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Thursday, May 4, 2017

Market Update 5/4/2017 Are we there yet?

"Are we there yet? Are we there yet? Are we there yet?"

We sold into strength, and got a nice little shakeout, as predicted in the previous update - calling the bottom in real time, and the downside target on the DOW within 4 points, yesterday Wed.. Nice little bullish reversal, intra-day. Looks good on a 5 min chart, but is this the bottom.

No sooner than I called it, we saw a sentiment change on a new Healthcare Bill, and Fed speak. Once again proving the charts predict herd behavior.

But is this the end of consolidation?
Probably not. We're not exactly seeing the market off to the races this morning, and continued weakness in Oil doesn't confirm the sector rotation we're looking for. May, is historically selling season, and comments in my twitter feed, are good contrarian indicators. Yesterday you saw someone re-tweet a 5 min $VIX chart, in order to convince himself, that the $VIX had broken out. That kind of nonsense deserves and immediate block.

  1. $VIX resistance is 11. 
  2. May is selling season
  3. Only trust a 5 min chart if you're able to trade that time line, or you're going to be left holding the bag, when the short term charts break. Longer term charts, are way more reliable. 
  4. It's too soon to confirm a continuation of the previous rally.  

Continued caution is warranted, because we're not out of the woods yet.

The Dow continues trade in a range, and there's a good chance we see the 20.650 level tested in wave E of 4. As long as this looks like a broadening triangle (seeing in purple) there's a good chance we're going to see the price action continue to whipsaw in a range.

To add to weight that prediction - The Citigroup Chart

$SPX watch the 2397 area:

Intel $INTC - This one drives the Semiconductor space, so it's worth watching, if not selling short. Lower high is bearish. Wave C's are devastating

Opening bell rings in 5 min.
Take care, AA

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