Watchlist: 12/2 Searching for Support

Market Notes:

Yesterday the markets opened on a positive note and held much of the gains through lunchtime. Then came the inevitable first “Omicron” variant case recorded in the US. Once news broke the market plunged, giving up all of the day’s gains and then some.

We all knew there would be Omicron cases in the US. That news was not a surprise. But the market remains highly sensitive to the news cycle. I said this on Tuesday and again yesterday. This is a time for caution.

Since the market is positioned to fall I went looking for support. I want to know when the most likely time for a reversal is.

SPY 1-week candles – Chart via thinkorswim

Since the market has been on a tear for over a year I pulled back to the three-year view using weekly candles. From this view, it’s clear, the SPY has been grinding up inside of a channel ever since the pandemic crash of March 2020.

Here’s the same line on the daily candle chart:

SPY 1-day candles – Chart via thinkorswim

Next, I looked to see if the market is oversold yet…

At the close yesterday, only 23% of stocks were trading above their 50-day moving average. About 35% were above their 200-day moving averages. Historically 10% is the lowest these figures go. So no oversold signal there just yet.

The put-to-call ratio and RSI are still at neutral levels. The market’s not at any major level of support … So there could be more downside still to come.

If the SPY reaches $440 I’ll start buying. But I’m waiting for indications that the bottom is in. And I haven’t seen those yet.

But I’m not scared of a crash at this point either. Everything appears to be in line with a technical shake-out.

Futures are up again this morning … But the market could tank again on more news.

I’m still holding my positions and have cash on the sidelines. I’m risk off until there’s a reason to change. Stay tuned to my daily notes and I’ll let you know when I’m turning bullish again.

Watchlist:

*Low Float

*APRN has support at $10
*SRTS is on watch
*ESSC is on watch
*YQ has support at $1.70 (I bought yesterday, average cost $1.83, risk off of $1.70)
CARS has support at $16
MCRB has support at $10
ABUS has resistance at $5.50

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