Prime Time

It truly does not get any bigger than this: The looming weekly close for the Russell 2000 Index at the primetime level of 1,082.

I have talked ad nauseam about this for good reason–The small cap weakness could easily presage something more ominous in the broad market this autumn and beyond.

As i write this, I see we are just below 1,082, thug marginally.

With declining 150-day and 200-day moving averages now well above price, I view a weekly close below 1,082 as confining a multi-quarter top, rendering any rallies as opportunities to sell.

As they say, the bigger the top the bigger the drop. Note how long the Russell has zigged and zagged…

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As I noted yesterday, even after the selling we have seen in equities this week the “X-factor” for further weakness could easily be a resurgent Japanese Yen.

Recall that the Yen typically moves inversely to global risk assets, namely equities, due to actual or perceived correlations to the “Yen Carry Trade.”

After massive buy volume yesterday, the Yen ETF, below, is pushing higher as we speak today.

While that is happening, equities are struggling to hold even a modest upside bounce.

If the Yen gathers more steam, I expect the Russell 2000 Index to lose major support at 1,082.

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https://www.youtube.com/watch?v=hfKIeCry_S8

My JO position is currently the biggest one I have in my 12631 Trading Service portfolio, which members have access to 24/7.

The coffee commodity is gapping much higher this morning and I am inclined to trade around it now and lock in partial gains. My original, core entry was down at $36.14.

Keep an eye on DNKN SBUX for pin action shorts

Elsewhere, watch that Japanese Yen for strength to see if it pressures equites.

Here was my note to members about coffee:

Sold 1/4 of 3/4 position Long $JO @ $39.86 from 36.14 core entry and $37.21 add to scale gains. 1/2 position left now. Stop raised to core entry. Taking advantage of opening gap higher after several days prior of rallying.

If you are looking for some (quick) support buys here, a good algorithm screen to have, courtesy of The PPT, is one I made called “12631 Quick Bounce Plays.”

In the screen, I am looking to isolate stocks with positive daily Hybrid PPT scores, but negative weekly ones.

Thus, they are ripe for a quick bounce as the momentum seems to be turning, if only for a bit. I also screen for PPT Relative Strength scores, as well as volume and % from 50 day moving average.

Members please click here to view and save the screen

Here are the readings as of Friday’s close. Remember, we are talking about short-term flips here, not high quality, multi-week swings. Keep those stop-losses in place.

(Click on image to enlarge)

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For you night owls out there, feel free to drop me any market/trading-related topics you would like me to cover in a weekend video.

In addition, anything else about the current market, feel free to drop below.

Speak your mind, night owls.

With the surge in buy volume on Wednesday in the Japanese Yen ETF, below on the daily timeframe, I am looking for a snapback rally to ensue in the beaten-down Yen. The ETF has had daily oversold RSI readings since August.

If the Yen rallies, the Dollar should come in a bit and ease pressure on some commodities, namely precious metals and miners. So, keep an eye on all these correlations tomorrow.

Drop me your tickers overnight.

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