meaning above 2,200 on SPX, the long term bearishness will be there. I repeat, I haven't see so much long term bearishness in 4 years. Personally, I am mostly in cash and bonds and only 10-13% in stocks. I may very well sell everything into a potential rally.  

Take care! Be safe! Don't be a hero, this is not the right time!


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