Tuesday, October 25, 2016

Short Term Market Action Suggests to Me That Stocks Will Fall Starting Late This Week or Next

Click on Chart to Enlarge

This chart is an hourly chart of SPY.  What we are seeing here is an obvious overlapping type short term action, not a directional upward movement that would signify major buying interest.

Notice that the overlap has occurred underneath 2 trend lines, one from the consolidation beginning in September.  The other origin is not shown, but is a trend line from Feb 2016 lows to the June 2016 lows.

Also interesting is that the 214.50 level is level that SPY was trading at just prior to the last FOMC meeting announcement.  It had been support for the triangular consolidation in September.  Now prices have met some mild selling each of the last 4 times price attempted to reach that level.

The next FOMC meeting is next week.  And so we could possibly see some market movements with higher volatility next week.

Currently I am positioned in 3x leverage (SPXU) at ~24.00.  Also, the banking sector stocks and brokerages have hit the extreme end of their harmonic reversal zones and it looks like today could have been the final day up in that major rally in big banks.

Based on what I have posted here in recent weeks, as well as the larger prices pattern and cycles, it seems likely to me that a substantial move down is imminent.

But we shall see.


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