“One thing all of u know for sure is that the stock market doesn’t go down just because a lot of folks think that it has entered the heart of looney land.” Robert Kirby
“In a speculative market what count is imagination and not analysis.” Benjamin Graham
Wednesday marked a technical reprieve from the slew of internal warning signals…the Hindenburg Omens and Titanic Syndromes.
The fact that this unprecedented cluster is occurring in the midst of our November 4 to 7th time frame is not happenstance albeit it does not mean the market will not have a further crescendo.
Wednesday for the first time in five sessions, the number of new highs at 92 on the NYSE exceeded new lows averting what would have been a fifth consecutive Titanic Syndrome.
However, new lows on the NAZ were 212, nearly double the 114 new highs.
Further, on the NYSE, both new highs and new low surpassed the 2.2% threshold, resulting in the fourth Hindenburg Omen in the past five trading days.
The Hindenburgs and Titanics aside, the fact is that the market despite the SPX hovering near record highs continues to exhibit extreme internal weakness.
The persistence of new yearly lows signals mounting downside pressure that will resolve toward a deep and sustained downtrend.
Wednesday’s rebound was largely in response to the Supreme Court hearing arguments over the legality of tariffs imposed by President Trump this year.
While a ruling may be weeks or months away, early indications suggest a majority of justices lean toward striking down those tariffs—a decision that would eventually lift all Trump-era tariffs and require rebates of funds collected this year.
Markets seem to interpret that as a short-term economic positive.
That said, the market bottomed as the tariffs were enacted and it would be typically perverse if it topped on news they were being struck down.
Likewise it would be remarkable if October 29 stood as the record high for this cycle.
Oct 29 being the big crash in 1929.
Wednesday saw a stampede in many glamours which sprang from a down 50 futes overnight Tuesday.
Powerful Gap & Go’s played out in STX, SNDK, IREN, LITE and WDC to mention a few.
Stunning reversals played out in AMD which opened on it 20 DMA at 243 and exploded to 259—where it pulled back to 255.
We pinged that 90 degrees up from 243 is 259 on the Square of 9 Wheel.
Amazing.
For its part TSLA tested its 20 DMA before rallying 18 point.
It looks like yesterday’s LROD (large range outside up day) may precede TSLA coming out of a Cup and Handle scoring all-time new high.
Be that as it may, yesterday the SPX gave back half of yesterday’s gain following an outside up day of its own.
The SPX 3 Day Chart is pointing down. Consequently, trade today above Wednesday’ high will satisfy
Two consecutive higher highs while the 3 Day Chart is pointing down.
This will put the index in the Minus One/Plus Two sell POSITION.
I highlight POSITION because it is not an automatic sell.
Sometimes it does mark an immediate rollover, but it is a time to watch the behavior.
This is especially true if the top is behind us.
Interestingly IF a Minus One/Plus Two Sell perpetuates sell-off, a move below Wednesday’s low will trigger a Keyser Soze Reversal of a Reversal as Wednesday was an outside up reversal day.
As well breakage below Wednesday’s low is important should it play out because it I a failure below:
1) The 20 DMA for a Grail Fail
2) The early October high
3) The Breakaway Gap from October 24 for a Jump The Creek sell
4) And a failure below a trend line from the Oct 10 low.
The tension is on the tape. Downside below the 20 DMA warrants caution.
Alternatively a turn up in the 3 Day Chart in league with upside momentum is fireworks.