Tuesday, October 6, 2009

Market Observations

Ok, I have been remiss...I did not feel that well today and did not get around to posting until now.

First lets look at the markets. I have my concerns. It is easy to paint a bearish brush on the market in the form of market structures or counts that are bearish until they are not.

This is what I see:
  1. Gold looking bullish. 
  2. Dollar under resistance and not impulsing
  3. Oil looking like it may want a push up
  4. Gaps remaining to be filled
Ok those are not buy signals, but they are warning signs that the market may want to probe up for a better retest. The charts are not making me comfortable.

What am I looking for? 
What would make me comfortable, would ideally be a gap up tomorrow followed by an energetic sell down reversal. This would apply to equities, Oil and Gold. However, I am concerned that we can get a fake out here and end up with a rally back to test some gaps and resistance in the 1050 to1060's. There is a benefit to this occurring if it were to do so. Bear's who have finally gotten a taste of a small win after being beaten up may misinterpret a move up to retest as something more bullish than it would likely be. Additionally, it would serve to convince weak handed bulls, that the waters really are safe and they can buy dips even if they are scary ones.

One of the negatives to any move up in gold is that silver has reverted of its old warning signal of non-confirmation. We should see Silver remain in a non-confirmation of Gold if we do get a pop.

VIX has triggered a standard dev short-term buy signal and there are still a lot of constructive looking charts out there. So, all of this should not surprise to work together to create a push up into the Wednesday to Friday area. Gold, Oil, and Equities...are what I am keeping an eye on. I am just laying out a case. Its not a bullish case, but certainly a push up here will feel bullish to a lot of market participants...and that may be the objective.

CCI array is showing supports here and a potential bounce. But we are getting high quality divergences (plotted over prices) that usually only occur at tops and bottoms for the daily SP500 emini futures.

While I am not in love with the count below for Oil, it is not totally out of the question...its on the table.

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