First off there is a lot going on in this market:
1. Oil is trading at 1 year highs.
2. China is trading near 10 month lows.
3. The bond market seems broken.
I could go on...
Looking at the short term charts
The bottom I called - in real time - on Wed. - Documented in yesterday's update - not only held, but the rally continued to gain steam on Thursday.
There's a good chance we're in wave 1 since nobody seems to believe in this rally, but there is a high probability that we're only in wave A, at the beginning of a little counter-trend rally - in wave 4 of C.
For Example
$COMPQ - Assuming wave C is going to look like a textbook 5 wave move, and chart says yes... If you're unfamiliar with Elliot Wave theory, I suggest you learning it.
The broader market is looking pretty good here, as I was saying yesterday.
Of course we didn't get anywhere close to capitulation - not even close...- and stocks are not oversold, but the CNN indicator was giving an extreme fear reading....
$VIX below 20 is nothing. Never trust #CNN on anything
— Veteran Market Timer (@3Xtraders) September 27, 2023
I've pointed to the CNN fear gauge in the past, but I think it's important to consider the source (CNN) and take it with a grain of salt.
Capitulation
One thing CNN's indicator does measure is the scared money, hiding in money markets, and that's someplace I no longer want to be. If you remember, I moved the 401k to a safe place, back in July, and that's where it's stayed, up until now.
BUT the chatter on bond yields has reached fever pitch! This has gone on for several weeks, so I'm confident we're seeing capitulation in that space.
401k trades adjusted: One place I put money to work is the most beaten up Bond fund I could find. Another place I'm moving money to, is beaten up small caps, which - if you recall - I got out of back in July.
TODAY'S TRADE
I'm not expecting a big short squeeze today, but maybe just enough to draw in some more dip buyers, ahead of next week.
We should also see money put to work on Monday, and then we should have a better idea of where things stand.
Finally The $DAX
As you probably know, the $DAX leads global markets, and especially Europe, and I've been using the $DAX as a leading indicator for several years, and I'm ready to start trading $DAX futures.
Last night was a no brainer, as the $DAX was seen pulling back to support:
German $DAX leading the rest of Europe. US Market futures higher. #SP500 S&P500 $SPX #DowJones #Nasdaq #Stocks pic.twitter.com/NADA0xjeIi
— Veteran Market Timer (@3Xtraders) September 29, 2023
Tips on Trading the DAX - linked - Great Article from dailyfx.com
Take care,
AA
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