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Wednesday, March 1, 2017

Market update 3/2/17 - RE: Massive Rally to Dow 21111.97


Tired of winning yet? 

Nice 300 point rally! It's hard not to get at least a little excited when you see a move like we saw on Wed, even if we saw some selling into the close, but always remember to keep your emotions in check. I'm practicing that as I type, because I'm feeling extremely bearish this evening. I prefer to do these updates in the morning, when I'm fresh, so I must be wigging out a little. Then again, I have good reason to be bearish, looking at the charts.    
Looks like a powerful wave 5 of 3 - blow off top - and capitulation for the short sellers, and this rally is as much about that, as it is about Trump, and the Republicrats, promising to Make America Great Again. And where is all this money going to come from, with the debt ceiling set to freeze on the 15th, and why doesn't the fake news report on that? 

Funny I was just talking about how weak wave 5's can be - in a previous update - and now we see this kind of momentum..? No matter... trust the charts.    

The Dow: Short term support is 21,100 (where it landed on top of my blue line), and if it breaks down after hours, you might find a nice bearish trade overnight, in futures trading.  

I'm surprised that we didn't see a bigger reversal in the $VIX - only down 4%. I would've liked to have seen a re-test of the $11 level on a day like this. Does that mean the market is going higher? Probably, but not until a pullback, which may not come until next week. 

Maybe we retest the highs again around OPEX, which comes early this month, on the 17th - St Patrick's Day. That's the date to watch, I think. 

Regardless of manipulation around OPEX, or the $VIX; the $SPX took out my target, and that's where I sell. If we see 2 more 300 point rallies (Thursday and Friday), I could be persuaded to change my outlook, but I'm only expecting flat markets on Thursday. May even hold up into the beginning of next week, so weekly options get paid (Monday). 

$SPX - this is the target I mentioned earlier. 

$SPX 2 hour view - looks like we could squeeze a few more points out of this rally, before reversing. I don't have a downside target, but I would expect wave "iv" to fall out of the channel. Can't get too bearish until we see the (channel) trend break.     

For example: You can see how wave 4 broke out of the channel (in blue), in 20 year treasuries - in a bear market. Classic Wave 4 sideways consolidation. 

Financials: I heard some slick Money manager on Bloomberg, claiming this rally is just getting started, and the $XLF still has higher to go. Really? See the LT XLF chart below. 

$RIFIN (financials) Tweeted out this sell target going into the close. 

The Long term XLF: Looks like the end of primary wave (3). I have far more bearish EW counts than this, but even this bullish view has a target of $16 in wave 4, at the bottom of the range. Consolidation could take 3 years or more if this is the LT bullish trend. Rally 5 years, consolidate 3, would be a gift. 

$RUT Russell 2000 - Small Caps - I believe this is where the next crash resides. 
This chart has been working for some time. Wave 5 could throw over, but look at it!  

SPX - SmallCaps rigged since 2000
The price action has already thrown over on this one, and I'd expect it to sit on my pink line for a couple months, before all hell breaks loose. 

I like that chart so much I've added it to my public "Charts of Doom", linked in the side menu, and if you have any friends, or loved ones, still long this market, you may want to sound the warning. 

So I'm bearish into next week, and then we'll see where we are. 

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