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Sunday, January 30, 2011

At Last..

SPX made a HH and LL and closed in the negative.  It was an intra day reversal.  They say buyers disappeared after early in the morning and only sellers were left in the market.  This is negative for the markets.  It is not often a top is made on a intra day reversal.  Secondly this decline wiped out last  10 days of closing.  The forces are quite strong on the negative side.  The best thing was SPX did was not to close at the low of the day.  Follow up is very important to establish a trend and with all analysis from last 2 weeks it is apparent to me that it will be confirmed very soon.  
On right is weekly round up.  The big move started on the later part of Tuesday and sprinted on Wed. and Thurs.  It peaked at the opening on Fri.  Now looking back it appears to me that after topping out at 1296 a Gann number the last weeks was a distribution week and market didn't waste any time falling apart once distribution was complete.  SPX did NOT make a LL and made a HH on a weekly basis.  RUT did make a LH and LL on a weekly basis.  Both closed negative for the week.  RUT reacts faster  for it is more volatile and speculative in nature.  No doubt it topped out first.
The chart on left is SPX daily from July 1st low with Gann angles and a super imposed channel.  SPX stopped on the median of the channel.  The median line  is good IMO when the trend is maintained.  Once the trend changes they really do not offer much support.  Instead the decline channel produces a median that acts as resistance.  I expect this to be broken.
This is from the 666 low in March 2009.  I was very impressed by the exact hit on the 4x3 Gann line.  It has proved to be a big resistance 3 times before with good size hits and IMO this will also be a good hit. If it get all the way to 1x1 that would be a significant move.  Currently I have reservations if it will get there.  
The chart on right is TNA daily.  There is a lot of info on it.  Last Jan. the decline lasted 18 days.  TNA lost from 48 to 34 about 29% (wow Fib. number).  If I apply that to 79.5 it should fall to 56.3 TNA is at the upper median line and at the bottom of a long term channel.  
The chart on the right is TNA hourly.  There is major island gap at around 55.  The 88% pull back point to the last rally from 52.1 to 79.3 is at 55.3.  Combining all these three points I would conclude that 55 is a very good point for the decline to end.  That is getting ahead of myself but that is what I am trading for.
Few more points:  RUT is already in the negative for the year. The Dec. 2009 closing was 783 for RUT and 72.5 for TNA.  SPX closed at 1257 last year it is positive for the year.  With tomorrow being last day of the month and the selling that was prevalent on FRi.  I am very comfortable in forecasting a rally soon very soon if for nothing just to shake the early bears.  Also a negative January has bear connotations that have a long term effect and IMO the markets are not ready yet.   
I have seen blogs calling this as the end of THE "C" to declines that would take SPX to less than 666 at 400 and even to 250.  I am not in that camp.  This is a pull back and I plan to watch the indexes and trade on that.
I am bearish for next 12 trading days or so.
Thanks for reading my blog.

Thursday, January 27, 2011

One minute 01/27/11
SPX made a HH and HL and closed in the positive that is positive for the markets. It traded above the 1300 level for the first time since 666 low in March 2009.  As with any round number It barely passed it and came back.  My guru Adi calls it a salute to the round number general.  SPX was brisk all day but the range was rather pathetic about 7 points.  There was a high just after 7 and low of the day around 8.30 and the high of the day few minutes before close.  RUT's move was similar except it had two tops 797.53 at 10.19 and the second 797.40 at 12.46.  This in my books is significant.  In abull move a second top is rarely lower than the first.  I am bearish on RUT
The chart above is SPX weekly.  I have marked Gann angles on the decline and the subsequent rally.  The rule I am employing the point where the biggest rally occurs after the decline starts is set to 1x1 line and similarly the biggest decline point is set to 1x1 after a rally starts from the bottom.  The 1 point per day on a horizontal and one point per 1/10th of a 1" by 1" graph on vertical doesn't always give the 1x1 line at the 45 degree line on a weekly chart.  
The chart above is a magnification of the previous chart from March 2009 low.  A closer look shows we may have a few more points.  If it hits the 1x3 line tomorrow its at 1338 and in a week its at 1333.  SPX is rallying roughly 5 points per week.  Say that is kind of 1 point per day.  I am slowly turning bullish today.
The chart above caught my eye.  It Dow monthly with Doma 15.  The blue line at 12260 will be a major resistance line.  The last wave looks like it is has well defined 5 waves.  I am not certain if dow will retreat to 10700 area kiss the Doma and go back one more time to get hit at the resistance 12260 or we go straight to 12260 and then fall to Doma. None the less this is worthwhile to watch this chart.
  There is so much exuberance in stock market it is getting sick. Jobless claims were up 51K;  Durable goods were down 2.5% and Moody's said US debt rating may be lowered from AAA based on budget deficit.  But nothing mattered.  The market piled on.  In this environment it is quite difficult to be logical.  It is easy to charge patrons $30 bucks a month and phony up some imaginary EW count and mark  resistances and support every  2 points and claim that one is right always.  This will be personal test... IF the market doen't turn right here I will decidedly move to excel based system that wouldn't forecast where the market is or where it going.
I am still bearish.
Thanks for reading my blog.

Wednesday, January 26, 2011

Missed chances?

SPX made a HH and HL and closed in the positive that is positive for the markets. It was kind of a cloud walk day.  SPX gapped up at the open made the low of the day just a few minutes before 7. After the real estate news it made the first high at 7.47 and then a quick pull back to of 68% of the range till then by 8.40. A  shallow rally followed that took it to the high of the day at 3.15.  SPX lost 38% of the range of the day by close. It closed at 1296 slightly above the intra day high from 19th.  The range was 9 points and the action was brisk.  RUT did similar.  

The chart on right is TNA hourly.  This channel has proved to be more effective than I thought.  I wasn't following it. I  was busy with Gann and missed a good chance at the low of TNA.  The decline stopped at 38% and at the bottom of the channel.  Now this counter rally should stop at the 12.5% around  75.9 and a new decline  should take TNA to 61.8% at 62.5.  Well I plan to watch this more keenly.
The chart on left is SPX 4 hour chart.  Actually the first bar is at 9 and second is at 1.00 close.  The Doma is 34 points.  While I was getting all exited about the decline from 1296 looking at this I notice it was nothing.  However it form a perfect parallelogram.  Should the decline start 1263; 1227 ; 1189 are not bad targets and final blow off to 44% at 1172 is O.K. by me.  First it hasn't started yet.
  Today was day 144 and big things were supposed to happen.  They sort of did but not with a big bang.  All the ingredients were there for a top. O calling the stock roaring; 144 day; EW count; Adjusted sq. of 9 at 1299;  Channels;  closing at high of day;  BUT the soup didn't come together.  I personally do not like push the expected top by nickel and dime every day.  If we do not get a decline from the 76 level in TNA I will change my tune and go long and very seriously switch the analysis to rally and decline levels (Fib. and Gann.) instead of graphs and trend line. 
I am still bearish.

Thanks for reading my blog.

Dud... I think not!

SPX made a LH and LL and closed in the positive that is positive for the markets. The first high came at 7 and a little zigzag decline took it to the low of the day  around 12.00.  SPX then took off and erased the entire decline and closed at the high of the day.  RUT also made a LH and LL and closed in the positive.  Its pattern was similar to SPX.  It also closed at the high of the day.  That in my books means we will get a 0.8% or roughly 6.5 point decline sometime tomorrow.  Dow was down a mere 3.3.  All the indices were down almost all day.  This prevented people from buying until very late in a short covering rally at the end of the day.
The chart on the left SPX hourly.  There are four sections in this channel. Wave 1 went up 2 sections Wave 3 went up 3 sections and if this Wave 5 were to go 2 section that would take it to 1312.  It stopped at the median line of the top section.  Next Gann number to watch is 1314.  
The chart on right RUT daily.  It is not on a 1 point scale.  It is best fit to keep RUT above the 1x1 line.  It found resistance at the 3x2 line and that has happened before with some harshness and support at 4x3.  The support is very weak.  I expect RUT to test the 1x1 line at 680 or so currently.
The chart on left is also RUT daily in a different take on it.  I have marked the previous rally points in terms of percent rally to the big decline from 856 to 342.  The 61.8% point is at 660.  Last Jan. the decline similar to now ended with a 10.7% decline.  It would take a 15% decline to get to 680.  From the channel, the 61.8% decline and the 1x1 line my sense is RUT is going to 680 roughly.  
I am still short.   Last time day 180 on another count was very disappointing.  Tomorrow is the big day 144. May be this one will not be a dud.
Thanks for reading my blog.

Tuesday, January 25, 2011

Gann or O and Benny?

SPX made a HH and HL and closed in the positive that is positive for the markets. The first low of the day came at 6.33 and the second 0.15 higher at 10.04.  It reached a high at 9.10  and hung around at the top for next couple of hours. It then lost 50% of the day's range by 12.30 and a rally to the close put it near the high.  There was a slight difference in RUT's pattern in that it did not rally as much in to the close and stopped at 25% from the top.  Also it did not make a HH and made a LL.  The ranges were 9.5 and 9 for SPX and RUT. Once again one of them is faking it.  None the less it was a good bulls day.  
The chart on the right is TZA.  It has been nothing but a dog except for some occasional rallies here and there.  We are in the middle of rally from 14.13 and today's high was 16.12. It had a HH and HL but closed in the negative.  I give more weight to closing.  From the pre thanksgiving high to recent low range it has come back 25%.  It is above the Doma 77. The chart itself appears to be making the inverse right shoulder of a H&S pattern. This being the case there is an excellent chance it can rally up to 18.25 the 50% point and that goes well with current topping situation I am looking for.

The chart on the right is dow daily.  The bottom chart is magnification from July 1st.  Just like SPX 144 day cycle is coming up on wed. Jan 26th.  While the 4x3 Gann angle resistance is at 12310 what drew my attention was where it stopped at the mid point of the channel. This also happens to be the trend line joining the 25th June and 8th Nov. Dow is strongest of the three indices and is only made up 30 stocks.  That makes it easy for it to fluctuate to the stronger side when one or more stock report a strong earning  albeit due to currency fluctuations.
The market  is at a point  where it has to decide whether to follow Gann or O and Benny.  My thinking is Gann the other two are very very temporary.
Essentially I am bearish and am waiting for the 144 day cycle to show up and do something on Wed.  
Thanks or reading my blog.

Sunday, January 23, 2011

I Think SPX has...



SPX made a HH and HL and closed in the positive that is positive for the markets. The high of the day came at 7 and the low of the at 12.56 just a few minutes before close.  Range was 11 points.  RUT had a similar trading pattern but it was much weaker.  The top came at 6.34 and low at the end of day.   Neither of them closed at a point to qualify for low of the day close.  For a option expiration the action was brisk.  Once again the max pain was way of mark.  This is so because the open interest used in these calculation is at least 2 days old.  
On right weekly charts of SPX and RUT.  It was a short week of 4 days only.  While SPX made an attempt to recover 75% of the range of the weeks decline and settled at 50% RUT's efforts were anemic and it settled near low for the week.  Not a healthy sign. They are 5 min. charts and the Doma 77 works well for really really short term trades.  RUT and SPX do move out of sync  particularly at tops and bottoms.  



The chart on left is 4 hour chart of RUT.  I have noted the decline %tages on the chart.  RUT is in a  10 week cycle from low to low approximately.  Based on that I expect RUT to bottom around 5th of Feb. The first 2 point trend line is important in my books and that is projecting a 680 bottom.
Lastly on right is daily chart of SPX with important date count on it.  Both Fib. and Gann days/dates are marked.  144 days from Jul 1st low falls on Wed.  the 26th an important Gann date and also 144 is a Fib. number of days.  SPX low on July 1st was 1011 and the sq 9 marked number is 1008 making adjustments for that 1299 seems a reasonable top.  I wouldn't be surprised if SPX makes make another attempt a small one spends 3 days near the top and finishes the formation and starts the decline on Wed.  This is a calculated projection and not a forecast.  By my forecasting method SPX has topped for it has done a first top at 1296 and a second one at 1291.   Anything over 1299 and I will have to look for fresh signal.
I am short and will continue until the signals reverse and they haven't
Thanks for reading my blog.

Wednesday, January 19, 2011

Finally when rain came it poured..

SPX made a LH and LL and closed in the negative that is negative for the markets. The high of the day came immediately after the open Then a quick decline till 7.45 followed by a flat line till 9.20 ; a decline and rally of same proportion after that;  and a final decline starting at 10.30;  and a final flat line at the last 30 minutes was the story in SPX.  RUT was also similar.  Today was a DKOD and as such SPX could decline 3% (approximation) in the next few days.  It was a DKOD on RUT also.  Neither of them qualified to be called closing at the low of the day.  The decline felt a lot harsher than it looked because of dow not participating under the strength of IBM.  The ranges were 16 points in SPX and 22 points in RUT.  From my perspective it is a little too much for the start of the decline.  Because of this my sense is SPX should put in an inside day tomorrow with a bias to the upside and negative at close.
The chart on the left is TNA hourly.  After riding the top line of the channel from the bottom it finally gave way and fell hard.  It went thru 77 DOMA not a positive sign It also had  a DKOD and closed near the low.  It stopped at the 25% point of recent range from the last good low on Nov. 16th at 52.  Putting it differently it wiped out 25% of the work that took over 2 months to do.  Someone stepped on that sand castle. Here is theory when TNA or any stock rides a channel line from below it will fall and when it rides on top it will go up.  I will test this theory in future days. 
The chart on right is TNA daily.  In 2009 TNA rallied from a low of 30 in Nov. to a high of 48 in Jan. of 2010 and fell to 34 in 18 days.  That is a decline of 30% of the TNA value and 78% of rally range.  If I were to parallel that I get 57 as  a point that closely satisfies both conditions.  I would say time to fasten seat belts.  First bouncy point is around 68.  The arrow points to the intersection of the long term channel from March low recent from Aug 24th low.  that is at 68. The number of days in the 3 stages of the rally decline and rally after Feb. 5 th were 54, 81 and 102.  This decline by my calculation ends on Feb 11th. 
Lastly I have an hourly chart of SPX.  Wave 1 was 110.5% of starting point at 1011 and wave 5 was 111.6% of its starting point at 1173.  With respect to time wave 5 was 132% (244 hours) of wave 1 time  (185 hours).  Today's low was 1278 that is 2x9= 18 points lower.  Sq of 9 does everything in 9s.  To me it stopped on the DOMA 77 and did not go thru it.  The first support is at 1262 and the rally to 37.5% of the decline point is at 1285 and anything over that would cause me slight concern.  A healthy 50% correction of the rally from 1011 to 1296  would be to 1145.
The perma bears are all over the place.  Calling this THE end of "C"  in a 5,3,5 correction to the decline from 1576 to 666.  As the market comes down I am sure I will hear these voices become louder and louder.  However the trick is to focus and let the market dictate the trading actions and trailing stops offer protection. .
I am happy the decline started.
Thanks for reading my post.

Tuesday, January 18, 2011

Gann 360 on SPX?

The news that dominated all day today was Steve Jobs of AAPL taking a medical leave and earnings from IBM and AAPL.  Both reported block buster earning and revenue.  I could not find a single spot where they were rating AAPL a buy in the morning.  The talk was how Jobs was AAPL and AAPL was Jobs.  AAPL after making the low at opening quitely moved up all day and after the closed moved up some more.  The important lesson is to keep focus on the stock and not on news. 
Had this Steve Jobs news hadn't come out everyone would have focused on earnings and the stock would be sitting at 360 before earnings and 375 after and that would have caused serious disruptions in demand and supply equilibrium on AAPL. 
SPX made a HH and HL and closed in the positive that is positive for the markets.  The first low came at 6.55  and the second  at 8.00 abut a point higher.  It moved up choppily to 1296.06 and dropped 25% of the range in last few minutes before close.  RUT acted very differently. The first high came at 6.45 and the only low at 7.52 at 801 some 6.5 points lower from yesterday's closing. ( Pl. refer to Yesterday's post).  It did not make a HH.  It made a HL and closed in te negative by .01.  Yet  again it closed at the high of the day.  Does history repeat itself I will know tomorrow if RUT pulls back 6.5 points during the day.  The chart looks uber bullish.

The chart on the left is SPX daily from 1011 low on Jul 1st.  The 360 degree cardinal is at 1296 from square of 9.  Gann believed when a stock or index  hits  these numbers exactly a turn happens.Todays's high was 1296.06.  There is a 3 point correction that needs to applied for SPX low was 1011 and the cardinal 0 degree is set at 1008.  When I see 1299 I would short just out of little respect for Mr. Gann.  
The chart on the left is SPX daily from March 09. It is straight 1 point per day Gann.  SPX is slightly above the  4x3 angle line by 0.25 point.  This line was a reistance on Nov 5th  at 1225 and SPX dropped 50 points in 7 trading days .  On the same multiple we could drop 56 points and take a breather at 1240.  Should SPX proceed to 1x1 line it is at 1145 number.  Ooops! That would hurt.  
A small note.  This market seems to go up on bad and good news.  It is not behaving where any kind of TA is proving effective. Personally should the market not turn around very shortly I would quit calling a well thought about  top and employ the excel method and forget TA for a while. Nah! I will see.
Thanks for reading my blog.

Monday, January 17, 2011

Is Last year being repeated?

SPX made a HH and HL and closed in the positive that is positive for the markets.  The first low came at 6.33 early at the open and the second  (1286.70) and the second came at 7.30 at about 1.60 higher.  A steady rally took SPX to the highest point of the day at close.  The range was a healthy 12 points.  RUT did very similar.  The first low was 799.05 and the second low at 799.19.  The pull back never came.  RUT closed very very close to high.  Now that is negative for RUT and RUT could see a 0.8% about 7 points some time during the day  tomorrow. 
On right is SPX and RUT for the week.  The low came early on Monday and all the pull backs were minor.  First rally from 1262 to 1277 corrected 50% to 1269.72.  Next a rally from 1269.72 to 1286.87 corrected a 37.5% to 1280.47.  Finally a rally from 1280.47 to 1292.99 hasn't corrected yet.  The purpose of this highlight is that when the markets pull back very quickly every step of the way then the giant correction is not needed and often very late coming.  It is also worth noting down where the last rally started from.  A tabulation of the highs and lows over (25% correction)  may give better trading outlook.

The charts on the left is hourly SPX and RUT from the recent low point  made around Thanksgiving in November.     First it shows the importance of DOMA 77 in SPX.  Secondly while the magnitude of the moves are different the nature and the characteristic of the moves are very similar.  Most of us do our calculations and TA on SPX and to me it is a confirmation that it fits RUT.  Not exactly may be but good enough for my work.  SPX has done 15 steps of up and down(a step is when it corrects 25% or more of the previous move) and has in all corrected 60% (84 points) of the total 142 point move. A tabulation is on right .  Keeping a running tab helps me a lot.  Lastly SPX has rallied 195% of the previous decline and should be setting up for a decline. 





The last chart on right is SPX daily.  The top line from July 2009 onwards and the bottom line is from July 2010 onwards.  In the primary structure of the two moves are very similar.  After closing at the high of the day on Jan 19th SPX lost 106 points (9.2%) in 14 days.  If history were to repeat from 1293 SPX would decline 119 points to 1174 .  We did close at the high of the day. 
It is very difficult to be objective and not get locked in to a perma bear or a perma bull. What keeps me on my toes is reading both sides on many of the blogs on the net.
I have a short position and continue with it till things resolve.
Thanks for reading my blog.

Thursday, January 13, 2011

Shock and awe?

SPX made a LH and HL and closed in the negative that is negative for the markets.  The first high came at 8.38 (1286.70) and the second came at 9.19 (1286.68).  SPX steadily declined and made the low of the day at 12.35.  Then a reflex rally lifted it to 50% of day's range.  The range was again a pathetic 6 points.  RUT had only one high and that came at 8.48 and a low at 12.41.  The counter rally was a little shy of 50% point.  SPX had a inside day closing in the negative. This projects a negative day tomorrow.  RUT made a HH and HL and closed in the negative.  That is not that bad but still negative. The range was 6.30 points and that is also not that bad.  Once again RUT looks slightly positive and SPX looks negative for tomorrow
 Both the charts on the right are RUT daily.  On the channel chart,  RUT is on the second median line.  It is slightly above the 88% point of the decline from 856 top in 2007.  If it doesn't start the decline very shortly RUT may be looking at making a new high above 856. 
The second chart on right is Gann angles chart.  Here RUT is riding underneath the 3:2 line.  When it gets rejected the support should come from the 1:1 line which is around 680.  It is  not a quesyion of if we get a hit the question is how soon and how violent  is the the shock and awe going to be.   I know of no one who is expecting it. Market always does what the least number of people expect.  From our CIL I learned the $BPSPX the bullish percent EOD index is at 87%.   That is a very high number and it is flashing a on coming train. 
Thanks for reading my blog.

Wednesday, January 12, 2011

Intoxication

SPX made a HH and HL and closed in the positive that is positive for the markets.  The high came at 9.30 and then SPX  drifted lower to about 32% of the range by 12.30.  A late in the day a rally put SPX within a point of the HOD.  In RUT the high came early at 9.00 and the decline was 44% of the range.  Late rally put it at at the highest closing just like SPX.  It was not walk in the cloud day.  Rally didn't shoot up early and stay there and rally even higher towards the close.  SpX is within 5 points of a high I projected a while ago at 1290. Yet today's action did not show any signs of slowing down.   
The chart on the right SPX hourly.  I have posted this many times.  I have been writing for a while about how the 185 hours of 1 (1010 to 1123) is likely to be duplicated in 5 (from 1174) and the top would come at end of it.  What I missed clearly was the size of the move 113 points. At a good top there is a high probability that this is also met. That point is 1287. Today's high is 1287.  Looking closely at the chart even though SPX has not traveled the full  2 channel width  like wave 1 did  it did make the 1.5 channels and backed off at the exact median line.  The last 0.5 channel is 26 points I am not sure if SPX needs to do that. This is good enough for me for It has met time and price.  Right Mr. Gann!
If SPX was close to top before it closer now. I will have to wait for the signals to go negative before I can short.  There were glimpses of that but they have turned and now I wait again.  
Clearly this market is intoxicated.  The most likely end to this nonsense would be a violent decline.  I am getting ready would jump when I get a chance to short.  
Thanks for reading my blog.
One more thing if you don't have anything good say best don't say it if you must be respectful. Thanks again.

Tuesday, January 11, 2011

It sure ain't going to follow me!

SPX made a HH and HL and closed in the positive that is positive for the markets.  In SPX the first high came a little after 8 and the second one a little after 10.  SPX just fell apart after that.  It lost all of the advance for the day in an hour Then a slow grinding rally lifted SPX to 68% of the decline.  RUT had only one top around 10 and followed SPX on a fast decline till 11.00. The rally only lifted it to 50% of decline.  An important point to note: Yesterday we had an inside day in SPX with negative closing and RUT with positive closing.Today both SPX and RUT were up more than 0.75 percent at some point.  I am making a conclusion on an inside day it is not the day before that matters but it is how the inside day closes that is worth following.  

The chart on the right is TNA since its high on 4th at 77.42.  The low was on 7th at 70.09.  With today's high TNA has rallied almost 88% of the decline.  That is a good point for it to start declining and it did.  The small problem I am having is that it is 7 days into decline and TNA is still within 2.6% of the top.  That is not how the declines work.  Any new higher high and I will have to abandon the 15 days of decline theory and move on. 
I have used TNA but the story is same on others.
I am still bearish may be for one more day of testing after that I will follow the market it sure ain't go to folow me.
Thanks for reading my blog

Monday, January 10, 2011

Which one is Fake?

SPX made a LH and HL and closed in the negative. That is a negative for the markets.  It was an inside day closing in the negative.  Inside days are pauses and tomorrow should be a follow up of  yesterday.  SPX made the low of the day at 7.00 and then a steady rally  ensued all the way till 12.45.  A little pull back into the close didn't even shave 25% of the range.  But the important point is  It spent most of the day in the red and closed the day in red.  That is negative.  RUT did very similar except two differences one it turned positive just a few minutes after mid day at 9.45 and it closed in the positive.  It also had an inside day.  One of these guys is faking it.  
  On left is SPX 5 minute chart from the time SPX made the top. It was three days ago and SPX is at 50% point of the decline range.  For the decline to continue it needs to quickly make a new lower low and move on.  Hovering around the 50% point is not very bearish.  The chart on left is RUT 5 minutes. It topped 5 days ago.  The first low was at 778 and second low on the 7th was at 777. That is lower low which implies the down trend to continue.  However it has rallied almost 75% of the decline range. That is not unusual on the very first wave of decline.  This decline would be invalidated if RUT makes a new high.  As things stand now I do
not think it wil.
  On left is TNA hourly That trend line was drawn on the 2 hour chart and automatically adjusted to an hour by FSC.  It is now the controlling trend line.  A clear break of that would establish a downward trend.  TNA hasn't passed the DOMA 77 decisively and did go a little below the 25% decline.   Here too a new high accompanied by a new high on RUT would put TNA right back in the bullish corner. 
On right is FAS.  The current rally started late on 11/29 immediately after Thanksgiving ( important Gann date) and continued all the way to 30.43.  It is bouncing of the 25% point but still very near the DOMA 77.  Tomorrow is an important day if banks lead an advance and all three indices SPX, RUT and Banking BKX were to make new highs I would be the first one to call this decline off. But I don't think thats in the cards.  I plan on watching all three very keenly. 
Bottom line I still bearish but a little less gung ho on it.  I will short as and when a good point shows up and signals are on.  
Thanks for reading my blog and offering me your encouragement

Sunday, January 9, 2011

Ride 'em Cowboy

SPX made a LH and LL and closed in the negative that is a negative for the markets.  The high came at 6.38 and low and 9.55.  Then it rallied almost 67% of the decline to close 10 points from the bottom and 5 points from the top   It had a range of 15 points. This is an expanding range on the decline and it favors bears. RUT did very similar except it rallied only a little more than 58%.  Its range was 17.5 points highest in a while and that also favors bears.  
These are two charts of spx.  On left weekly chart with my best guess Gann angles drawn.  SPX is catching resistance from the 2x3 Gann line and the horizontal bottom of  EW 1 on the decline from 1576. During advances the previous decline bottoms become resistance and in declines previous advance  tops become supports in general.  The 1x2 Gann angle support is at 1150.  On the right is a daily chart drom the 666 bottom.  It has clearly rolled over and a decline is under way.  SPX has a lot of support at 1220 previous top becoming support;  1200 a round number support and finally 1150 1x1 angle support.  My take would be a decline to 1150 is very probable.
These two charts are of RUT. On left is weekly.  There is long term slow bull channel in light blue.  RUT is finding it hard to penetrate the last line of resistance formed from joining the first top 855 and the second top 852.  It is still within the fast channel above the median line. The first support is at 750 and then at 680 where the bottom of the fast channel meets the median line of the slow channel.  On the right is daily.  It is being returned by the 88% point of the decline from 855 to  342.  This is an important point I have seen reversal at this point a number of times.  The 1/2 median line support is around 750 and the bottom of the channel at 660. This what I am going to be guided by and will wait till 680 before any serious buy.  I am bearish on RUT.
 The last 2 charts are of FAS.  The chart on left is hourly and right is 2 hourly. They have  different channel configurations.  From the left FAS has broken thru the fast channel and is back testing the bottom of that channel.   The width of the channel on right is $7.  My sense is FAS will go down to the median line and after hanging out there for a few proceed to the bottom that is around 23.5. 
All in all we are in a pull back and I plan on riding it.  I will short at the first and all good points I get.
Thanks for reading my blog and offering me encouragement.