Everyone already knows it. Prices today in the SPX, SPX and ES futures spiked on the Jackson Hole news conference by the honorable FED Chair Warsh. Then one could say they turned around on any number of concerning snippets. The initial result was the last remaining overhead price gaps in the cash market was closed as shown in the daily chart of the S&P500, below.
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| S&P500 Cash Index - Daily - Gap Closed |
The situation now is that all the daily gaps are currently below the market. The market turned today very near the 70.7% upward retrace level which we have seen as often being a replacement for the 62.8% Fibonacci ratio in down markets. It is calculated as 1/1.414 (or 1 divided by the square root of two). In previous down markets the 62.8% retrace level had just become "too popular", and markets seldom turned there.
Today the ES futures did close below the 18-day SMA, turning the bias down. But, the market has a lot of work to do to make a lower daily low so that a down-trending parallel could be drawn. The slow stochastic indicator is in over-sold territory, so we need to have our antennas up for unusual formations if the market is to go lower.
We shall see. Have an excellent start to the evening and the weekend.
TraderJoe
I think Elliott_Day_Trader did an excellent job of counting out the up wave in cash (SPY). So, this comment is not meant to take anything away from that. But, because the futures markets trade extra hours, they often go places and take more time than the cash markets do. So, it just makes me wonder if the whole up wave after the B wave of the flat is not an expanding diagonal C wave in the CFD - with its after-hours trading, as in the 90 min chart, below.
ReplyDeletehttps://www.tradingview.com/x/StXUEAW3/
The reason for the question is that if the diagonal is the pattern in the futures or CFD, it might mean that a down wave should break the low of the diagonal in 'less time' than the diagonal took to build.
TJ
Interesting to note that the $VIX has also closed a gap, and had a 'near-strike' on the lower daily Bollinger Band. Ira is not following this one publicly any more (on YouTube for his non-members) but he used to be religious in saying the "Smart Money" often looks for the VIX hits on the lower bands to make an options play back to the 18-day SMA or more.
ReplyDeletehttps://www.tradingview.com/x/6br3jolV/
Keep in mind with Mon/Tue being a hybrid "First-of-the-month" we may get some upward snap-back in equities for any larger decline were to begin.
TJ