SPX had a HH and LL and made a intraday reversal. This was expected as Friday was an inside day. Markets opened with a bang but a little after 7.00 am lost all the steam and started coming down for the rest of the day. A few minutes after 12 noon SPX reached the lowest point and made a half hearted rally to close at 1184. It was 11 points from the top and 7 from the bottom. Not particularly a bullish close but enough to scare the shorts. Now we have 2 big events back to back. Election tomorrow the markets should be dead and FOMC and election results on Wednesday.
Very probable tomorrow we will get a inside day after today's outside day. Wed. could be highly active day. My speculation for wed is FOMC should nullify whatever effect market is having because of election results. If it was positive because of election FOMC will be negative. or vice versa.
The chart on the left is hourly SPX. The accordion type parallel lines have not completely broken down yet but spx keeps hitting at the lower lines of the channels and sooner than later the green line support is going to vanish and it will be on the blue line, only to proceed to a undrawn red line. Currently 1117 is at the 50% retractiobn level. IMO thats where its going and that is not making me bullish.
The chart on the right is TNA hourly a proxy for RUT. It has clearly broken down and is on its way to 45. The median line generally a support has given away and we should see a little more momentum towards at least 45. It is also customary to backtest the median line.
IMO we should go a little lower than 49.80 old low back test fail and rush to 45 or lower. This is from previous observation and not predicting or wishful thinking. Heck if that doesn't happen and TNA turns around completely and makes a new high our signals would say so and I will be on the long side.
I am very bearish and the interpretation of the election results may be negative.