Yesterday’s (Thursday) red close was the longest consecutive losing streak for the S&P 500 (8-days) since October of 2008 & today marked the 9th consecutive day of losses as the S&P 500 once again closed lower (along with all the Nasdaq, Dow Jones Industrials, & every other major large cap index) following a very feeble attempt for the markets to rally, with the major averages going green through most of the trading session only to be hit with selling into the close erase all of the earlier gains & then some.

Nothing has changed in my near-term & intermediate-term outlook for the market other than the fact that today’s failed attempt at a rally only further affirms the bearish case with all major US indices closing well below the recent “flashpoint” critical support levels. Although the selling, at least in duration with 9 consecutive red closes, has been the most persistent drop since the vicious bear market of 2008, the selling has also been somewhat surprisingly controlled so far. “So far” is the operative word as it is fairly common for a significant correction to start gradually until it reaches the point where the panic selling & waterfall-type selloff kicks in, such as was the case in mid-to-late August 2015 & early 2016.

Bottom-line, although anything is possible, it still appears to me that the US equity markets still have more downside before any meaningful counter-trend rally or lasting trend reversal. My best guess (based on analysis of the charts) is that the Nasdaq 100 has at least another 1½-2½% downside before any meaningful reaction. I’ll be leaving town shortly, returning Sunday evening & will do my best to post any significant market developments that I might have missed if I get the chance to study the charts over the weekend but as of now, I still believe that the R/R is still clearly skewed to the downside at this time.

For those members that don’t have the time to catch up on all the trading room comments, I’ve pasted some of the comments & replies that I posted within the trading room today. There were also several trade setups & market analysis posted by other members which are certainly worth checking out if you get the time. For those with limited time to catch up & sort through all of the activity in the trading room, consider utilizing the “Follow” feature, which allows you to follow me or any other members whose commentary, analysis & trade ideas that you find useful. The ability to filter the trading room posts to view only the activity from those who you have selected to follow helps to streamline the content & makes for a more efficient way to quickly catch up on the lastest posts from other members that you have selected to follow. More on the “Follow” feature can be found under the Trading Room Tutorials located on the sidebar within the trading room.

Have a great weekend!  -Randy Phinney

Miscellaneous Trading Room Commentary Posted Throughout Today’s Trading Session:

rsotc posted a new activity comment 2 hours ago

Yes. DNN is holding just above the late 2015/early 2016 lows which is a pretty significant support level. However, when I look at the weekly chart, I think the most likely scenario (and one in which I would consider going long) would be a relatively minor break below those lows, taking the stock to new multi-year (or all-time?) lows, which would serve to shake out a lot of the weak-handed longs & draw in some more shorts, thereby setting up the potential for a lasting trend reversal & bottom in the stock. That would also put in some nice bullish divergences on the weekly chart, assuming that the new low doesn’t take to stock too far where the current potential bullish divergences would be negated or “burned through”.

rsotc posted a new activity comment 2 hours ago

Teeps- WB has minor R around 48.50 so a bounce to just shy of that level seems like an objective area to add to a short position. A break below 43.90 would also be an objective add-on level as that could be a catalyst for a move down to T2 or T3.

rsotc posted a new activity comment 3 hours ago

Funny, I just replied to these comments on the uranium stocks from another member via private message about 30 minutes ago:

Q: CCJ reported earnings yesterday. They were quite good. The spot price is getting all the headlines but most production is committed to longer term contracts at prices way above spot. Volume/divergences etc seem to suggest the bottom is in. My watch list for the sector is small as very few have survived. URG is my favorite…small producer. Well run. Very low cost. DML has a large percentage in a Mill and a world class developing deposit. FCU and NXE both have world class deposits. UUUU gets a lot of attention but seems a bit more of a promotion story to me. …

My Reply: Thx. I just glanced all of those charts as well as URA (etf). Definitely the potential for a possible bottom in the charts but still some work to be done to firm up the bullish case on. I’ll do my best to keep them on my radar but please keep me posted if you see any movement or developments in with the uranium stocks. (end reply)

Bottom-line: I see the potential for long-side trades in the uranium stocks but can’t make a strong enough case to go long just yet. I’d rather miss a little of move up from here while waiting for the charts to firm up & confirm an entry than go long too early & tie up funds in what could be a dead-money (sideways) trade for weeks or months with an increased chance of being stopped out.

Is it strange that the small caps IWM have been outperforming larger indexes QQQ and SPY for example

rsotc replied 5 hours ago

  • Not really IMO. This is simply the expected reaction off the first tag of major support/downside target that I’ve been highlighting for months now.. Small cap were much more oversold & fell a lot more than the large caps so this is simply an oversold-off-support bounce that probably won’t go very far or last more than a few sessions IMO. I’ll post the charts on the front page as I probably should have highlighted that in the recent broad market updates.

    Thanks for the response Randy! With that in mind would you suggest waiting til next week to add to iwm puts ?or grab on the little bounce

    rsotc replied 4 hours ago

    • I know there is a natural inclination not to short after the market has just experienced the biggest drop in many months & is at oversold reading all the way out to the daily time frames.
      With that being said, I have one sell signal after another on the daily (intermediate-term) time frames flipping from bullish to bearish recently & from my experience with so many variables taken into account that it would be hard to list them all (including gut fell or intuition), I do think that it shorting any bounce at this time, such as that on IWM today, is objective.
      Always keep in mind the benefits of scaling in vs. going all-in short. Short a little IWM today, a little more on Monday whether the market is higher or lower.. continuing to add either on strength or weakness UNLESS the major indices (SPX, NDX, WLSH, etc..) take back those critical/flashpoint supports on a SOLID daily close, or even 2-consecutive daily closes, above those levels.
      Those levels are a mere 1% above where the SPX & NDX is trading now so to put that into perspective, you are risking, say 2% or so (giving an extra 1% margin above those levels on your stops) to make what could likely be 10 or even 20% or more, should the bearish developments on the daily & weekly charts begin to play out as expected.


pkm48193 posted an update 5 hours ago

There were some very impulsive moves this morning. GDEN dropped to 8.68, way below final target, and bounced back up to 10.11

rsotc replied 5 hours ago

  • GDEN is a good example of both a momentum overshoot of support as well as how opening order imbalances can cause a stock to overshoot the level of where the “natural” equilibrium price between buyers & sellers is.
    I’d have to assume it was an earning miss or bad forward guidance that caused the gap but as I often say; more often than not, if the charts of a stock are clearly bullish or bearish (as was the case with GDEN), the odds favor that any earnings induced gaps will go in the direction indicated by the charts.
    Following the opening gap & overshoot of support (T2), as soon as the order imbalances (too many sell orders vs. buy orders at the open) were absorbed, the stock snapped back to the well-defined support (9.57 is the actual level where the support line was drawn on the chart that I covered in the Casino stocks video) & has bounced from there.
    Essentially, if you exclude the opening order imbalances which were very rapidly absorbed, you simply have a stock gapping down & bouncing off resistance. Congrats if you caught it!


stock51 posted an update 5 hours ago

Randy, would u still short the Mkt going into Monday?

rsotc replied 5 hours ago

  • Absolutely.


stock51 posted an update 6 hours ago

Great number out of CARA up almost 20%

rsotc replied 6 hours ago

  • CARA has potential from a fundamental & technical perspective as a long-term hold. Nice pop on earnings & so far so good as they ran it down below the bottom of that triangle pattern (uptrend line) yesterday, quite possibly to run the stops, with the stock gapping up & holding above that trendline so far today.
    CARA still has some work to do to firm up the longer-term bullish outlook, with several resistance levels plus that key downtrend line/top of the triangle pattern but I plan to keep a core position tucked away unless stopped out (weekly close below triangle), adding to the position strategically on breaks of resistance and/or pullbacks to support.


russ66 November 4, 2016 6:10 am at 6:10 am

Casino ETF’s:

BJK (Van Eck Sectors Gaming ETF) is perhaps a more direct ETF than PEJ mentioned in video.
Volumes were small Nov 3/16: PEJ = 6878, BJK = 589.

rsotc November 4, 2016 10:07 am at 10:07 am

Perfect, thanks Russ. Here’s the weekly chart of BJK with some key levels. I’m going to take a look at the charts of the individual components asap & see if I can find any other casino stocks that stand out as trading opps. I’ve already had some very nice gains on a few of those from the video such as ERI & GDEN (gapping down below T2 today for a very swift & large profit). Thx again.


Jjyk21 November 3, 2016 9:53 pm at 9:53 pm

Randy, although broad market has taken some beating last couple of weeks, semis and some like AVGO been resillent. would semis continue to outperform while broad market continues to go down or would they play catch up and more?

rsotc November 4, 2016 9:21 am at 9:21 am

@Jjyk21 Assuming the broad market is headed much lower as I suspect, then I strongly favor the latter (semis playing catch-up to the downside by falling more than the broad market in the coming weeks & possibly months).