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Wednesday, March 2, 2011

Key Reversal...

Today is an Intra day reversal or in terms of TA it is considered a Key Reversal because SPX  made a higher high and a lower low and closed below yesterday's close.  This is often the first sign of a good top.  Seldom does a top form on an intra day reversal but SPX's highest point was on 2/18 at 1344.  So this is in line with topping action.  What it means to me is we topped out on 2/18 and are accelerating the decline.  Couple of important observations SPX closed at the low of the day.  My studies have proven and  it is deadly accurate and points to a plus day the next day.  
I also have a EW count that counts 1344 to 1294 as 1.  1294 to 1332.09 as (a) and 1332 to 1306.15 to day as (b) and (c) yet to come.  Chart on right display this.  This does not diminish the value of today's decline or negate it.  The observation is the hit today is severe and looks like terminal instead of start of something big.  Thats what I am  thinking.  RUT only had a LH and a LL day.
The chart on right is dow daily.  The DOMA line is at 11772 and the 1x1 support is at 11123.  Today's closing was at 120058 roughly every 250 points there is support for dow. However should it break 11775 I will start getting worried a lot for it would take out a key trend line from way back March 2009.  Ouch!.
 This is RUT daily on right.  It got hit by the 3x2 line and is on its way to the next support at 3x2 line.  Before it gets there it has support at 798 and then at 738 a previous top.  The big botheration is none of RSI reading 60;30;15;5 or 1 min ever reach the climax 75 or more.  SPX hasn't given the 30 points from 1332.  My conclusion is RUT/SPX should gives a rally here albeit small one.  That would be a good place to sell short.
I am still bearish but wouldn't be surprised to see a rally here.  I wouldn't play the rally I would wait to short.  
Thanks for reading my blog.

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