Another down day above the October 10th and October 27th lows for the SPX. Volume rose again today but remains below the volume of the previous upthrust.
Chart courtesy of Stockcharts.com
I have been receiving a number of emails asking if “the” low is in. My response – “I don’t know.” The market is dynamic and must be read on a daily basis to determine trends and strength. Currently, the market is not trending in the short term – which makes it impossible to guess what will happen tomorrow.
Reading the market does not take much skill. Experience helps as market patterns tend to repeat themselves over and over again. The only thing required is diligence. The daily, weekly, and monthly charts must be evaluated on a regular basis. The market is going where it is going. It does not respond to anyone’s guess. Therefore, it is imperative that the guess is continually refined. Very often the guess was wrong. Market readers are broken into two groups: the good ones quickly alter their guess and move on, while the bad ones cling to the concept and right and wrong. The market is always right. The only time a market reader is right is when their reading matches the market.
I watch the market as a hobby and to improve my long term retirement account. This blog is a way to share what I see and think with others as they watch the market in their own way. I use market geometry to determine what is happening. I cannot tell you why it is happening. Based on pattern knowledge and experience, I can sometimes make a guess at where it should move to. If it does not move in that direction then that is good information also. When I see a major cycle turn in the future I share it with you. I do not know anything more than you do about what will happen at that turn. Price could change direction, accelerate in the current direction, or do nothing special. With major cycles, price rarely does nothing special – but it is a possibility.
For example, I have posted about the July 2006 cycle, the July 2007 cycle, the March 2008 cycle, and the October 2008 cycle. The first three cycles were discussed elsewhere before I started this blog. Each one of the first three cycles had significant price turns associated. The March 2008 cycle caused a reasonable rally into May. Based on my long term cycle reading, I did not think the downturn would end until October. The October 2008 cycle ended the vicious sell off which started last summer. But it is unclear if the cycle only had the power to slow price down before it continues the trend down. Or if the price will change direction.
Nothing I do (or anyone does) can tell what will happen tomorrow. It is a game of probabilities and patterns. Had price bounced off the October cycle with serious volume to the upside, then I would have guessed that the trend had changed. Since price has done nothing but consolidate in the last month, pattern knowledge tells me that the downside risk is high. But the downside is also not a given. It is possible that a marginally new low will bring in the buyers. Bad news in the last couple weeks has been greeted with low volume selling and the October 10th low has held for the SPX.
For example, Intel Corporation (INTC) cut estimates tonight. In September, this would have made new lows on the indices. There is no need to guess what will happen tomorrow. Watch the prices and see if we have a big selloff or just a small one. INTC itself was only down $1 after hours which tells me much of the news has already been priced in. My rule of thumb is to NEVER trade the news – watch the reaction the market has to the news and then make trading decisions from that knowledge.
Heads up: Tomorrow is a full moon and 90 days from the August high on the VLE.
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Tags: How To Use Market Cycles · Intel Corporation (INTC) · Volume1 Comment
A few thoughts. Tomorrow is reversal day or die day, I think Libby mentioned that earlier. I had read several weeks ago somewhere that 11/13 and 12/22 are dates to watch for market turns. I wish I remember where I read it and by whom. Anyone else here sees any significance of these dates?
Things I am not liking in market now are that big stocks are closing into new lows. Correct me if wrong here: GOOG, BAC, GS, and maybe INTC and others tomorrow. This for me is big
red warning flag to be very very careful. A seasoned trader should be able to see signs of reversal tomorrow but until they are seen and continue into close then stay away.
GOOG has broken down from triangle earlier and today closed into new lows. DJIA broke down through bottom triangle side today. Many potential reverse Head & Shoulders were almost deleted today.
Volume was not too high or lower a good sign? Not sure I buy into that since that also mean not many buying around especially when things close into their lows. Significant moves downward can start on low volume. Especially if we entered into the slow bleeding phase again.
all above negative things could mean crap if market can manage to reverse with “authority” tomorrow, and then follow through. my 2 cents.