Thursday, April 29, 2010
Today's market opened with a bang and stayed there most of the day. My observation with cloud walk in FAS is it opens up with a gap and progressively gets better until about 11.30 then there is a sharp sell of usually temporary and FAS closes near the high of the day. There was a small window of opportunity at 7.10 and I jumped on it and got in at 104.5 and sold it at 109.5. Having lost some very good chances yesterday I wanted to lock in some profits. I am looking for a follow thru tomorrow. Many instances I have noticed this process can continue anywhere between 2- 11 days before a top is made. SPX did go above 1206 to 1209.36. Giving a plus sign. FAS closed at or above the DOMA 77 in 60, 30, 15 min charts but not very convincingly.
It is bullish but iffy. The problem was DOMA was not near the bottom but near the top. It took quite bit of move just to get to DOMA and after that there wasn't much steam left. I have drawn channels as an overlay on to the envelope to give a better picture of the turns. The midpoint of the channel is quite important level both in declines and advances. There are two immediate resistances one at top line of the channel and next at the top line of the envelope. They should give an indication of the follow thru. FAS did close positive and that is always bullish.
The second chart is FAS five minutes. I put it up to illustrate the violence that is followed by a calming top or a bottom. Mostly they are not a V formation. Both steep and flat take more than a day finish their jobs. The end of the month window dressing has one more day and if buyers show up to pretty up their portfolios we may get a new high. I will be watching DOMA and DMRM to look for follow thru. I will stay bullish as SPX is above the DMRM 1206. I have very little interest in looking at EW at this point may be a little later if the process of decline matures. .