June 18, 2019 12:41 PM RSS

Kick Them When They're Up, Kick Them When They're Down

  • Wall Street Rebel | Geoff Garbacz
  • 10/23/2018 9:08 PM
Kick Them When They're Up, Kick Them When They're Down
Repeat after me. Gap opens are bad. Gap downs are good. Yes, it may have hurt to see the S&P 500 down -2% as we got close to the open this morning. 

However, the S&P 500 put in the low for the day by 10:30 a.m. EDT and recovered to close down only -0.51% after being down -2% which was clearly a mental victory for bullish traders and a blow to the bears. Despite the recovery, the market failed to give investors the all clear signal.

The S&P 500 failed to closed above its intra-day support level at 2743.75 which we call the Erlanger Value Lines. This level is a key one that we follow very closely. The index did rise above that level until it failed in the last hour. The low for the day was 2691.43 on the S&P 500. This low was below the last one on October 11 which was 2713.29.

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Interesting to note the CBOE Volatility Index (VIX) only made it to 24.66 today while on October 11th it hit 28.84. In theory, when the S&P 500 goes to a lower level so to should the VIX. It did not which is a big tell that stocks may finally be ready to head higher.

The S&P 500 has now traded lower for 13 days and is up only 4 days in October. Such action action ties it with several other months since the fourth quarter of 2012 as the most number of down days in a month. 

Moreover, the S&P 500 has failed to close higher for 2 days in a row since September 20th. The last such streak was from November 10, 2015 to December 15, 2015. The action has been really ugly or as I call it "fugly". Can a turn be coming soon with such dismal statistics?

As we write tonight, the S&P 500 futures are lower by only -2.50 points while the Asian markets in early trading are mixed. Tomorrow is another key day to see if markets can begin to turn higher. 

Until then, adios amigos.

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