Stock indexes down, Gold up

q1204.pngStock indexes were lower across the board today, with the S&P with the largest percentage loss. Yesterday I posted all the reasons I thought the indexes, and specifically the Qs would be down today, and all the indexes gapped down right on the opening of the day session. What bothered me about my comments after they were posted is that it seemed there were too many reasons to expect a drop. Too many confirmations. Almost any definition of trend and definition of momentum would have given a very similar opinion, so it was information most traders trading off the daily charts would see. There was no information that almost every technical study would not have missed. That gap down proves my point. Even with the bearish indicator set-ups probably widely seen, the set-ups are still valid – it’s just not as comfortable being in a trade that seems too obvious.
In the case of the QQQQ, the open was very near the low of the day, with a price right into the up gap left five sessions ago. Then the Qs proceeded to fill the down gap from the close yesterday, and after fulfilling that, prices chopped around to close down a bit but higher than the open. In fact the opening price of the day session was never revisited. The S&P had a similar pattern, but did manage to close slightly under the opening price of the day session. The S&P price structure still looks more negative in my opinion than the Nasdaq, however the momentum indicator that I use had not quite turned back down as it had in the Qs. It has turned down as of today. Trends seem to be still firmly down, but now with a pivot on all indexes at the high of the bar from last Friday as a point where if tested and exceeded the short term trend would turn back to the upside. The previous minor pivot on 11/14 was exceeded, but the indexes failed to hold that pivot, so I believe the pivot on 11/30 will be meaningful if the indexes can take out and hold that level. I have my doubts that will happen, but I must look at all possibilities. I’m bearish still, but could be wrong. There is much expectation of the interest rate cuts next week, with more talk now of a 1/2 per cent cut. Also, some are still expecting a year end rally. If the markets fail to move to the upside with these expectation, there could be quite a bit more coming on the downside. If that pivot is taken out, with my trend indicators turning back up, the bear in the upper left corner will be replaced with a bull of some sort, but I’m not holding my breath and will continue to favor the short side for trading.
Gold made a move back above the $800 level basis the Feb contract. Trends have been flat to slightly up with no real warning of the upmove from the way I look at the charts. The dollar was off a tiny bit, and crude continues to drift lower.

Leave a Reply

Your email address will not be published. Required fields are marked *