Everything Riding on GDP Tomorrow

The market today was unable to confirm yesterday’s candlestick reversal pattern on all the popular indices and the IWM Russell 2000 ETF was unable to confirm the potential bullish triple P  pattern on the MACD histogram.

The sp500 is showing that the histogram continues to show downward momentum and does not have any clear signs of reversal yet.

For the bullish case one can point out the relatively light volume today on the SPY ETF of only 224 million shares.  But a bearish case can still be made in that we don’t have any confirmed reversal and also that we are hugging the bottom of the swing trading range without a decisive downward break.

This hugging of the bottom of the swing trading range (and also very near support levels) is still potentially very bearish because it could set the market up for a ‘jumping of the creek’ tomorrow on the GDP report where the market busts through support after the recent 3 day build up.

It could go either way tomorrow.  I did not like the close today either.  I hate to say it, but this one is a coin toss.  I have evidence that seems about equal on both sides of the market.  So it would seem the GDP report in the morning is either going to gap and go this market up in the morning. Or gap it down below very key support.

The SMH in particular looks like it is hanging on by a thread.  It closed right at the bottom range of its supporting channel line.  But the volume today was really light on the SMH. 

I really thought we would not get a clear break up or break down signal until the next two weeks.  But there exists the possibility (based on today’s close and lack of confirmation of yesterday’s bullish candlestick and MACD Histogram setup) that we could get a significant break down signal tomorrow morning with the GDP.

Posted in Market Timing, SP500
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