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.

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