Hawk’s Scan Sentry Report November 5
Many traders expect the American stock market to drift without commitment one way or the other until after the US elections and then respond to the outcome of the election by charging up or down. Some bloggers are even trying to predict how the market will react if one or the other candidate wins. Personally, I do not see it as my job to predict the markets…. It is my job to be ready to meet the markets.
I don’t know how the market will react to the election results. I do know, however, that since our current president took office in 2009 the stock market has doubled in value. This is due in large part to the accommodative financial policies (free money to the bankers) of men like Bernanke and Geitner, who also worked with previous Republican administrations and, like so many of our treasury officials over the last several decades, came up through the ranks of Goldman Sachs and other large banks. The point is that Wall Street is heavily invested in both political parties, and the power brokers in the markets that we trade will likely have their way regardless of who lives in the White House.
The truth is that the wealthiest financial and corporate institutions have always looked for ways to buy influence in governance. It is just easier now. In the old days buying influence was called bribery and was patently illegal. Now it’s called ‘investing in politicians’ and ‘lobbying’ by Super PACs. Since the 2010 decree of five partisan Supreme Court justices that ‘corporations have the same constitutional rights as persons’ and as such ‘money represents speech in the political sphere’ (two notions that I believe our revolutionary founding fathers would wretch at) money has become a far more powerful influence on our electoral process. Have you noticed exponentially more political ads this year? I have. And the dangerous thing is, there is no transparency as to the source of that money. Some of our candidates were even hosting political fundraisers in foreign countries this election season!
Please excuse my digression… the point is that I don’t use politics to analyze the markets; I much prefer technical analysis. So how am I preparing to meet the coming markets? Well, my bearish orientation on the markets is unchanged from last week. Once again looking at the S&P eMini contract, we got a pullback into the Triple Trender as expected. The Radar 3 Trend Strength Index is still strongly bearish, and the Radar1 Fear/Greed indicator is indicating that there is quite a lot of selling compared to buying going on in this market at this time. As noted last week we are still looking for support at 1400, 1385 and 1365 and resistance around 1420 and 1460.
Although I am currently generally bearish (at least until we see signs of a “Santa Claus Rally”) I always look for opportunities in both directions. Below you will find daily charts from selections on my weekly watchlist with possibilities in both directions. As always, I do my best to explain the setups on these charts; but if you have any questions about any of the indicators on these charts please follow this link to a legend describing these tools.
_____Longs_____
AIZ
( A bullish Pullback 23 and Trend Exhaustion 1 signal at the up trendline. Note how this forms a bullish Pullback divergence in the Radar2 Price Leader.)
DWA
(This Pullback 23 signal coincides with a nice breakout of the resistance trendline. Note the recent pullback into the Triple Trender.)
FBC
(This Trend Exhaustion 123 is setting up to catch a breakout of the trendline at the recent highs .)
_____Shorts_____
PAG
(A breakdown from the up trendline following a bearish pivot divergence in Radar1 Fear/Greed. Beware, Radar3 Trend Strength is still bullish. )
GXP
(Radar 3 Trend Strength recently went bearish as the price breaks below the up trendline and all three Triple Trenders are now bearish. )
MDF
(Another Trend Exhaustion 3 signal accompanying a bearish pivot divergence with Radar1 Fear/Greed. Again, be careful, Radar 3 Trend Strength still shows strong bullishness.)
May the trend be with you,
Hawk
