Thursday, January 6, 2011

The clock ran out

The SPX opened slightly lower than yesterday's close and made the low of the day by 6.33 a.m.  It was all rally after that.  A small window appeared after 7 and  7.30 to hop on and that was it.  SPX did not get any kind of pull at the close and finished the day very near the high.  It did a HH and HL and a plus close.  That is positive for tomorrow.  RUT did almost the same thing.  It pulled back 25%  between 9.30 and 10.30 of the range from open to 9.30.  That was a 2 point pullback for a 8 point rally.  RUT then gained 4 points to close at the high of the day.  There in lies a small problem.  I have found when RUT closes at the high of the day (within 50 cents) the probability is high the next day there will be a 0.8% about 6 point drop from current day's close sometime during the day.  Both had DKOD.  But lately I am finding out DKOD has a lower probability in indices than ETFs. 
The chart on he left is SPX hourly.  The 185 hours where 5 = 1 came and passed.  The channel width is about 55 points.  The very top line of the channel is around 1315 and the median line is around 1285.  I don't believe this median line has the strength to stop the upward momentum.  Then the next logical stop is around 1315.  The main sense is instead of moving the target higher and higher I am just going to trade my signals.  If and when the decline comes the signals should catch it.  But boy I sure would like to see a top here.
The next chart is redrawn channels on FAS. It is a 2 hour chart.  It is regular channel chart with median lines at half and quarter.  FAS is sitting exactly on the top line of the channel.  It would be great place to reverse.  The banks have been in a tear.  Unless something big happens to shake things up this baby may be going right back to the start at 39. which brings us to the last chart FAS daily.  I drew the blue zigzag line to form a mirror image of the left.  The chart very evenly balanced and if this turns out to be a mega H&S watch out below.  It is very difficult to call a top.  Specially when the other side has unlimited resources and is bent on keeping a top from forming.  My calculations are all screaming top but if it doesn't happen in a day or two I would just wait.
I am feeling bearish.
Thanks for reading my blog and ofering me encouragement.

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