Dow – The Aftermath 10-15-2014
The next support for the closing was 16131. Indeed, we stated “if that holds we may have a low today temporarily.” That appears to be the case and a bounce back into Friday appears likely. The low this week will be important. It appears to be a test of the primary support area, which was enough to scare the non-professionals. We have closed back into the Daily Channel helping to relieve the selling pressure.
We can see that the top of the critical long-term channel has held. This is where a correction is typically going to find support.
We see high volatility tomorrow and Friday. A closing on Friday above 16170 will signal we could see that possible rally temporarily leaving this week’s low hold for now.
As I have stated numerous times, you are your worst adversary. It is your own emotions that you must conquer. Understanding how panics develop, how long will they last, and how far can they move point-wise, are critical issues to address. NEVER marry a position be it long or short. If you have to make excuses, you are doing something wrong.
The computer covered its 7 short positions on the daily level today at its objective 15900. It would have re-entered a short position upon the election of a Daily Bearish Reversal. These are mathematical numbers that pinpoint pressure points within the market. The primary objective is to eliminate guessing and human emotions.
The Big Movers forecasting models are now in Beta testing by selected clients. We expect that to be release for next year in time for the real wild times ahead – 2015.75.
Dow Update 2PM 10-15-2014
This is the main channel – the Weekly Breakout Channel. A retest of that area is normal in any uptrend. The top of that channel lies at 15574. The key weekly closing support lies at 15970. The key levels to watch at 15665, 15370,15280, and 14450. A weekly closing beneath 14450 would signal a break is possible to 11119.
The next Daily Bearish Reversal lies at 15824. A closing below that would signal two more days down. So far, nothing has changed. Today may still form the low if 15824 holds for the close. Otherwise, look to 15176 and then we enter the 14 zone. Therefore, holding the 14700 level on a quarterly closing basis would keep the market tone very bullish long-term.
The Dow Today in a Nutshell 10-15-2014
We seem to be in a race to see who can ask government to hold their money. This is the classic flight to quality (i use that word loosely). The talk on the street is always trying to find a fundamental to fit to the price action. Plunging oil prices are signs to economic slowdown, the potential impact of global economic weakness on U.S. earnings is another issue thrown into the pit, and the spread of Ebola will be devastating wiping out chocolate lovers as well. The Swiss, after handing over anyone with money to foreign governments were reduced to chocolate and watches. Well now the chocolate may vanish.
We elected the Daily Bearish Reversal in the Dow yesterday and we have fallen out of bed from 16313 to 15945 in the first 15 minutes. The next support lies at 16131 for the close so if that holds we may have a low today temporarily. The weekly support lies at 16170 and a weekly closing beneath this level warns we should certainly move into that 14470-15560 area. A weekly closing below 15960 will warn of a move down to 15284.
Nevertheless, today is 17.2 days down This raises the possibility for a temp low if the Dow closes back above yesterday’s closing at 16315.19 but at the very least 16170. The technical support lies at 15934 today and the resistance is up at 16723. We need to see a closing above this area to relieve the selling pressure.
Our timing array shows today as a turning point with the next coming in two days. We see this week still as a target for a turning point and thus we may have a temporary low this week. Only a daily closing below 16131 would warn of a further drop for the next two days is possible whereas a daily closing below 15970 will be the next sell signal.
So far the market has been electing the Daily Bearish Reversals including last night. Much of the panic selling is done right now, but this remains to be seen. This is the first day the few retail players in the market have gotten scared.
The bottom of the broad trading channel lies at 16080 today. Holding that level on a closing basis is rather important for the panic selling to subside.
All – in All, this appears to be the bubble in government confidence. Why anyone would rush to buy government debt when it is obvious governments are in trouble – well who knows. This certainly appears to the end of the flight to quality underway. This is what we need to set the stage for 2015.75. You have to have the bubble form and it appears to be in government. Thereafter, look for the crash and burn and such a pattern would then push the phase transition in private assets into the declining wave of the ECM as confidence in government collapses.