News Bogeys the Shorts and Pauses the Market

I am working on a hardware system upgrade so I will write up market information when I can. For the time being, I opened up a post so you can comment to one another today.

9:00 am MT: Market Analysis: The government news bogey about creating multiple investment funds to purchase bad loans and distressed assets caused Short to cover in financials this morning. The short-covering caused a gap out of the gates, and now the Shorts have subsided a bit, which is causing the gap to fade away.

I speculate that the market still has a chance of making new lows in the current downswing, but the downswing itself is just about done. Watch the ADX on the 60m chart of the Dow. Since the beginning of January, the 60m ADX has hit 45 twice, and both times the market started a "relative" area of consolidation, which was basically a pause on the Daily charts. The 60m ADX is at about 41 right now (while the Dow acts like it wants to fade a bit to new lows). So the market is getting in to territory where it is likely to pause short term, especially if it fades to new lows and the 60m ADX pops through 45.

I am still working on my hardware upgrades, so I don't have my chart grabber tool to post the chart itself, but you should be able to bring the ADX up yourselves in your charting service.

9:12 am MT: Intra-day Update: There's the leg down to new lows I was looking for. I still think 6,500 is on the table (although it's pretty extreme for the downswing). But as I detailed above, the 60m ADX is not quite to 45 yet, so a move to new lows here is not unprecedented. The market could continue to fade off a bit this morning. I speculate that if the Dow drops in to the 6,500 area and if the 60m ADX spikes above 45, then the current downswing will probably be over. For now, a nimble trader can still play puts, but you probably don't want to see the market go back above 6,800 if you are in puts.

9:28 am MT: Intra-day Update: I've been looking at the market charts several different ways, and I think the Dow won't make it to 6,500 on this downswing. I think it will come short of that mark, and land in the 6,600's at most before a pause or bounce. I think it's ripe for an early turn, which would be disappointing only in that I would like to see this capitulate and get everything over with right now. I think that we might not see capitulation yet on the current downswing, which means that any bounce back would carry some risks for another roll down to lower lows. I would really rather see the capitulation to 6,400 - 6,500, right now, this morning, but the price action is just not indicating it currently. In this case, I actually hope I'm wrong (in a weird sort of way) and the market has a climactic bottom today, but I'm not seeing it right now. We continue to get the slow bleed, and when we get the 60m ADX in the 45 area, I think it will grind back a bit, after which it could be back to the bleeding.....

11:15 am MT: Intra-day Update: Not much more to report other than the 60m ADX is at 43 now. The intra-day tipping point is 6,800 on the Dow, with a move above 6,850 likely confirming a short term pause/bounce. For now, the grind continues, but I still think a capitulation is off the table for this downswing.....too bad if I'm right.....

12:00 pm MT: Intra-day Update: The SPX (not the Dow) passed 45 on the 60m ADX a little while ago. The Dow is getting close. Not that those are magical numbers, but the market is still hanging around. It's looking like a Pause Day, even if there is some late day selling. At the very least, in continues to look like we won't get capitulation.

12:40 pm MT: Intra-day Update: There's the bump past 6,800, which should facilitate the Pause Day I've been looking for today. A move above 6,850 (which is putting on a ceiling on the Dow as I type) would likely confirm the pause/potential wiggle-back type of bounce. It looks like it was another news bogey.....I won't post what the news bogey was because it's almost too surreal to write.....

2:55 pm MT: Market Wrap: The market held the morning lows and finished with a Pauser Day. The consolidation on the 60m charts was not unexpected if you were following the extreme reading on the ADX for that time frame. I speculate that there is still more selling risk in the markets, but the balances are more 50/50 on the short term after I spotted some of the price and technical indicators intra-day today. There will be a number of Economic Reports due out in the next three days that will impact the market, reaching a climax with the Employment Report on Friday.

I'm still day to day with the short swing trades, and the economic gauntlet the market is about to run through the rest of this week will definitely keep me day to day.