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

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