Tuesday, October 19, 2010

Is this it?

SPX made a LH and LL today which by itself is a negative for the mkts for tomorrow.  The range from hi to low was 19 points and spx closed only 6 points from the low of the day.  It closed in the negative.  RUT made a LH and LL and closed in the negative. It had a 17 point range and closed only 4 points higher from the bottom. The action today was quite violent. Markets opened down from a not so cozy earnings from Apple and unimpressive one from IBM.  After the housing report stocks made an attempt from little before 7 AM and stayed moderately high until a little after 10 am and then the decline started and accelerated towards the close.  The decline stopped around 12.30 and a meager rally took it to the close
IMO this is the break we have been waiting for.  Some kind of a news that triggers a violent action followed by a good size decline.  SPX and RUT are almost where they were 6 days ago. Several of my signals were turned on. SPX has declined 2% from the top.  The 10/20 sma cross on TNA is to the negative side. TNA crossed the DOMA 77 on the 60 minutes. We were coming off a DKOD. Several upward trend lines have been broken. All in all this spells trouble for the markets.  
For sure the markets will stage small rallies to consolidate unless we have a higher high I  will be bearish from now on and use all rallies to pick and choose shorts.  We are only on the first day of the decline.  Doubts about its validity and sustainability are fair.  All that is needed is a follow thru in next couple of days doesn't have to be tomorrow.   I suspect tomorrow would be an inside day.   
The chart on the left is SPX hourly. After hitting the low to high red line it has broken down and below the blue channel.  A nominal place to stop and rest would be 1125 before resuming the decline to 1070 or slightly above.  
1185 was the high, keeping it round 1080 is not a bad number to shoot for that would be 100 point decline.  If this is the hit I think it is then it shouldn't take the normal 2 weeks.  It should be faster.  The chart on the right is SPX daily and it echos the same readings.  Much depends on how tomorrow shapes up.  

The next two charts are TNA.  I use TNA as a proxy for RUT also because thats what I primarily trade these days. The blue on the right  is a daily chart where the channel that has held for a while has clearly broken down.  How far it goes and what type of a hit it will be is subject to guesstimation and I will be content if the direction is right.  The chart on the left hourly TNA  and that paints a better picture to forecast TNA  to make a low around 44.  
Having said all this I will continue to play the points and am bearish. 
And one more thing Oct 26th is BIG day by Gann calculations.


  1. Dino-

    What does Gann show for Oct 26?

    Like your analysis-I trade TNA/TXA also.

  2. I Had a Gann emblem in a blog few days ago. Oct 26th is 180 days from April 26th low considered important.