“IAM” is the online name of one of our professional trader friends who writes a respected private newsletter to be shared with just a few friends and colleagues. He lets us share the newsletter with you, our readers. We offer it to you largely unedited, so you can see how professionals think and what they talk about. All views belong to the writer.
This week the S&P closed at an extreme low. It rejected volume value high from the prior week and hardly caught it’s breath as the selling was released from a market that was coiled and ready to make a move. In extended trading and after the market closed, it dipped below the prior low the last time we came down in this price range. Quad-Witch was pretty harsh for the week.
All eyes will be on the Fed announcement Wednesday, December 16. The recent economic news left no substance for the move. In Radar’s opinion uncertainty and a vote of no confidence is in play. After six consecutive calendar years of higher broad-based increases in equity prices our current fully priced market needs to find a place to rest. Two steps forward and one step back would seem like a reasonable endeavor. 1966.25 would be our best guess. On the way below 2000 prior lows of 1983.50 is where support established itself, 1937’s/1932’s before that and 1913 and 1890. If we trade below 1932’s this week, email me at meee646@gmail.com and some more specific details can be provided.
Before a base camp can become respectable Radar likes to see six to eight days of a basing pattern and possibly a gap or strong move to separate. Friday we closed below value and a prior low.
For the Bulls to reestablish the pursuit of the promised/expected $127.23 eps for the S&P 500 12 months out, a rebuilding of confidence will need to show itself. For now it is looking for it. For Q4 analysts believe there will be a test of the market metal. A possible third quarter of lower earnings seem to be in the crystal balls, however the sage ones are still forecasting deferred delivery of those earnings. Yes, an extension of the earnings recession. Three stubborn quarters of stumbles where the global banking community is running into a credibility issue are an embarrassment. The greater problem appears to be the profligate spending of borrowed money, a massive accumulation of debt to do it and no sense of discipline. Now wonder the Cool Aid is losing its effectiveness.
Day-to-day trading will do its usual thing of probing for price points, testing/trying to extend value, and showing its statistical brilliance. Christmas may provide a reason for hope. I sure hope Santa hasn’t been stocking up on coal. I hear you may have to apply for a burning permit to use it and only on days of good air quality.