S&P 500: Program Trading From Big Guys Responsible For The Swings

Another day full of pattern failures. US Q4 GDP should be terrible. What was really surprising is how jobless claims came in at “unchanged”. Are you serious? Is this a joke? How is that possible? They won’t get away with “unchanged” in next week’s report. But first, we have several reports out tomorrow (Friday) morning, including personal income and U. Mich. Consumer Sentiment.

So, despite the negative economic news, we still gapped up significantly but sold off immediately (”sell the news”). Then S&P 500 (^GSPC) drifted down and hit support at 940 at the gap’s opening, then gave off a reactionary rally, and finally dropped down to yesterday’s close (aka the highly-reliable WTF pattern). That proved to be enough support as we formed an inverse head and shoulders (or the bat formation) and rallied as close as we could to this morning’s high before breaking down. We again found support at this morning’s gap opening and was just about to breakdown until…”WTF” showed up again in the last 10 minutes of trading.

We’re in a long consolidation range and don’t seem to be going anywhere, but on the 3-day chart, we formed what looks like a cup with handle pattern. The 6-month chart shows that we’re still not comfortably out of bear territory and that we’re still testing the 20-day MA. Even though volume is light, it is now obvious and clear that program trading from the guys with some big dough are responsible for the swings. What else could you expect from a market that is not as liquid as before?

S&P 500 1-day

S&P 500 3-day

S&P 500 10-day

S&P 500 6-month

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