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Friday, March 10, 2017

Market update 3/10/2017

Market reversal 

Yesterday I tweeted out that "I hate this market", but it's actually a love hate relationship. I could not wait to review the charts this morning. I love the challenge, and the satisfaction, of doing something most people think is impossible. It's just that remaining bullish in an unhealthy market, is becoming a bit uncomfortable. Think it's been a year since we've seen even a 1% pull back?   

Saw a little shakeout below support an hour before yesterday's close, and market futures are seen snapping back in a big way this morning. The fact that we saw a lot of short covering into the close, tells me these weren't pro-short sellers; these were retail bears, being set up, as usual. When the powers that be (pro-shorts) are in control of the selling, they like to sell into the close, which causes maximum panic (psychologically). 

I'd rather not see the market gap up this morning, but once the bear trap is set, that's how it goes. 

The keys to finding the absolute bottom on this pullback was the REIT's chart (which traded into a classic broadening triangle pattern), $VIX resistance (which I tweeted around the same time the market reversed), and the lack of downside acceleration, below support. Pretty mild as far as shakeouts go.  

The Dow: 

$SPX: Support becomes the breakout point, above 2366.25 

Oil - wti crude found support above 49.20 this morning. Too soon to say where it goes next. Seeing resistance on the USO @ 10.75 - 10.80. The USO is supposed to track the WTI, but it's an ETF, so the chart becomes skewed over time; a topic for another day.    

Energy - resistance is 595 on the $DJUSEN. I see that being taken out quickly, since this pullback was only a 38.2% Fib retracement of the entire rally in Energy, which started in 2016. Could see a real upside surprise. 

$RUT Resistance on the Russell is 1392.71

Gold remains in the dumps as it continues to test the 50 day. Should see plenty of short covering in precious metals, ahead of the Fed, next Friday. A rate hike is priced in, so if Gold remains in the dumpster, I'd be anticipating a, "buy the news", event.  

Miners ""

REITs - When I recommend a trade I like to double-check the charts. The $RMZ is a small cap fund, which drives the corresponding leveraged 3X ETFs DRN. 
The short term $RMZ chart I tweeted out yesterday, corresponds with the LT $IYR chart, which is the most reliable REIT chart. 
I think we're going to trade back to the top of the range.   

Wish I had more time this morning, but that's all the time I have. 
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