Tuesday, September 29, 2015

Bounce Due

The decline is in the 9th inning.  Time is now on the bull's side.  You are on day 8 of the selloff that started on Friday September 18, after the sell the news reaction to the dovish Fed.  The bears have used up most of their ammo.  The odds favor the bull side starting today.

We got the rout in biotechs, the favorites: Facebook, Amazon, etc. got hit hard yesterday, and we are close enough to the August 24 lows that you will get retest buyers coming out to buy.  You have crude oil much higher now than on August 24, and you have very few signs of FX stress as indicated by a strong euro or yen.  The VIX has also been quite tame, which tells you that the hedging demand for volatility has been satiated over the past several weeks.  The put/call ratios were at extreme highs yesterday as well.  It wasn't a perfect capitulation, but it is about as close as you will get in this liquidity overflowing market.

The market should be strong supported at SPX 1875-1880.  The overnight ES lows of 1861 should hold intraday.


MM111 said...

Good call MO. Did not go long however since many seem to be calling for lower still.

Market Owl said...

That's too bad, these kind of buying opportunities do not come often in the stock market. Still decent levels to get long here, IMO.