Commentary: Paul Ebeling on Wall Street

$DIA, $SPY, $QQQ, $RUTX, $VXX

FLASH: Last week saw Wall Street participants taking profits, but the major indexes are still technically Neutral/Bullish overall.

The large cap growth indexes are solid enough in here, Friday sellers showed up for the 1st time in some time. They will see support and bounce and start this leg all over again.

Friday’s action could well have been an overreaction to the stories regarding a yield curve inversion. A run to the bank because, despite the Northside move, there is still lots of professional skepticism that this market cannot continue North.

Note: The 1st day of an inversion is not the start of the selling. The market peak comes 3, 4, 6 months or longer after the signal. And as for signals, the 3 month/10 year is not the pairing most indicative despite what the NY Fed claims. The 2 yr/10 year or 3 month/30 year are the Keys. That said, the 2/10 is just 22BP from each other. Not much room for maneuvering.

The large cap growth names that led the recent recovery and semiconductors look to be Key to a near term hold and recovery for the larger growth stocks.

The market is at 1 of those Key points near term.

The Big Q: Will the indices shake off the inversion cation and continue North, or will they test back to midpoint or the bottom of the October/December consolidation range, or will they fully correct to the December low?

Such questions always arise when we see market seller come in onvolume and at important marks. This is important, because Friday selling came with a reversal of a solid move up Thursday and overran it.

So, now we have to look at both sides of the action.

Look at some of the big name leaders to test to get some new or more positions. We also have to look for some Southside plays. SPY to the Southside could deliver some gain.

And look at the software stocks for good entries and positions right to make some money on any fall, they have been quiet for a while. If they fall, they could go deep and fast.

Plus, looking at the major indexes, if they can support level and rebound Wall Street will start to continue this rally to the September highs. 

Pay attention, remember it is your money and so, your responsibility.

The Bulls Vs The Bears

Sentiment

VIX: 16.48; +2.85 
VXN: 19.83; +3.24 
VXO: 17.26; +2.86 

Put/Call Ratio (PCR) CBOE: 0.89; +0.12

The Bulls & The Bears

We saw a bounce in Bullish sentiment last week, and a decline in the Bears.

The Bulls are at: 53.9 Vs 52.4 last

The Bears are at: 20.6 Vs 21.4 last

Support and Resistance

HeffX-LTN’s overall technical support and resistance outlook for the major Wall Street stock market indexes is Neutral to Bullish in here

Have a terrific week

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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