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Wednesday, August 25, 2010

Working towards intra month reversal ?

SPX and the markets did not behave right at all from the beginning.  There was not a hint of bullishness.  It started out down deep and after the Philly number made the low of the day at 7.03 and rallied till 11.43  followed by a decline till 1.56 and had a final rally till 3.26 and finally closed down 15.5 points at 1051.87.  I have given the times of day to get an idea of trading peaks during the day.  This 1051 is very close to an all important 1044 level where we  bottomed at the 5th of Feb. and at 1040 on 25th of May and at 1042 on 8th of June.  I have always felt market finds lows at previous tops and highs near previous lows.  Given that IMO the 1040 will be breached and quite soon.
The full moon today didn't do much for the markets.  The low of the day is not a next day phenomenon.  It simply points to the extreme condition that are prevailing in the market and a counter rally probability of higher prices in very near future at very high levels.  None the less todays performance was pitiful.  None of the reasons panned out to produce a plus result.  Simply put it was a wrong call. 



  The first chart is $rut.  These are Dino's high to low parallel lines.  So Far it is inside an outer channel.  If what we know is only 50% ( I believe that) the next 50% is the lower channel that would be quite horrific.  I said on Monday I expect serious declines to happen very shortly. The next is TNA and poor TNA can't get anything going any rally is crushed. The bottom of the lower channel is now around 27.  The third is SPX  and support is around 1032.  My sense is we will go much lower than that.  1010 was the low from July if that is taken out we would have our first intra month reversal to the downside since Jan 2009. Not a positive sign at all. The last chart is also SPX but over a longer time period horizon.  The red trendline was broken today that is definitely not a good thing.  The blue trendline is my D2PL and support on that line is at 1032.  SPX is not too far from that. Any rally at this point say 20 points on SPX should be treated as a opportunity to short.  The market is extremely week and gaps are appearing that may not be filled for a while.  The rain drops are showing next will be water fall.  I wasn't quite sure how today's full moon would work it didn't.  Next big day is Aug. 26th could be a temporary bottom.  I am bearish and this is no time to pussyfoot around. I will short judiciously.
 

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