Market Finally Bounces

Early pre-market futures are indicating a gap up for the third time in the current downswing. The prior two up-gaps led to immediate fades, and this one may do the same again. However, the current downswing is getting pretty crispy, even for our current "Keystone Cops" fundamentals (I let you guess who the Keystone Cops are.....).

The fade went quite a bit deeper than I expected yesterday, but I'm not that surprised that traders are still so queezy. The market is very nervous right now, and rightfully so. However, all bad things must come to an end eventually, even if it's after a complete implosion. The current downswing is facing up-gap #3, and it's getting a little risky to go dumpster diving for too many puts this far down in the rubble. Don't be surprised if the market fades the gap a bit this morning, but also don't be surprised if we start the settling process for a short-term technical bottom. This may be a day where it's tough to play anything, but I'll keep an eye on it anyway.

There's not much to say, technically, that's different than yesterday. The market did fade to new lows, but the downswing is oversold, the market is IT Bearish to Neutral (not straight up Neutral for anyone still clinging to the old posture) , and the market is in a support area. Now it's a matter of watching to see if the support zone holds or not. The index charts will have to start a new reversal process after the candlesticks from Friday were blown up yesterday, so I'm watching to see if we get a pause and settling to the downswing today. I will toss up a chart or two after the open if price action starts telling us something new.

9:00 am MT: Intra-day Update: When the SPY (market) held the gap 45m ago, the complexion of the downswing changed. The probabilities are greater now that we get the pause day I was looking for. The price action intra-day makes sense when placed in context of Benny's speech today (lots of fluffy talk), and the Presidential address later this afternoon (more fluffy talk). If nothing else, the Shorts will want to cover a bit as a hedge against anything of substance that might be spoken (not likely). So the technical move (not fundamental move) is taking shape. The probabilities of a short term bounce are increasing, especially if the market can hold the pause this morning.

Here is a 5m chart of the SPY from 45m ago showing the important turning point in the downswing: (I couldn't post it in real time like normal because I was running a webinar, but at least I told the attendees about it when it was happening.....not that it helps you any.....oh well.....):
(click on image to enlarge)


Here is an updated daily chart on the SPX showing minor intra-day resistance at the mid-point of yesterday's real body:
(click on image to enlarge)

So far, it looks like a pause day, and the catalysts are in place to keep it a pause day. Benny could always derail that, but I doubt he wants to kill the market. I speculate he will want to say all kinds of positive things in order to prop things up. The market has a good likelihood of a short-term technical bounce. However, don't get too aggressive with the bounce, the market is Neutral to Bearish at best, and at risk for another drop after the bounce is over. Anything bullish you do (and I'm probably not doing anything bullish today), do it small.....

12:45 pm MT: Intra-day Update: At this point I want to see the market hold the line a bit. I expect a little wiggle back right now off the pop the past several hours, but I want the market to hold the general area into the close in order to keep the probability of a short term bounce alive. Here are three stocks that are interesting bullish movers today: GS, NTRS, and AMZN.

1:40 pm MT: Intra-day Update: Barring an end-of-day collapse, the market may actually Engulf today. This is similar to the November low price action, therefore the short term bounce is finally happening.