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Sunday, March 13, 2011

Decline has just started

SPX is clearly in a decline.  The trend line that held from Aug.24th is busted at 1314 and there is a little song and dance going on to convince people that is nothing but a  small pull back.  I am not buying it.  The rounding top spx has put in the last 11 days is quite deadly.  The most plausible next candle will be a large candle.  IMO it is likely to be a red one.  In a decline all consolidations resolve to the down side an vice versa in an advance. For the week spx was down 17 points.  Tues. rally cancelled Monday's  decline ; Wed.'s 2 point decline was a set up for a 25 point decline on Thurs. and Fri.'s rally of 9 points was 1/3 of the decline of 27 points the prev. 2 days.  Why this is important is because just like in a rally SPX drop 50% of the range in a day or a week for embedded correction in a decline it pulls up 33 to 50  %in short intervals of time for  a built in "correction"
The chart above is my version of 1,2; 1,2; chart.  I believe SPX is in serious decline and is  likely to see significant lows in the near future.  In the next few days say by Wed.  it should be at 1260 with at least one long red candle of 40 points or so.  The decline line are lot more closer to vertical than advances are.  The Up trending channels should see significant piercing.  The chart above is SPX  hourly is easliy duplicated and in my books is worth paying close attention to.  
The chart above is RUT daily.  The last good decline was from April. 26th to Aug. 24th. and went thru 4  quarter channels or 2 half channels. It stopped after half channel with a may melt down.  Similar decline now would pull RUT down to 650 area.  and I think it will.  
This is gann angle chart of RUT from March 2009 lows.  It bounced on the dot from the 4x3 line but I think it is going to 1x1 line around  690 and a bounce after that.  The last decline was from 745 to 587 or 160 points and lasted 4 months.  In this decline RUT should see 160 point decline in 2 months.  and That will put it around 690/700 for 1st stop of the bus.  
This is my hourly TNA chart.  I have said this before in my blog it clearly is approaching 66 possibly by this Wed.  Melt down have their own fuel mostly no event causes them and  some where in the middle things heat up because of some story.  I believe the economic story is yet to come and no one has a clue what it is.
I am utterly bearish and will short every good bounce I get.  Thanks for reading my blog.

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