Market Thumps and Bumps

All the economic reports came in slightly better than expected this morning but the market opened down anyway. This means that there is still some residual selling from yesterday's shock and awe. I am still holding to my thought that we will get a Thump and Bump. We already have had the Thump with the drop at the open. Traders may drift this down for a little while and thump it a little more, but somewhere during the day we could see shorts come in and cover ahead of the weekend.

I will be coming and going on and off throughout the day, so I will post as I can.

8:05 am MT: we just had the first round of short covering the past 10 minutes. If the market does manage to drift back down, don't be as aggressive with your puts today as you were yesterday. At any time the "Twitchies" could come in and try and "outsmart" each other. You should be out of half of yesterday's puts by now and selling the rest into any downdrifts we get today. We may still get another downward drift after this morning's early short-covering, but I expect any new lows to be met with more short-covering, so be nimble today.

10:15 am MT: the market did drift back down to the morning's lows about an hour ago, and the shorts once again covered and ran the market back up. If you are out of about 3/4 of you put positions right now, that's probably a good thing. If the Naz crosses above 2,320, then we might finish the day in the green. If we go north of 2,330, then we might get a bounce that carries over into Monday. It's still possible that the market sells a little more, so a test of 2,300 is not out of the question. At that point I would be out of almost all my put positions and watching for short-covering into the close. So a cross above 2,330 would cause me to bail on the last of my puts, or a drop to 2,300 would cause me to lock down the last of what I had and walk away for the weekend.

1:30 pm MT: the Naz sold off a little more down to 2,290 and the shorts immediately came in and drove the index back up to 2,320. At the start of the bump the Naz had a Morning Star Reversal on the 30m charts. Then the index rolled over again a few minutes ago and the shorts came right back in with a Morning Star on the 5m charts. So the shorts are doing what I thought they would today, they're covering every fade. This is one of those mixed days where the bulls don't want to be long and the bears don't want to be short. By now, I would be scaled out of all my puts, especially on the drop to 2,290 - 2,300. Everything I said about a Thump and Bump is playing out just like I thought, we'll see if this holds into the close. I gave an additional explanation on what a Thump and Bump is in the Comments. A lot of these terms you've never heard of because they are often my own description or name for what I see.

2:05 pm MT: Market Wrap: The Naz did indeed finish the day with a Thump and Bump. The candlestick pattern is similar to a Dragonfly Doji, which is similar to a Hammer. The jist of it is that shorts covered the lows at 2,290 and the Naz finished the day at 2,315. Don't be surprised if we bounce a little more on Monday. The NDX also finished with a Thump and Bump. Last night I posted that I thought we would get a Thump and Bump today and that the Dow would hold 11,250 - 11,300, the SPX would hold 1,275, and the Naz would hold 2,305 - 2,310. Today, the Dow held 11,297, the SPX held 1,272, and the Naz held 2,390 (the Naz was a little lower than I thought it might go, but not entirely unexpected because that was the bottom of the gap on April 15 - April 16). The Dow was the worst performer today and didn't bump much at all, which is not too far off the mark since the Dow has been the worst performer in the market's current bearish IT trend. The SPX has a Spinning Bottom candlestick today (my term for a Spinning Top at a potential swing bottom).

I think the market has about a 60% chance of bouncing a little more on Monday ahead of the big ISM report on Tuesday. Next week will be a big week on the Economic Calendar with the Employment Report, the ISM, and even Factory Orders and Chicago PMI. I'm a little leary of the ISM on Tuesday unless analysts lower their expectations a little bit. Usually the game is for the analysts from financial institutions to put in catastrophic - and therefore easy to beat - expectations. Unless they lower the estimates over the weekend I think the estimates of an ISM number over 49.0 are too high, which could leave the market vulnerable to selling again on Tuesday. I'm expecting the analysts to play the game a little better than that and change the estimates over the weekend. If they do that, and dramatically lower the estimates, and we get a bounce on Monday, then the bounce has a chance to hold up on Tuesday if the ISM numbers are less than catastrophically bad. We will have to get through a less than catastrophically bad Chicago PMI on Monday as well in order for all that to happen. All in all, standing back from the Moon and looking at the Earth from thousands of miles in space, I still think we have a 60% chance of bouncing on Monday.