Do Equities Have New Tricks or Are They Ready To Roll Over?

November 2nd, 2009 Posted in Uncategorized

Good morning Traders

I hope you enjoyed and survived the Halloween Weekend. And how about them Yankees?! The best team money can buy is on the door step of another World Series.

Speaking of what money can buy, CIT is declaring bankrupt this morning. What this means to me is that Tax Payers bought and have now realized $2.3 BILLION in losses. Thank God (or whomever you thank) that our Leaders turned CIT away when they came looking for more money just a few months ago. But why didn't they see this before giving them $2.3B?

Anyway, it seemed fitting that equities posted a frightful broad based decline Friday ahead of Saturday's trick or treat holiday. On the week, equities dropped anywhere from 4 to 6% depending on which market you follow. Friday's decline was the greatest one day drop since April.

In regards to my weekly trading numbers, Friday close represented the second consecutive week that equity index futures (as well as cash indexes) trade below and closed below their weekly Pivots. This is a very bearish signal and has been fairly accurate since I started calculating these numbers on a regular basis 3 plus years ago.

So are equities ready to rollover?

Yes, if my work is correct. However, I feel we may see another bounce higher, like today for example. As I write this ES Z9 is +6 higher trading at 1039. Plus 6 isn't really much of a move higher but it's evidence that the Bulls are going away without a fight. The week to week trend is now bearish. The uptrend has been broken so instead buying dips, I'll be looking to sell rallies.

As I've mentioned over and over again, the key to much of what's going to happen and what has happened is the movement of  the Dollar. DX Z9 rallied approximately $0.875 last week to close at $76.475. I also mentioned that it looks like this market has bottomed and may be making a move to $78. If this happens, equities will be vulnerable.

This week brings us a slew of information on interest rates around the world. The FOMC will meet starting Tuesday for a two day meeting. Also, out with interest rate decision will be the BOE and the ECB on Thursday.

Another report that will Friday's Employment report. Expectations are for a lost of about 160K jobs. Sooner or later this "lagging indicator" has to become a primary focus.

This Week's Pivots are:

ES Z9 1055.53; NQ Z9 1710.70; YM Z9 9810.67; TF Z9 579.90

If you're interested in receiving the complete version of my pivot and trading levels via email please contact me at ruria@manducatrading.com or call toll free at 866.312.4965.