Technical Outlook:

  • One of the best trading days of the year yesterday on what is usually considered a very bearish day historically in the market. 
  • Today starts the beginning of fourth quarter – by far the most bullish of all quarters. 
  • After trading lower for two straight quarters (a rarity that hasn’t been seen since 2011), I wouldn’t be surprised to see quarter four turn out to be very bullish for the market. 
  • The big key for the market will be getting back above and closing above the 1997 level. Then there is a confirmed double bottom in place. 
  • SPY volume saw a nominal uptick in strength and was overall average for the day. 
  • VIX dropped 8.7% down to 24.5. 
  • 30 minute chart of SPX sports a similar double bottom pattern to the daily chart. 
  • SPX managed to reclaim the 5-day moving average yesterday – something it hasn’t been able to do since the FOMC sell-off. 
  • I expect the bounce to continue strong in the days ahead. 
  • The Fed has never raised interest rates at a point where the market was trading lower on the year. 
  • The large gaps in the market, the record number of stock buybacks, and ETFs that are constantly accumulating/dumping large chunks of stocks, and most importantly the high frequency trading, shows just how illiquid this market has become in recent years. These entities are the most responsible for the massive market swings that stocks incur each day. 


My Trades:

Chart for SPX:

SP 500 Market Analysis 10-1-15

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