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Wednesday, February 23, 2011

Now what?

I have been waiting for this for a while now and boy am I glad it came today.  Markets got whacked and whacked hard today.  SPX gapped open 4 points lower and never filled the gap.  It was a steady decline  all day. The worst point was at 12.40 and SPX stood at 1312 roughly 32 points lower from yesterday's high.  It passed some major milestones today.  Doma 77 on the hourly was taken out.  30 min 200 point mvg. avg. was breached.  It took out all the gains after 4th of Feb.  MACD and STO rolled over. 10/20 mvg avg cross on the hourly.  It was a DKOD.  Many channels and trend lines were cut.  All in all worst day in quite a while.  RUT did even worse. 
One can pick any indicator and it was negative.  like everyone ran for the door at the same time. 
I have 2 charts.  The first one is TNA hourly.  It has crossed the DOMA 77.  It is in a solid channel and the lower line support is at 75.5. It has found support there previous 3 times.  I believe it will find support there again albeit short term.  I have marked some very important levels of support.  This could and sure looks like it would get very nasty.  The thing that bothers me the most is the RSI and it fell to 17 a very low number.  That might give TNA a small bounce.  
This is my daily TNA.  The top median line of the channel was resistance on Sep 23rd 2009 and the decline from there lasted 28 days.  TNA went from 44 to 31  a 30% decline.  The bottom of the long term channel is around 75 should that be taken out next stop would be around 61.  I plan to watch the daily closely.
We are in a decline.  There will be no rush to buy or to cover yet except for trading.  The rules there are slightly different.  Short and cover and reshort at a higher price.  But for medium and long term I will unload primarily because 30 point SPX drop ; DOMA 77 hourly cross ;  30 min. 200 point mvg avg breach.  
If the signal comes for going long I will follow with a 1/3 lot otherwise I am looking to short.  I do expect tomorrow to be a narrow range day may be even an inside day.
Thanks for reading my blog.

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