Sunday, May 23, 2010

Time Travel

The market's behavior on Friday was spectacular.  SPX started the making a low at 1056 and FAS at 20.88.  After reaching a high of 24.53 at 8.51 FAS started a steady decline all the way to 12.15 and reached a low of 22.93 at 3.17.  It then took off and closed at 24.45.  It took roughly 3.5 hours to decline 1.6 and it took less than 45 minuts to climb back to almost same levels.  The point I have been observing is if a large number of candles produce only a small decline or rally then a small number of candles will do the opposite.  It was a intra day reversal with a HH and LL and therein lies a problem I wasn't able to find bottom that happened with an intraday reversal. That is a negative It was a positive DKOD day for FAS meaning we should have 1 - 5 days of rally ( it used to be 2-7) .The Channel-1 and Channel-2 charts are both SPX daily.  I have two different configurations.  They are both at or slightly below their channel bottom lines.  The channel - 2 chart shows SPX forming nice parallelogram.  The timing days are unbelievably symmetrical.  10 days from top to top.  10 days from a top to next bottom.  The black arrow is at 1095.  I did not buy this rally on Friday at all.  It is situation rally pertaining to OPEX.  It should die out in a couple days.  The low of the day close on Thursday played out well.  It is 100% for rally on the day following a low close day.  Usually big intraday reversals are followed by inside days.  As of now IMO we should get a 2-3 candles to take us to 1095 and start the decline again.  May be a little more ferociously
I have also included RUT charts.  Daily and weekly.  The daily chart displays Gann 4 failure that accelerates the move.  We should see faster declines in  RUT in coming days.  The weekly chart (a must for any Gann person) shows the formation of very even decline channel.  It should now move towards the 1x2 line at around 560- 570.  All in all I am bearish but I will wait for confirmation before I jump in and short FAS or TNA. 

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