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Thursday, August 31, 2017

Market update 8/31/2017 - Tech breaks out to new highs

Giving the charts a workout this morning

The short sellers typically get squeezed at the top, and if you look at the long term trend on tech, that's exactly what looks like is happening. We haven't seen a pullback in tech in over a year. 

The big picture: The RSI, The MACD, and the Volume, have all rolled over, and volume typically precedes price movement. Could hold up for another few weeks... The upper blue channel line is your stop hunt, and key support on this chart is the previous high at 1150. 

Key support on the Dow is the 50 day moving average, which was back-tested again on Tuesday, where I called the reversal.

You would think it impossible, that the market would reverse to the downside here, and you'd probably be right, especially since the pro shorts are already on vacation. Never sell into a holiday, unless you see support breaking down. There is a slim chance that we'll see a run for the exits ahead of the long weekend, but odds are you won't...

 The Dow: See the 50 day ma: 

So there's the bullish view, "but wait there's more..."

 The NASDAQ has crawled back into its bullish channel, on decent volume. It didn't even bother back-testing the 50 day ma. This is all about squeezing the short sellers into another holiday as we've seen 100 times before.  

$SPX - if you look at the lower channel line you see the same thing... but is the correction complete?

The most recent pullback just seems a little too easy, and Money Managers would rather see the weak hands shaken out, before they're forced to chase performance in Sept. window dressing. Solution: shake out the weak hands, as soon as you return from vacation.

Possible catalysts are am Iranian torpedo boat, and Trump did promise to impose a hefty tax on hedge funds, and someone had to pay for tax cuts. 

This leads me to sine bearish patterns I've spotted on the short term $SPX, and the $NDX charts.

$SPX - looks like a broadening pattern, with an upside target of 2466.50 (depending on when it tops), and we could hang out in the top of this range for a few days, and retest the upper pattern line next week - in wave c of D (this straight shot looks like only wave a of D). The wave "E" target it off the chart, 40+ handles lower, and since wave E is a panic wave the sell-off should be swift. I'm thinking Sept 4th, or 5th (technical Tuesday).

$NDX (big tech) - looks like a suckers rally in wave 2. I'll probably have to raise my red resistance line this morning, but anything short of a new all time high points to a suckers rally... 

There's also a good possibility that we see our long awaited sector rotation, from tech into Oil and energy. If tech crashes into wave 3, watch for a sector rotation into energy, while few others are paying attention. Could see a nice short squeeze there.

$USO - watch the 9.25 target

I'm out of time, so watch my twitter feed... and please try to keep comments to a minimum, especially at the opening bell.

Thanks, AA


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