Wednesday, November 17, 2010

Even in Florida it is not sunny everyday

SPX made a LH and HL today.  It is an inside day.  These are pauses in the continuation of a trend.  This is forecasting a continued decline tomorrow.  The range was pathetic 8 point.  SPX made a low of 1176.5 early in the morning and the high a little after 7.30 at 1183.5.  Serious decline started at 10.30 and ended at 12.30 with 1175.82. A small rally to close and SPX ended the day at 1178.59 up 0.25.  Not particularly easy day to make money.  Option did get clobbered.  Calls lost more than puts.  All this move today, tomorrow and Friday is about option closing to find a point of optimal minimal losses for pros.  I always find the stocks slowly drift towards specific price targets to close.  Like AAPL  to  300.  Money is made by gorilla tactic of quick in and out for a few bucks.  
The chart on the left is a must have chart.  Its daily SPX.  Line (1) was drawn first.  Line(1) also is the 45 degree line.  The 1219 and 1227 can be considered as a double top and I am in that camp.  The drop then is to the amplitude which is at 806.  Ouch!  The current drop has been very different form previous drops.  For one we have a lot more inside days after a big down days as if to allow the food to settle down before we go and attack the buffet again.  Looking between the lines we are at the middle of the middle.  Last time spx did this ( black arrows) it hung out at the middle line for a couple of days going nowhere and whamo.. it got hit big.  Time to watch it closely for me.  
This chart on the right is RUT weekly.  There two distinct Gann angles drawn one sloping down sloping from 2007 and one sloping up from 2009.  There are a lot of lines on this chart.  Of immediate concern is the 1x1 line.  Currently the support point is around 650.  That is the point we don't ( or we do) want to break.  The line (1) black arrow is resistance trend line from last two highs from 762 on Sep15th 2008 to 746 on April 26th 2010.  To me the most important trend line is the line that joins the last two highs second one lower than the first and this has to be broken for the rally to continue.  OR  the last two lows where the second low is higher than the first low and this has to be broken for the decline to continue. 
I don't have it marked on the chart for 1x1 line is of higher importance.
My current opinion is we are about to get hit and hit hard.  I am bearish and will follow the signals. 
and one more thing Thanks for visiting my blog and giving your support.

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