The Three Scenes

The Long View - Monthly Candlesticks

The month of August has turned red, and if we had to compare the way that the markets trade on a monthly basis and apply it to daily trading we can see that the price right here is beginning to cut through the meat of the real body (green month for July) where it is more than 50% through the candlestick that was printed for last month.  If the past is any indication of what is to come there is a probability that we will finish off the month cutting through three or four candles length/height.  I know that may seem extreme but the candle sizes are getting bigger as the Bears begin to pick up in intensity, the can often average very tall candles.  1803 is a critical support point on this time frame.  In two points of view it can be gathered that price has the potential of drifting down to 2028 because that was the printed low took place on November last year.  [Election Bottoming Formation] in all reality reaching a nearly 17% drop is not without precedent but given the risk associated with the macroenvironment it is becoming more possible.  Reactions are coming from political headlines  On the other hand a 6-7% upwsing would bring the S&P 500 to 2600. 

The 50 period moving average comes to 2051 and that is near the election bottom as well. The institutional or aggressive buyers are placed at around the yellow arrows which you can also see on the weekly chart.  

The Medium Term - Weekly Candlesticks

225 and 50 Period Moving Average

These candlesticks give a lot more definition and the 225 moving average shaded in blue is lot closer.  The 50 period moving average is a lot more useful as a reference here.  The target set here is more of a maximum exhaustion point for the sellers, and probably a worst case scenario.  (Support 1) A mean reversion back to 2309.  (Support 2 ) a return back to the November bottoming formation and that is as far as the trendline extends.   

The Next 10 Trading Sessions

The institutions that are unloading their shares are definitely not buying as buyers dictate the market.  They are leaving their footprints with volume spikes.  Cash raising is what happens gradually and on each of the blue vertical lines I have indicated the days when volume goes up with a decline in price and that is confirmatory. For instance today's volume spike happened with 2.22167 million contracts traded "Large Players" are at work in spite of the gap in volume that happened up until August 8th This led to a gradual decline in stocks but not all at once.  It would have been more obvious if institutions sold all at the same time.  The white box shaded from this week was crushed with this massive downside breakout. And the frequency of directionally down closes in price are happening as well as ranges beginning to widening out.  In these past two Thursdays [8/10 and 8/17] the ranges were 41.5 and 44.75!  Compare that to the average daily range from Aug 15 and 16 at 12.875 per day.  "The Market takes the staircase up and elevator down" well the velocity of each decline expressed here is beginning to be more than 2x greater that each respective ascent.