Thread: tsptalk's Market Talk

Stocks claw their way back from some severe overnight futures losses. So far this looks healthy as the charts back and fill some of Tuesday's big gains.

We're in a bear market but the bulls will occasionally have their day in the sun as the selling exhausts itself. We see that with oversold indicators and extremely negative sentiment.

It could take days, weeks, or even months to play out sometimes depending on the situation and how volatile stocks have been.

The open gaps overhead, and they are quite a bit above the current level, are obvious potential targets, but as I mentioned in today's Market Commentary, those levels look too obvious and that could be setting up some kind if anomalous move, whether extreme to the upside or more shallow and not completely filling all of the gaps.

We may now be in a short term buy the dip environment but expect the unexpected.

The small caps are lagging some this morning, but the early weakness was constructive in that it was able to fill the small open gap (red) from Tuesday, as well as the larger "stealth gap" between Friday's close and Tuesday's low (purple) -- and hold.

Some decent gains in stocks after a typical choppy opening bell. The biggest mover today has been the drop in the 10-year yield as the market starts to price in the slowdown in the economy. Right now it is flirting with heading back below 3%.




The S&P 500 has been slowly moving off the lows so no explosive bear market rally yet,. Right now I'm watching to see if this is going to target the overhead open gaps, or if it is going to form some kind of a bear flag while consolidating, and floundering just off the lows.

Stocks are rallying this Friday morning, and the S&P 500 is back up testing its 20-day EMA. This held a couple of times in recent months but in late May it had enough momentum to break above it before stalling at the 50-day EMA, which is still more than 100 points above the current level. One gap was filled and there is another just above 4000.

The rare open gap on the weekly chart has now been filled. That "could" be the upside target, or...




... the top open gap on the daily chart (red) could be next, which is above 4000 and would likely coincide with that 50-day EMA, which is currently 4041 but sliding lower each day.

The market is digesting last week's big rally (about 6.5%) and we have a bit of a stalemate as the very short term indicators get overbought. However, longer term the indicators are still oversold so there is interest from both sides to either take some short term profits, yet the folks who missed the rally may be looking to buy the dips.

Fundamentally the Fed is putting the screws to the market with their hawkish stance, but technically there are some overhead targets on the charts that may get tagged before this rolls back over - if it does roll back over.

As I have said before, the open gap targets were so obvious that it may be too easy and that's why I have been thinking either the relief rally falls short of filling the upper gap, or it overshoots that gap and more FOMO ensues, because it's rarely as easy as we think it could be.

Not happy seeing red, but I'll take a red .11% over a red 1.10% at closing.

Sorry for the late post. I was busy with the Plus premium service strategies this morning.

So a 1% opening bell rally has now turned into a 1% loss a couple of hours later. Gaps on both sides of the indices had us trying to guess which would get filled first. This morning's rally had us believing the upper gap was the target, but the pros on Wall Street had another idea. And the 7% rally that JP Morgan predicted for this week (been talking about this in the daily commentary) probably was their way to get you to buy so they could sell.

Now we have ugly negative outside reversal day formations on the charts.

Just minutes after the opening bell and it's kind of a moment of truth for the C and S funds as they fill their open gaps from last Friday. It could hold or we'll probably see a test of the recent lows.

The I-fund is still above its open gap but there is a lot of room below if it doesn't hold above it.

Originally Posted by tsptalk

Just minutes after the opening bell and it's kind of a moment of truth for the C and S funds as they fill their open gaps from last Friday. It could hold or we'll probably see a test of the recent lows.

It's still early but so far the bottom of that gap is holding.

Staying with the gaps theme, another gap was opened with this morning's sell off.

There was a very small full open gap near 3700, but because the S&P closed closer to 3675 on the 17th, that can be considered a stealth gap. Those are gaps between the prior day's close and the next day's lows.