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Wednesday, October 23, 2019

Market Update 10/23/2019 - Uncanny Accuracy

 If you were watching the 1 min chart, like a hawk, as I was... The market just seemed to go exactly where I expected, throughout day. 

 Of course, it wasn't until I took a late lunch, that the market decided to roll over, but what really blew my mind was that, when I returned to my desk, the $SPX had traded precisely into a bearish channel, I had already placed on the chart. I mean usually you need to adjust a hypothetical channel, once you get a reversal, but it was perfectly placed! Uncanny!      

Reviewing yesterday's action: 

1. I was already expecting the market to sell-off at the open, and it was immediately sold - into strength - right out of the gate, so that much was easy. Put a down arrow on it and have breakfast. By the opening bell, I had already been working for 4 hrs. 

2. An hour or 2 later, the market had filled the gap (up). That's called a "gap fade".   

3. Market found support, and broke higher.  Obvious "break out".

4. As the market rallied higher, it became clear to me that that bulls were following a lower channel line (seen in blue), and once that trend broke, I put an (upturned) red line on it.

$SPX - See that reversal, as it retested the bottom of the the ridiculous looking bullish channel (blue/red).

5. It kind of stalled out there in the middle of the range (see in purple), and I took a late lunch.   

6. By the time I returned it has already broke my stop-hunt, and traded into the bearish channel.  

$SPX - See the stop-hunt. 2. The bearish channel... 3. Bearish backtest. 4. 3000 level breaks.

Of course the catalyst for this reversal, was Boris Johnson's statement in which he used a dirty word, on Wall Street, "uncertainty". Some will say it was the failed second vote, but no doubt quant trading programs sell any news feed containing that word. We also see the $GBP reverse btw.

The British Pound

$GBP - We've seen a huge short-squeeze in the British Pound, and now it looks like there's a lot of uncertainty surrounding Brexit again. Looks like they want to kick the can down the road, another 3 months! I think, I would short the hell out of it right here!

Getting back to US markets.

Check out the longer term views in the Public Charts area, and you'll see where resistance was sold, but is this the top? Probably not. You really want to see the short-sellers capitulate, before you see a major reversal, and yesterday was too easy.

 $SPX - new 15 min chart - 2993 support - in what still looks like a topping pattern

I was up early, but I'm already running out of time, as something I started to write here is going to end up in the book, if I ever can find the time to finish it.

McDonald's held Support, of course. You'd be hard pressed to find anyone on wall street, who has a sell rating on that one. But I want you to take a look at a secondary the lower channel line on the chart. The parallel thin blue line. That's worth noting.   

Opening bell rings in 3 min. so I gotta run.

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