It is not difficult to understand what happened in the markets today. Markets dumped till about 9.40 and rallied to close. It was D D R R day. My sense is the floor wasn't interested in buying early in the morning. It selectively bought a few mid day and dumped it all near the EOD. Why because things didn't close near the high of the day in fact they closed in retreat. This is a serious difference in the tone as my CIL buddy JXXD called it. Maria is not excited about the close. Yesterday's hourly chart with channels is a good one to follow on SPX.
This is Gann angle chart on the hourly. A 16 point drop will put it at 1280 a support a lot of people are looking for. Looking at the chart and the world markets particularly Japan tomorrow I would expect a drop to 1278 and rally back to 1287 and total collapse to 1255 by close. I know many feel this is not "impulsive" enough to be a major down wave or something but I remember 2007 start wasn't that impulsive either. Also at the start of any sequence people are not convinced this is it. Its only towards the end they figure it out usually it is too late by then. I expect the first sequence to take us down to 1160 ish before any sensible rally develops.
This is my hourly TNA as mentioned before I am expecting a hit to 66. How it develops will be in line with the SPX story from above. Downside is always closer to vertical than upside is meaning it fast and furious.
Personally I will not be a hero and go long. There will be cheaper prices to do that later. I plan on shorting aggressively on every rally all the way and not sit on sidelines like some suggest.
I am absolutely bearish.
Thanks for reading my blog.