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Friday, July 26, 2019

Market Update 7/16/2019 - Reviewing Yesterday's Pullback

 In yesterday update, I sounded the warning - that after hitting our upside target, the charts looked "sketchy", and that support on the DOW had broke, among other things... I also instructed traders to watch the $VIX (for any sign of fear), and "watch support at the 3017.50 (.80) level.

You can see where that support broke at the opening bell, and the results speak themselves. 

 $VIX reversed and gapped up as investors panicked, seen on this 5 min view, and this is a good example of how easy it can be to call a reversal, and I haven't even been trying that hard lately. I'm able to chart a little in the morning, blog daily, refresh the public charts a few times a day, and take it easy over the summer.  

I could go on and on about how I got it right again, but let's look at today's trade, and what to expect next week. 

Short term:

As you can see on the $VIX chart above the $VIX didn't break out - even on a 5 min view, and if you're watching the Public Charts area you already know, I remain bullish. The NASDAQ is leading as expected. DOW pulled back to a tradable bottom. Canada even formed a base, and today is short squeeze Friday. I don't have a solid upside target, but I see $SPX futures trading above 3009, and that becomes support. Resistance would be the previous high. As long as the $VIX continues to come down, no worries. 

We got the Federal Reserve next week, and that could be the catalyst for another shakeout, if they don't raise a 1/2 point, but once that news breaks it's going to take a lot of uncertainty out of the market. Maybe see a shakeout in Gold and Silver on that news, and that money put to work in equities? Maybe we see a capitulation top in Gold and Silver, followed by profit taking? That's going to be a tricky trade.

The Week Ahead:

If we don't see much upside (market) momentum, and a big breakout ahead of the FOMC (seems unlikely), then this is just a suckers rally. See wave B on the 15 min chart located in the Public Charts area. Wave B's aren't good trades, because they're usually choppy and hard to predict btw

After wave B consolidation would come another washout in wave C. I'd call 2990 (92) key support on the SPX, and a lot depends on if we selling into the Fed, or buying into the Fed.

I think we'll have a better Idea next week, but the charts resolved themselves yesterday, so I'm not too worried about it.

Happy Short Squeeze Friday, and have a great weekend.

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