MV Weather Report: Baidu, Tech Hit Strong Headwinds
Rain or shine, we review the day's biggest stock stories.
It was a slow day on Wall Street as earnings reports dominated the headlines.
Technology was the big loser on the day as the Nasdaq shed -1.20%. The weakness was thanks to poor earnings guidance by Baidu (BIDU), as the stock was down -11.39% on the day. The poor news from Baidu was also an excuse for investors to take profits in big winners like Apple (AAPL) -2.52%, Amazon (AMZN) -2.06% and Google (GOOG) -1.07%.
It was a choppy ride for the broad market, as the S&P 500 closed lower by -0.33% to 1063 right near the day's low.
Today on the Buzz and Banter, Professor Jeff Cooper gave his play by play to readers.
If the S&P stabs back through the ORB at around 1067 and sticks, it may trigger an ORB Reversal signal which suggests a test of the day high.
I think it is ironic that many of the well know Papa Bears threw in their towels, porridge, and fur right near the top in mid October.
It is also interesting that the peak for the move, if that's what we witnessed, occurred on October 19th, the date of the crash in 1987. The market may be said to have 'crashed up' into October 19th this year. 1987 was 22 years ago and as shown recently on a square of 9 chart 22 is 'square' or 90 degrees from the date of October 18th. Happenstance?
Later in the day, Professor Mike Paulenoff, filled readers in on the potential dangerous set up forming in the S&P 500.
Although the equity markets really are not doing much, I feel very uptight right now. Why? Take a look at the enclosed daily chart of the S&P 500. Let's notice that today marks the third session of weakness, and the decline has pressed slightly beneath the rising 20 DMA (now at 1070) AND, more importantly, is testing -- perhaps leaning against -- the Jul-Oct up trendline (1061.80).
So why am I so uptight? Well, in such circumstances, given the juxtaposition of the SPX and the above-mentioned important support factors, the market EITHER will ricochet off of the lines with power, or BREAK BELOW THEM, thereby triggering a potentially nasty decline (another 20 S&P points for starters). I really do not know which scenario to expect right now, but the bears have control of near term market direction, so I will go with a BREAKDOWN that violates the Jul-Oct trendline on the way to 1045/40 next.
Click to enlarge
The short trade was discussed here last night and I still believe there could be room to the downside due to a short-term dollar bounce and earnings season. But just like the bull camp was crowded a few weeks ago, it seems like the bear camp is starting to get there as well.
Heads up tomorrow morning, Norway's central bank is expected to raise rates at 9 am ET. It could have an impact on currency markets.
Have a great night.
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