From a love that's blind
Slip to the dark side
Across that line
--John Cafferty & the Beaver Brown Band
Late week action, including a -2.5% day for quarter end on Friday for the SPX, left weekly chart with a bearish looking 'inverted hammer' bar. The Fri close was a few handles above the 1120 level that has been challenged multiple times over the past couple of months.
Am having an increasingly difficult time visualizing the 1120 support level holding. Technically, we know that support tends to weaken a bit more each time it is challenged (as another layer of demand is stripped away). Combine this with rich aggregate valuations and an increasingly ugly macro picture and you have the recipe for lower prices.
Chart gazing suggests the 1025-1050 area as the next layer of support below. After that, 950.
I did kick some incremental short side trading exposure added early in the week in the Fri after hrs session (indexes drifted a bit lower after the regular session closed).
How they trade early next week will dictate next move...
position in SPX
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/gold/t24_au_en_usoz_2.gif)
1 comment:
The market is getting to the point where it’s now priced-in a lot of bad news. Should the news get worse, prices will move lower in Q4. This is especially true as just about everything broke under its 200-day this quarter. But with short interest so high and everyone (except the long only crowd) positioning themselves for the worse, any good news is going to lead to large rallies. If the good news is structural, the rally could be very substantial.
Overall though, the trend is down and there is no short-term bias on either side.
~Larry Connors
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