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Stock Market Final Probe Higher ... Then the PANIC!

Stock-Markets / Stock Markets 2018 Sep 12, 2018 - 06:37 PM GMT

By: Anthony_Cherniawski

Stock-Markets

SPX closed above Short-term support at 2887.58, but SPX futures are challenging it this morning. Despite the cross-currents, there is room for yet another probe higher that may last until early afternoon (near 1:00 pm). That will be the 60th hour and 8.6 days from the top.

Looking at today’s economic calendar, the most intriguing item at 1:00 pm is the 10-Year T-Note Auction.


ZeroHedge reports, “Summary:

Asian stocks slumped for the 10th consecutive day, the longest losing streak since 2002.
European and US stocks reversed Asian losses, trading modestly in the green
Oil extended previous sessions gains post API’s as Hurricane Florence approaches the Carolinas
CAD extends overnight gains NAFTA nears a perfect storm on dairy access
Dark clouds clearing for UK PM May as ERG downplays overthrow but presents an alternate Brexit deal
Looking ahead, highlights include, DoEs, Fed’s Brainard & Bullard and supply from the US

The "alligator jaws" chart presented by Jeff Gundlach during his Double Line conference call on Tuesday, which showed the unprecedented divergence between the US stocks and the rest of the world...”

NDX futures have challenged Short-term resistance at 7536.01 this morning. NDX may reach its peak sooner than SPX, so keep an eye on it as the day progresses. It appears that NDX may do a 50% retracement near 7546.00 this morning.

CNN reports, “The great bull run for the FAANG stocks and the rest of the tech sector is showing signs that it might be coming to an end.

Since Amazon (AMZN) briefly topped the trillion dollar market valuation level a week ago, shares have fallen nearly 3%.

Shares of Facebook (FB) are also down about 3% in the past week, following COO Sheryl Sandberg's testimony in front of the Senate about Russia's use of social media to try and interfere with the 2016 presidential election.

(Twitter (TWTR) CEO Jack Dorsey also went to Washington -- and Twitter shares have since plunged 10%.)

But the other FAANG stocks have taken their lumps lately, too. Netflix (NFLX), Apple (AAPL) and Google (GOOGL) owner Alphabet -- which didn't send a high ranking official to last week's Capitol Hill hearings -- are all down about 3% to 5% in the past week.”

VIX futures are flat after testing the 12-handle and 67% retracement this morning. I wouldn’t be surprised to see the VIX and equities rising simultaneously as an indication of turmoil at the trading desks. The Cycles Model suggests a doubly indicated period of strength over the next week. This may be a warning of a panic Cycle about to begin.

TNX has pulled back from yesterday’s high. However, the anticipated impulse higher isn’t yet complete. This afternoon’s Treasury auction may do the job of jolting the markets out of their stupor. The Cycles Model suggests that the current strength may end tomorrow, so this could be a rather short probe higher followed by a reversal tomorrow.

The Commitment of Traders shows that Large Commercial traders are long the 10-year Note by 738,907 contracts while the large and small speculators have the opposite position.

USD futures are flat this morning, but anticipate a period of strength through the weekend. There is the possibility that the retracement may hit the 61.8% value at 95.90 during that period. The threat of a higher USD may set the world markets on another decline that may compound the already huge losses overseas.

Regards,

Tony

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As a State Registered Investment Advisor, The Practical Investor (TPI) manages private client investment portfolios using a proprietary investment strategy created by Chief Investment Officer Tony Cherniawski. Throughout 2000-01, when many investors felt the pain of double digit market losses, TPI successfully navigated the choppy investment waters, creating a profit for our private investment clients. With a focus on preserving assets and capitalizing on opportunities, TPI clients benefited greatly from the TPI strategies, allowing them to stay on track with their life goals.

Disclaimer: The content in this article is written for educational and informational purposes only.  There is no offer or recommendation to buy or sell any security and no information contained here should be interpreted or construed as investment advice. Do you own due diligence as the information in this article is the opinion of Anthony M. Cherniawski and subject to change without notice.

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