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Thursday, October 10, 2019

Market Update 10/10/2019 - Breakout denied!

Yesterday's rally was weaker than expected, so I did something I don't do too often; I sounded the warning in the middle of the day, and you saw the rush for the exits going into the close. Futures were also sold pretty hard, but then buyers rushed in, and Oil went from red to green, overnight.  

There were several reasons I pulled the plug on yesterday's rally:

1. Continued market weakness! I was looking for some upside momentum, or a breakout, and nothing! Sure, I got the direction right again, and I even got $TRAN right, but no breakouts.

2. I didn't like the fact that the volume was so light, thanks to the Jewish holy day, Yom Kippur - something I hadn't even taken into consideration, when I put out yesterday's update. Holiday trading can be quite unpredictable.  

3. The $VIX remains high. It could hardly even fill the gap (up) from a day earlier. That's a red flag!

Speaking of the $VIX: I updated most of my $VIX charts this morning, and actually found some things I hadn't noticed before. A key to finding the next market bottom!  Of course, I'm not going to give that away!

I also found that the $VIX continues to trend down, and there's really not that much risk, at the moment. I don't publish my $VIX charts, but I can tell you the $VIX is trading in a range, between support at the 50 week moving average, and resistance at the 200 month moving average. It remains below 20, so I'm not sure why investors would be "spooked", as was being reported yesterday. 

I also charted the long term $RUT, because even after doing this for 10 years, I find I still improve my technique, year over year.

$RUT - This one remains totally oversold, and the $RVX (the $RUT fear gauge) could only manage to hit 25.13, earlier in the month. The previous high on the $RVX was 25.43, back in August. I'd be a buyer of Calls if we see that level tested again.

Trade back to the top of the range - seen in purple. Hopefully this doesn't take until after Thanksgiving, but this when the short sellers tend to get squeezed out.

I've added some bearish charts to the public charts area. The one to watch is the trend on the $NYSE.
The trend remains down, like I said yesterday, and that chart proves it.  

As far as today's trade:

I'm only expecting a little more consolidation ( sideways to lower), before making another run at yesterday's target (s)

Link it the Public Charts area,

Good Luck,


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