Marketpaths Nightly Report

From last night's update: I am expecting volume to start drying up after lunch Wednesday, as the big boyz leave the monkeys behind to run the show. This may make trading a little tough, as the tape will easily be pushed with little volume. If we see early weakness, they may just finish business on the downside and take the spx down to the 898-903 pivot zones.

If we see early strength, I am expecting it to be short lived and sellers will be waiting at 921-923 pivot zones, with an outside chance of stretching to the 926 pivot. I would use these levels to get short the bounce for the larger leg down to follow.

Review of previous night's notes and today's tape:  The spx took my bearish outlook from last nights update and spit it right back in my face. There was a plan in place and whatever the adp numbers were, the indexes would head higher. The original plan was for good numbers and a gap and run, but when the number were terrible, they had to switch to plan B. That was to bid the dropping futures back up and keep the buying pressure going until the shorts covered. Once they started covering, sell them the shares to cover.  

 Yesterday’s fall from the 930 level looked anything but corrective. I thought, as well as many others, whatever bounce that was pumped would lead to another leg down, taking out the lows from yesterday. What wasn’t expected was the push back up to the 932 level. That pretty much shut the door on any of my short term counts that I mentioned in last night’s update.  

We are in no mans land here where a push down to 860 or lower has the same odds as a move up to the 990 level. If the spx takes out the 956 level, the bulls will be in full control. If the bears can take out the 880 level, they will have full control. Until one of those levels is taken out, we have to stay in trade mode and be quick to take profits.  

The jobs report is due out Thursday and that should set the tone for trading. I would be surprised if the numbers are good, but wouldn’t be surprised if the decided to take the tape higher, even with a bad jobs number. Volume should be slim at best and that will make trading difficult.

Bottom line:  We are in no mans land here and it is best to wait for some more info from Mr. Market before making any big bets for either side.  

Mel’s Corner: This is going to be a new addition to our site for any members looking for the next day’s trend through a unique system designed by Mel. It will be an additional charge to our service if you would like to join and I will keep you in the loop when we are going to launch the ad on. In the meantime, I will post his technical trend indicator so you can track his results.

Numbers range from -20 thru 20. -3 thru 3 are "null" signals.

Negative numbers are bearish, positive numbers are bullish for the next trading day.

Mel’s trend finder indicator gave a -2 reading tonight, which is a neutral reading for the markets on Thursday.

Sentiment Indicator:  (contrarian indicators) The short term sentiment indicator (1-3 days) has moved back into the extreme bullish levels. The intermediate term (5-10 days) sentiment indicator has remains in neutral territory, coming away from extreme bullish levels. The longer term sentiment indicator (3-6 weeks) remains in neutral territory and still has plenty of room on the downside to reach bearish extremes.

Bottom line:  The short indicator is back to extreme bullish levels and should cause the tape to turn down in the coming hours/days.

"Smart Money" Trend The smart money hit the sell side pretty hard today during the early trading rally. There was a delayed reaction to the selling, but the tape did pull back towards the close.  

Bottom line:   The smart money continues to accumulate selling volume during this rally. It should affect the tape shortly.

For Tomorrow: I am expecting very little volume and I really am not expecting much for the day. But the jobs data is a wild card and could spark some type of move. Watch the 930-934 on the upside and 917-912 on the downside.



 ETF’s we trade:

Ultra S&P500 ProShares (NYSE: SSO)

Ultra Dow30 ProShares (NYSE: DDM)

Ultra QQQ ProShares (NYSE: QLD)

PS UTLRSHRT QQQ (NYSE: QID)

UltraShort S&P500 ProShares (NYSE: SDS)

UltraShort Dow30 ProShares (NYSE: DXD)

PowerShares QQQ Trust (NASDAQ: QQQQ)

Direxion Daily Small Cp Bear 3X (NYSE:TZA)

Direxion Daily Small Cp Bull 3X (NYSE:TNA)