Stock Market Technical Analysis Blog
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We got hit with the first summer premarket smackdown this morning which has become the trademark of summer trading. This news driven premarket dump by WallStreet shown in the intraday chart posted at the top where I have drawn an arrow at the 4AM EST opening where WallStreet immediately came in and sold the SPY down all the way to the 930AM EST regular session opening. This power dump of the SPY was triggered by overnight news that the bank of Japan decided to not offer up any new QE measures. This announcement couldn't have come at a worst time as the TLT touched down to its lower channel line yesterday. It bounced up quickly from it today. You can see the one year downtrend in bonds (June to June) and with this morning's bounce triggered fears this might be the end of the downtrend. Also, it was widely assumed that this big neckline formation would break to the downside as the summer season begins.
The damage done by today's sell off was extensive and particularly harmful because so many indexes and key stocks were at Sentiment EMA pivot points. Unless they decide to have the first intervention tomorrow, which is also a frequent summer event, this will probably mark the beginning of the market going from a swing trading environment to a daytrading environment until the end of summer. Intraweek we are oversold, no doubt, but most traders are savvy as to when to stop trusting multiday hold setups and play intraday only until we see if there will be any patterns or channels develop this summer or if it will be day to day knockabout environment from premarket news.
Trade well my friends
Alan
