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.

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