Monday, September 28, 2015

Nothing New To Offer Currently on SP500 9-28-15

Currently stocks seem to be following relatively closely to the post stock "crash" pattern that I have mentioned several times recently.  Currently the SPY price is still about 3.5% above the August intraday low near 182.50.  However, the SPY price is less than 1% above the August daily closing low on 8-25-15.  It would not be surprising to see a quick sell off over the next couple days to break the August low.  That would basically fit the pattern expectations from past instances.

Note however multiple time frame stochastics oversold set up here with all time frames daily and lower being oversold on the 14,3,3 slow stochastics. So we may see some program buying/short covering kick in at any time.  The weekly stochastics however, has crossed back down and is not yet oversold.  So if a brief relief rally occurs from right at this level, while likely sharp if it occurs, may offer an opportunity to short with expectations of a very dramatic decline to follow, with the indexes headed to likely lower lows below the August low.

Currently I would not initiate a new trade in either direction.  I feel a partial scale out of a short position is sensible here, however, I really think that the odds favor a break of the August low before a major rally attempt occurs.

I will be looking for a bullish option trade set-up shortly after a break of the August lows if/when it occurs.  I think the scans will show a high odds play on a few scenarios once that low is broken.


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