The Unpredictable

The market sold off hard today but is still above the August 9, 2011 swing low.  I suspect that tomorrow we may get a a modest bounce or an inside trading day but then maybe weakness again near the end of the day.

At this time I do not believe the August 9, 2011 swing low will be broken tomorrow.  My take is that we trade ‘normal’ tomorrow and then still end up closing just above the August 9, 2011 swing low.

That would set up a possible break of the August 9, 2011 low sometime next week. The most bearish interpretation would be a break of the August 9, 2011 low right at the start of next week.

And now onto the unpredictable… a one day prediction.  If you want a one day prediction, here it is.  We rally tomorrow north from the open and fill some upside gaps into noon time and early afternoon.  Then during last few hours of the day sell off again for a flat close and end closing slightly under today’s swing low but still above the August 9, 2011 swing low.  That would be the ultimate bearish setup for early next week in my opinion.

Have a one day prediction for how we close the week tomorrow ?

I am looking for approximately 10 days of downside trading action with a few intermittent rallies but for the most part I am looking for persistent downside.

It looks like 1010 to 1040 is the ideal target for this move.  I don’t know if we could sweep under that range on this leg down.  Perhaps. 

I am watching the RSI closely as well as the MACD histogram because there does exist the possibility of a bullish divergence eventually setting up relative to the early August 2011 decline.

This possible divergence will be key in figuring out when the next sustained bullish upswing occurs. 

‘Big Chunk’ moves in the market are usually not of extended duration.  During the 2008 plunge in October there was a period of 4 or 5 days that made up the worst chunk of the decline, but the rest was whipsaw and complicated.

I sure would like to see a nice ‘big chunk’ of the decline occur for most of next week so we can get it out of the way.  The alternative more delayed scenario is that we drift down next week but then save the real fireworks for the week after.

P.S. Larry Pesavento is indicating that Monday the 26th September is a P-Index day which means it is a very strong astro date that can either serve as a dramatic acceleration day or a turning point day.  The way the chart is setup looks like it should be an acceleration type day.

Posted in SP500
5 comments on “The Unpredictable
  1. JR says:

    I agree with your analysis of tomorrows action.
    Almost certainly up at the open, then a gradual settle back to Thursday close. Although it is possible to finish a tad higher.
    Obviously, the smart money has been short but shorts are skittish and do not like surprises. So they are prone to go flat in the last hour of Friday. That said, their covering could act as a catalyst for buyers on the sidelines to come in.
    So I would not be surprised to see the market close up a tad tomorrow.
    If it closes even or lower that would certainly portend for next week being down, perhaps very, very down.
    These type of down moves often are cataclysmic. So a really big down day next week might be expected. Perhaps as much as 800-1000 points!!

  2. ed says:

    I don’t know what a P-Index day is but that date does jive with the Bradley turn date and New moon next week

    As far as Friday is concerned, I would not be surprised to see a rather size-able rally that closes up strong. The market’s way of anesthetizing it’s victims before it carves them up next week

  3. Tom says:

    Yes JR I wast thinking the same thing… especially the last paragraph you wrote.

    The P-index day is astro related and it is supposedly very precise according to Pesavento and it tends to contain a lot of volatility. It sure does look like the way the chart is setting up that the P Index day will be an acceleration date or a huge move.

  4. ed says:

    We had a positive day today as expected with some bullish candle reversals on the index ETFs

    While I have been bearish this week and expecting even more downside next week, I have had some new signals that tell me that we may have had our run for now. Per haps a move back up to the neckline of the H&S on the $DJI is possible

    The Bradley turn date usually precedes a change in trend but since we are already in a down trend it is more likely that change will be up, even though the new moon tends to be a negative factor

    Your P-Index may add some energy to that move. I am net long with some short dated, far out of the money, cheapy spy puts for insurance against a calamity.

  5. Tom says:

    Hey Ed, how much and/or how long of a bounce do you see up coming ?

    I have been trying to identify a bounce and for how long and admit the new moon and the Monday Astro date could spark a reversal… but are you looking for a 1 day reversal or 1 week reversal or more ?

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