So far this session looks like a classic pop and drop. The market rallied early on the unexpected +9000 jobs ADP report beating the -48,000 job loss estimate. I suspect that there was some early short covering carry over from yesterday as well. Sure this two day rally beats the usual 200+ down days which has become the norm, but nothing much is really happening here. The hedge funds are still making a mess of this market. There's no follow through on winners - so selling the rally is the rule. That's why these rallies are so short lived with such sharp reversals. Nobody trusts it! Can you blame em? Will tomorrow bring more of the same with the fear of the financials returning to the spot light again? Us human beings learn by our experiences and for the past year its been wise to sell out into rallies. Now the rallies are getting shorter and shorter. In the not so distant past the rallies lasted for several weeks, now we're lucky to get a few days. This is classic bear market action. This won't last forever and maybe we're even getting close to a change. When the market can finally sustain a rally of some duration, that's when the fireworks will really begin in earnest.
The Weekly Pivot range is 8425 - 8495. The NYA is currently in the pivot range at 8450. Not a great rally. Essentially we just got back what we lost on Monday's plunge. Plus we're right at the weekly mid pivot of 8460.
8910 r3
8740 r2
8565 r1
8460 mid
8290 s1
8185 s2
8010 s1
1. We're well below the 200d mva which is horrible place to expect sustained bull market rallies.
2. It's holding the 8100 low and upper half of the bollinger band. This market needs to remain in the upper half and above the 9d ema if its going anyplace. Otherwise the selling will beget more selling.
3. The rally 6 days ago carried to around 8633. The July 1st high is 8666. A very good sign if the market takes out those points without falling back. A terrible sign if it breaks below 8100.
4. The market isn't overbought so a strong rally from this level is very possible. What's the catalyst? Friday's jobs #. The ADP report is notoriously unreliable when compared to the government figures. The May jobs number absolutely crushed the market. Some of the recent data suggests that employment is holding up and big recessions don't happen without lots of people being unemployed. I know the numbers are skewed, but they are what they are and what counts for us is how the market reacts to the numbers. The non-farm payroll estimate, for Friday release, is -68,000. If this comes in anywhere close to +9000 like the ADP figure, I think the market can get a real rally. The estimate for the unemployment rate is 5.6% so anything lower than that will add fuel to the fire.
If this scenario were to play out, I'd be looking for a strong rally up to the r2 8740 level at least.
5. On Thursday we get the revised GDP figure which is estimated at 1.8%. Doubtful that will surprise to the upside. The economy is sluggish (just look out your window). I think 1.8 is pretty good all things considered.
6. Friday is August 1st. Often the first of the month gives us the H or low of that month. In July the H was 8666 (remained the high all of July) and the Low was 8491. Mark Fisher along with talking about his ACD system and pivot ranges, brought this interesting statistic to my attention. The funny thing is that it seems to hold up more often than not.
The Weekly Pivot range is 8425 - 8495. The NYA is currently in the pivot range at 8450. Not a great rally. Essentially we just got back what we lost on Monday's plunge. Plus we're right at the weekly mid pivot of 8460.
8910 r3
8740 r2
8565 r1
8460 mid
8290 s1
8185 s2
8010 s1
1. We're well below the 200d mva which is horrible place to expect sustained bull market rallies.
2. It's holding the 8100 low and upper half of the bollinger band. This market needs to remain in the upper half and above the 9d ema if its going anyplace. Otherwise the selling will beget more selling.
3. The rally 6 days ago carried to around 8633. The July 1st high is 8666. A very good sign if the market takes out those points without falling back. A terrible sign if it breaks below 8100.
4. The market isn't overbought so a strong rally from this level is very possible. What's the catalyst? Friday's jobs #. The ADP report is notoriously unreliable when compared to the government figures. The May jobs number absolutely crushed the market. Some of the recent data suggests that employment is holding up and big recessions don't happen without lots of people being unemployed. I know the numbers are skewed, but they are what they are and what counts for us is how the market reacts to the numbers. The non-farm payroll estimate, for Friday release, is -68,000. If this comes in anywhere close to +9000 like the ADP figure, I think the market can get a real rally. The estimate for the unemployment rate is 5.6% so anything lower than that will add fuel to the fire.
If this scenario were to play out, I'd be looking for a strong rally up to the r2 8740 level at least.
5. On Thursday we get the revised GDP figure which is estimated at 1.8%. Doubtful that will surprise to the upside. The economy is sluggish (just look out your window). I think 1.8 is pretty good all things considered.
6. Friday is August 1st. Often the first of the month gives us the H or low of that month. In July the H was 8666 (remained the high all of July) and the Low was 8491. Mark Fisher along with talking about his ACD system and pivot ranges, brought this interesting statistic to my attention. The funny thing is that it seems to hold up more often than not.
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