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Danville

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A fifth straight session of declines for the S&P500 and the Dow Jones on Friday on concerns about the growth outlook and reduced central bank stimulus. The S&P500 fell -1.7% for the week reaffirming September's reputation as the weakest month of the year, closing at 4459 (-0.77%). The Nasdaq closed at 15441 (-0.77%) while the Dow Jones closed 272 points lower at 34608. Our base case is for the correction in the S&P500 to test and hold trend channel support 4435 area before the uptrend resumes. However, should the S&P see a sustained break and close much below 4435ish, a deeper decline into the 4300/4250 support area is possible.

 

 

The ASX200 closed 37 points higher on Friday at 7406 after testing resistance, formerly support, 7440/30 area. Likely, a lot of the buying seen on dips earlier last week (and the week before) was related to the $30b of dividends announced during reporting season. As soon as a stock goes ex-dividend, fund manager buys ASX200 futures to avoid tracking issues. Signs of basing/stabilisation ahead of trend channel support 7320/00 area would be an initial indication the correction is complete, before a resumption of the uptrend. Aware that should this fail to materialise, further falls towards the next area of support at 7200 is likely underway. The ASX200 is expected to open 57 points lower this morning at 7350. Resistance on the day is expected at 7390, and support viewed at 7320.

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US CPI data tonight, there is plenty of event risk in the coming weeks, including the deadline for the budget draft deadline (September 15th), the FOMC meeting (September 22nd), the infrastructure deadline (September 27th) as well as the debt ceiling expiration (September 30th). Providing the S&P500 remain above trend channel support at 4435 allow for a rally towards 4600. Keeping in mind a sustained break and close much below 4435ish would warn that a deeper decline into the 4300/4250 support area is underway.

 

As noted in an article yesterday, while the ASX200 all but reached our long-standing pullback target 7320/00 last week, a break and daily close above resistance at 7450ish is needed to indicate the correction is complete and the uptrend has resumed. The ASX200 is expected to open 10 points lower this morning at 7415. Resistance on the day is expected at 7445, and support viewed at 7380

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In a resumption of last week’s September weakness, all three key us equity indices closed lower despite a softer than expected August inflation number that rose by just 0.3%, the lowest in 7 months. The S&P500 closed at 4443 (-0.57%), the Dow Jones closed 292 points lower at 34578, and the Nasdaq closed at 15383 (-0.33%). There are several key event risks in the coming weeks to keep the market on its toes, including the deadline for the budget draft deadline (September 15th), the FOMC meeting (September 22nd), the infrastructure deadline (September 27th) as well as the debt ceiling expiration (September 30th). Providing the S&P500 remains above trend channel support at 4435 on a closing basis allow for a rally towards 4600. Keeping in mind a sustained break and close much below 4435ish would warn that a deeper decline into the 4300/4250 support area is underway.

 

 

The ASX200 closed 12 points higher yesterday at 7437, again supported by the energy sector, which closed up almost 5%, and a dovish speech from RBA Governor Philip Lowe. As noted in an article on Monday, while the ASX200 all but reached our long-standing pullback target 7320/00 last week, a break and daily close above resistance at 7450ish is needed to indicate the correction is complete and the uptrend has resumed. Until then, allow for a retest of support at 7320/00. The ASX200 is expected to open 48 points lower this morning at 7388. Resistance on the day is expected at 7425, and support viewed at 7370.

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Composite Volume surpassed 10 billion shares for the third straight day on Tuesday. That may not seem like a big deal, but the last longer streak came in mid-June (five from 6/15-6/21).

 

 

 

2

 

Volume eclipsed 10 billion shares EVERY day in the first quarter. Not surprisingly, the greatest amount of volatility of 2021 occurred in the year's first three months, as well. The question is whether the increased participation now is just an aberration or the beginning of a new phase.

 

 

 

3

 

We typically don't see huge volume in a steady, non-volatile uptrend. As discussed yesterday, big one-day moves (especially big gains) have been missing lately: we haven’t seen a 1% SPX advance in 36 trading sessions now.

 

 

 

4

 

Small daily moves = low volatility = low volume = persistent uptrend. When that equilibrium gets disturbed, the trend can be threatened. In other words, if volume continues to rise, something will have to give.

 

 

 

5

 

And if that does change, we'll see it in the pattern work, too, but only after there's evidence of deterioration. That's slowly been happening. The latest bearish pattern downside target remains in play (4,410)…

 

 

 

6

 

But for now, the Bear Oscillator remains in the Tame Zone (0-3). Actually acquiring that target would push the indicator to the Elevated Risk area (4).

 

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U.S. stock indices closed in positive territory overnight spurred higher by a 3% rally in oil prices. The S&P500 closed at 4481 (0.85%), the Dow Jones closed 2937 points higher at 34814, and the Nasdaq closed at 15460 (+0.50%). There remains several key event risks left in September, including Friday nights quadruple witching for U.S. stocks, the FOMC meeting (September 22nd), the infrastructure deadline (September 27th) as well as the debt ceiling expiration (September 30th). Providing the S&P500 remains above trend channel support at 4435/25 on a closing basis allow for a rally towards 4600. Keeping in mind a sustained break and close much below 4435/25 it would warn that a deeper decline into the 4300/4250 support area is underway.

 

 

The ASX200 closed 12 points lower yesterday at 7417, as falls in the big three iron ore miners, BHP, RIO, and FMG offset gains from healthcare heavyweights CSL and Cochlear. As previously noted, while the ASX200 all but reached our long-standing pullback target 7320/00 last week, a break and daily close above resistance at 7450/70ish is needed to indicate the correction is complete and the uptrend has resumed. Until then, allow for a retest of support at 7320/00. The ASX200 is expected to open 36 points lower this morning at 7443. Resistance on the day is expected at 7460, and support viewed at 7400.

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The ASX is looking for 32 pts higher.

 

  • AUD +0.2% to 73.33 US cents
  • Bitcoin on bitstamp.net +3.6% to $US48,075
  • On Wall St: Dow 0.7% ; S&P 500 0.9% ; Nasdaq 0.8%
  • In New York: BHP +0.8% ; Rio +1.2% ; Atlassian +1.3%
  • In Europe: Stoxx 50 -1.1% ; FTSE -0.3% ; CAC -1% ; DAX -0.7%
  • Spot gold -0.7% to $US1792.36/oz
  • Brent crude +2.7% to $US75.56 a barrel
  • US oil +3.2% to $US72.68 a barrel
  • Iron ore -4.1% to $US116.65 a tonne
  • 2 year yield: US 0.21% ; Australia -0.01%
  • 5 year yield: US 0.80% ; Australia 0.59%
  • 10 year yield: US 1.30% ; Australia 1.20% ; Germany -0.31
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we discussed four criteria that would create a better set up:

 

 

“The SPX’s strongest rallies in 2021 have come from dips within the uptrend, not on breakouts. Thus, the best risk/reward set up would be seeing the SPX:

 

 

 

1. Drop to the bottom of the 2021 trading channel and hold – Good start

 

2. Seeing a bearish pattern form, FAIL and create a bear trap – Close

 

3. Visit and hold above the 50-Day MA – Good start

 

4. Drop from the Upper Bollinger Band to the Lower Bollinger Band, hold and reverse.” – Has not happened yet

 

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1. Drop to the bottom of the 2021 trading channel and hold.

 

The SPX continued lower from last week through this Tuesday, of course, and while the financial world was waiting for the that inevitable test of the 50-Day MA, the index FIRST came in contact with the upward trading channel. This has been as good – or perhaps even better than - the 50-Day in timing the market’s turns, especially since May.

 

 

 

Again, while not everyone sees this channel, the pattern adequately has captured the advance’s pace. And, thus far, said pace has remained constant. A change of character, i. e., a material slow down, would prompt a downside break.

 

2. Seeing a bearish pattern form, FAIL and create a bear trap.

 

 

 

As the decline extended through Tuesday, the 4,410-target looked like a real potential. Indeed, the downside objective remains alive for now, but the pattern has very little wiggle room to work with as of last night’s close. Immediate upside follow-through would void the bearish setup, a scenario we’ve grown quite accustomed to seeing in 2021.

 

3. Visit and hold above the 50-Day MA.

 

 

 

The 50-Day MA discussion has been pounded into our heads with every drawdown. And while we may be sick of hearing about it, the dip buying around the line has been a real phenomenon.

 

 

 

That being said, we need to realize that it's not always a quick one-day visit back to (or near) the line, even though that's been the case since June.

 

 

 

Last September and October saw strong breaks (red), which proved to be temporary, but buying as the line was FIRST hit didn’t help.

 

 

 

In February, March and May of this year, the SPX's first bounce from the line failed (yellow). Those instances provided a few scares before the real turn higher emerged.

 

4. Drop from the Upper Bollinger Band to the Lower Bollinger Band, hold and reverse.

 

 

 

This has NOT happened yet.

 

 

 

One reason is that as Volatility has increased from August’s exceedingly low levels, the lines (bands) have widened,. Does this mean we’re due for another - and bigger – drop before a real bid emerges

 

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seems the study lean towards " buy the dip" strategy . :unsure: imho ----if one wants to do it , used stoploss , that way you can catch the good entry with the manageable risk!! :)

 

 

 

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U.S. stock indices closed mostly lower ahead of tonight’s quadruple witching, despite U.S. retail sales unexpectedly rising in August. The S&P500 closed at 4474 (-0.16%), the Dow Jones closed 63 points lower at 34751, and the Nasdaq closed at 15516 (+0.08%). There remain several key event risks left in September, including tonight’s quadruple witching for U.S. options and futures, the FOMC meeting (September 22nd), the infrastructure deadline (September 27th) as well as the debt ceiling expiration (September 30th). Providing the S&P500 remains above trend channel support at 4435/25 (closing basis) allow for a rally towards 4600. Keeping in mind, a sustained break and close much below 4435/25 would warn that a deeper decline into the 4300/4250 support area is underway.

 

 

The ASX200 closed 43 points higher yesterday at 7460, led by the energy sector following strong gains in the price of crude oil. The ASX200’s close at 7460 is right in the middle of the 7450/70 resistance zone highlighted. A daily close above this resistance zone is needed to indicate the correction from the 7632 high is complete, and the uptrend has resumed. Until then, allow for a retest of support at 7320/00. The ASX200 is expected to open 15 points lower this morning at 7445. Resistance on the day is expected at 7470, and support viewed at 7410.

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Instinet's US trading algorithms have been updated to account for multiple index rebalances including S&P, NASDAQ and Russell. Historically on such days we see higher than average volume proportions in the opening and closing auctions, and continuous market volume tilted more toward the close.

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witching day!! :o:unsure:

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The S&P500 closed below trend channel support at 4435/25 and if the break is confirmed tonight on a closing basis, it indicates a deeper corrective pullback into the 4300/4250 support area is underway. Aware that a break and daily close back above last week’s high at 4486 is needed to negate the deteriorating technical backdrop.

 

 

The ASX200 closed 56 points lower on Friday at 7403, with 35 of those points coming from BHP, RIO, and Fortescue, following another sharp fall in the iron ore price. The ASX200 is expected to open 89 points lower this morning at 7312. Resistance on the day is expected at 7370, and support viewed at 7300. Should signs of basing emerge near 7300, it would be an initial sign the correction from the 7632.8 high is maturing, although a break and daily close above 7470 is needed to confirm the basing and the uptrend has resumed. Aware that should the 7300 support zone give way, the next level of support is not until 7200.

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