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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.

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