Stock Market Viewpoint

Stock Market Viewpoint
Reading the Tea Leaves...

Wednesday, October 15, 2014

S&P: A Foot Slip Into The Bear's Den

Stock Market Technical Analysis

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In the market Wednesday, investors and the Fed got a quick taste of what the stock market would be like if the VXX starts trading above the 40.25 line.  The market took a wicked drop the moment the VXX crossed above it and traded at some scary numbers until they stepped in for the rescue into close, getting the VXX back below the 40.25 line.  As much as the Fed would like to end its tenure as keeper of the stock market, they learned quickly today how badly the S&P can get battered if the VXX crosses the 40.25 line, the entrance to "the bears den". Considering how the S&P was tossed around like a rag doll during the hours the VXX was above 40.25, we will definitely be watching to see if the Fed got religion Wednesday and makes this the beginning of a sustainable stock market bounce.  There is plenty to work with, hammer reversal candles printed on the week and day of the Indexes.  

With the beating the market took today, surely the Fed realizes that after pumping up a bubble in the stock market that they can't just wash their hands of it and disappear, they will have to do more than they have in the past two weeks with their incognito buying of the SPY and QQQ.  Hopefully the Fed came to realize that if they back off on their stealth purchasing of the SPY and QQQ at the same time they end QE that the market might crash hard.  They not only need to continue the SPY and QQQ purchasing program (asset re-inflation as Bernanke referred to it in his early tenure), they really need to step it up considering the selling deluge that keeps on coming.

Trade well my friends


PS  Here is a link to a very good in a nutshell article by Josh Brown
There she goes, my beautiful world

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