Monday, October 13, 2014
Liquidation
That was a complete wipe out in the final hour. Back to back to back panic days in the closing hour. You don't see that too often. It is now turning into risk management mode for the funds, and with the increased volatility, they are reducing long positions. That is how you get these tidal waves of selling. We are very close to what I view as extremely strong support in SPX 1855-1860 area, which is around ES 1850-1855. There is not much downside left unless we have an outright stock market crash. Reduced some of the long position in ES to manage risk, but still long.
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2 comments:
Hi MO, how useful/important is 200 day SMA? Looking at the SPX chart, breaching below 200-SMA was indeed rare and once below, there was another 5%+ decline, followed by very volatile phase. Is this observation correct?
I think market action is reinforcing QE end trade, although economy is no doubt stronger than the past few years. Unless, economy is perhaps peaking.
There is no reliable pattern when in comes to breaking thhe 200 day MA. It does look like we will be going even lower this week, probably down to SPX 1850, where there is gigantic support.
Yes, QE end trade is making sentiment worse, but I don't think thats a factor because bond yields are so low anyway, even w/o QE.
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