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Thursday, June 29, 2017

Market update 6/29/2017

First off: I'd like to correct a mistake I made in a recent update, when I posted an outdated chart - which must have been stored in my blogger console - from an update I did in May. It showed the NYSE breaking out above the 50 day moving average, after back-testing the bottom of the channel. That bullish chart worked like a charm, but that chart is history.

The long term channel on the NYSE is anything but bullish.

 Here's the long term trend on the DOW.

Only an idiot would be buying the market up here, hoping for another false breakout, like the ones we saw in wave "3", and all we've seen over the past few months is every rally sold. 

You don't normally see bearish traders take on large short positions going into a long holiday, so while I think the market can hold up for a few more weeks, my longer term outlook is bearish.

Technically speaking it doesn't take short sellers to take a market down, and if there's a lack of sellers, there's a lack of liquidity (lack of a bid underneath this market), and all it would take is a stampede for the exits to cause this market to fall into a death spiral, but that's highly unlikely.

I also believe bullish sentiment has to reach new recent highs, before we can see a major reversal.  

Still someone may know something, and I suspect something big is about to happen (between the 4th of July, and the fall). Tensions between the United States, and Russia (in Syria & the Ukraine), have escalated to a fever-pitch, and the mainstream media has been selling a war with Russia for some time. The industrial military complex wants this, because war is their business, and there's lots of money to be made... just look at all the US generals who sit on the boards of defense contractor, Northrop Grumman, and the like.
 Getting back to the charts:  

I'm short term bearish after yesterdays pop higher, and especially bearish the $RUT where we saw the shorts squeezed out.

We caught a nice snap-back rally off the lows (near 2418 support), and the bottom of what looks like  a contracting sideways triangle pattern - a difficult pattern to predict. This remains key support on the $SPX, so I'm expecting a pullback - into a wave b - but not much of one, now that the bears are trapped, and volume will be light, and volatility down, next week. The bulls typically move the market where ever they wish, once the bears leave town.

 I have a couple different targets on this pullback - actually 3..:

$SPX - best case for the bulls is that wave "A" continues to run. See the blue channel (trend)

$SPX - worst case would be a retest of the lows, and if that level breaks, 2410 becomes support.

$SPX - The pullback target I'd like to see is 2434, or lower, but there are many possibilities today. Watch my twitter today, and I'll try to nail it down in real time.


$RUT - here's my short term target on the Russell 2000, and this looks like a better trade to me:

 Keep a close eye on the $VIX, something I wasn't watching on Tuesday, when the market rolled over. It's up to you to sell when support breaks and the $VIX is popping, don't wait for me to tell you what to do... if you don't know how to trade you have no business trading this market, with real money. I normally trade a free virtual account at the CBOE, and I can tell you it's good practice. Save your money, because it takes money to make money. If you're trading less than 10k, you're woefully under funded, and by not trading you'll learn patience, and that will make you a better trader, once you're better prepared.  

Out of time.


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