NDX dipped below 7162 and QQQ dipped below 174.05. These lines were the last secure lines we could have expected to provide standard support (Alt1link) for the technological sector. Additionally SPX lost 2809 with strength (Alt1link).
For the close after hours market is facing all what we could give; SPY is closing at 276.09 (Altlink2); QQQ is at 169.86 (Altlink2) while SPX futures are at 2769, too close to 2760 (Altlink2).
So please allow me to tell you that we should be relieved with today’s levels, but there is something that is extremely worrisome and is the fact that IWM is crushing every short term support (Altlink2). We had already observed that IWM had met its long term target off 2009 lows, so we should not pay attention to this and trade SPX and NDX without even looking at Small Caps but the action out there is very disturbing. While IWM was above 160 I still calculated probabilities for this ETF to meet 178, but with today’s action that target became extremely doubtful.
So, why did we stay long until here? Well, I still was trying to get 2905 to trim positions, specially on AAPL that was holding very well, I truly thought AAPL could hit 231 if we could get 2905, so I had my eyes on it.
As we mentioned, the market has hit all levels we could allow, so if for a moment we assume market met a bottom line today, we will put targets at 3009 for SPX and 194. I want to stress that while market can extend above 3009, believe me when I tell you, the return does not worth the risk.
Finally, please have in mind, we have over weighted the strongest management money can buy. $AAPL, $MSFT, $QQQ, $AMZN, $FB, $BA.
Indications for a bottom:
$BPSX is truly oversold, could go lower, yes, maybe to 10 line, but rarely hits that low and usually marks a multi month bottom period.
Volatility weekly: Implied volatility is looking decent, while inverted volatility still could price additional fear. Indexes can’t allow more downside based on wave counts, so a pike down probably make us rework our counts to another c wave up off February lows that points to 3150; but that would only apply if we hit 2738 and bounce back above 2780 with significant risk at 3022. Too much risk at 3022 if this count plays out. Fibonaccis here (Altlink3)
Volatility daily: All values are supportive for a bottom.
Moores’ 2CP is at 29.6
Princely’s ONE/VXO, daily is at reversal area. Additionally stochastics on all indexes has met lower levels.
Market Mood models from Dr. Cari: Today’s big move day panned out, and it was also a down day. Tomorrow’s MMI is also close down, but is likely to be a consolidation day. Friday remains uncertain and the preliminary for the weekend is looking up so far. The MAM signal of a major low 10/11-18 is confirmed.
Oct 10 15:48:28
For a while now, we’ve been looking for a low in October. A close below 2850 today will confirm the MAM signal of a major low between 10/11 and 10/18.
Oct 10 11:49:50
While from the outside could be considered we are only watching market to fall apart, reality is speculators could write many counts here and is the work of an analyst to send analysis, but my duty is to tell the levels until now broken don’t imply the end of the markets.
Based on long term charts, I reaffirm you, this is not the end for SPX and observing DJI, considering entire price structure, probabilities for the high to have been hit, are dramatically lower (Altlink5). Targets 3009 for SPX and 194 for QQQ
Have a nice day.
Carlos – Many thanks to Joel Withun
Seeking Options Team
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