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Sunday, August 15, 2010

A rally from current levels is probable

Except for the Monday when SPX went up 6 points it has been down rest of the week and finally ending the week at low day at 1079 but not at low of the week.  Friday was an inside day.  Many of the indicators have turned bearish and add to that the Hindenburg Omen also got turned on   Thursday.  It points out that the probability of a good size hit are much higher now than before. We had a positive DKOD on bullish ETFs on Thursday that has not matured yet and the closing at the low of the day on Friday is very positive. I have hourly, daily, weekly and monthly chars on SPX.  The hourly points that a parallel line support is very close.  While some percentage decline numbers are not exact they very close to short
term bottom. The daily chart has a 22 day cycle that is complete.  which is pointing to a bottom.  The low at 1079 is very close to a 42% decline for the rally from 1010 to 1129. The 50% mark is at 1070.
This may not be THE bottom pretty darn close to A bottom. Looking at the weekly chart the red trend line is parallel to the low 666 to 1220 hi line.  The low there also points to 1070 for support anything below will be a break to the down side.
The monthly chart so far shows a higher high and a higher low which is positive.  The trendline support is around 1035.  There 13 more trading days in the month. A lower low in the monthly will be an intra month reversal.  In the rally phase there are lots of intra month reversals to the upside  but once a decline starts they are very rare. The probability that we will see spx lower than 1010 is quite low for this month.
This is opex option expiration week.  The end of the week is opposite of beginning of week. Slightly over 55% probability.  
The TNA hourly chart is very close to the mid line of the Andrews fork. At 34.3 it will close to 88% decline of the rally from 32.5 to 47.8 that we found earlier was usually a good point to bounce. 
The TZA is bumping against the trendline resistance and is probable that could be turned back.   All in all I am bullish and will play the DMRM. My bull/bear ishnes is always short term.  I have a tough time forecasting any more than short term and as such I play short term only.

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