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Wednesday, October 16, 2019

Market Update 10/16/2019 - Investors Really Bullish, Or Just Another Engineered Short Squeeze? PART 2

Markets are trading flat ahead of the next Brexit announcement (around noon CST), so I got time to wrap up PART 2 of this update. We could trade flat in a range, for the rest of the day, but watch for a $VIX breakout (back above 14), on any negative Brexit news.   

 Getting back to the battle between the Bulls, and the Bears, and this Engineered short squeeze - on the tail end of (basically) a 3 day weekend, just ahead of Oct. OPEX. Can the market hold up into Friday? I  have my doubts after seeing the $VIX taken down to these levels, but we could remain trapped in the top of the range. It's just when the bulls throw caution to the wind, and don't bother putting protection on (as evidenced by the low $VIX), they typically get taken out behind the woodshed on Options Expiration. Could also be that the PTB wanted to load up on PUTs, before taking the market down. They're on sale @ $VIX 14.

Took me 30 minutes to find the link (below), but this short interview offers an interesting perspective, between a technical analyst who sees a "topping formation", and a fundamentalist who used terms like "undervalued", and we're going to find out who's right, before this earnings season concludes. 

As it turns out; I'm not the only one who's bearish:  Gary Shilling went short last week. I could've found him a better entry point, but he's an economist, not a market timer.

Enough talk, let's take a look at yesterday's rally to nowhere. 

$SPY fails to breakout. No change

The $DAX broke out above a right shoulder, on the bearish H&S pattern - I pointed out a couple weeks back - and tested the July high. I don't like the bearish H&S pattern. It's just not that accurate, even in a bear market.

Tech: The $DJUSTC sector broke out above my purple line - to a 3 month high - but now it looks like a little throw-over (false breakout) above the top of a sideways triangle in wave e/ of B. If you're not familiar with this pattern, then you have some homework to do!  2150 becomes the stop-hunt  

See: "Horizontal Triangles" at Elliott Wave International

There one more triangle we're watching, and you'd never find it on a short term chart.

$NYSE is trading in a contracting sideways triangle. Wave E's can throw over to the level of wave A, before reversing..... Wave E can also fall short of the target, but that's less common, and they, seldom, to never, hit the target exactly. I think this could easily get done before Halloween, but we'll see where we are in a couple weeks.     

That's all I got,

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