Green gap started the day. No surprise there as a knee jerk reactions from yesterday’s big down day should be expected. News-wise the Italian bond sales went through and thus boosted confidence.
I was away in the morning for my son’s field trip, but the green gap was filled in an orderly fashion. Unfortunately, the all-too-familiar intraday reversal seemed to have come back. We finished above the 200 day EMA (magenta line on the daily chart below). And once again, my target of 50 day EMA (bold olive line) failed to reach. Why?! November 1st’s jaw dropping dip failed to reach the 50 EMA and ended up costing me 5.26% as the market reversed. I seriously hope this time it at least reach it, if not break it! I am not sure why the market bounced just before reaching the 50 EMA both times; I couldn’t find any support at either bounce points (PS. the bold green trend line was drawn after the fact).
I mentioned about a risk of the market forming a symmetric triangle or wedge. I now show it in bold green lines. Tomorrow is going to be crucial in deciding if the wedge is here to stay. If it does, the bulls have a good odds of enjoying the continuation of up-trend. Given that the MACD had crossed over, the bears should be some chance of breaking the wedge.
Now what was I referring to as an encouraging sign for the bears? It’s the $BPCOMP. I like to use $BPCOMP instead of $BPSPX because I’ve always looked at it (but failed to use it this time since October as it was preempted by this other proprietary indicator) and its signals always seem cleaner. Today it’s finally flashing a sell signal! Well, the 10 EMA has not been crossed but the SAR indicator is showing an early sell indication. Bears, please don’t choke!
Portfolio Value: $126,500