Looking at the hourly chart:
There is no change in the prognosis. The S&P has formed a double top, and is struggling in a resistance band formed by prior consolidation. Although there is ample resistance to contain a rally attempt, there is very little supporting the current price level - leaving the market vulnerable to a sell-off. I believe a fall below 1085-084 will start a mass exodus. I can see this baby unwinding down to our 1029 mark. Of course, the chart posted on Friday still applies, including support at 071ish, 061ish etc.
For now, I am focused on the 20p MA crossing down through the 50p MA at point A. I expect this to trigger some selling. On the flip side, I am concerned about the possible breakout above the top trend line at a retest of the channel bottom at B (1110). I say I am concerned, but I am not overly concerned.
Let's look at today's action:
The futures market was down, then up, then down, and up. What a roller coaster. Kind of like the open of SPX itself, down up, down, up, down, up, break away - total rejection. This is one weak market. Anyway, one of the oldest tricks in the book is to show signs of reversal right as we enter lunch. This is to bait the retail crowd and dump shares. This is not "conspiracy theory" or "tales of the specialist" - it is just fact. Look how the market found a double bottom and simultaneous strength in the RSI right before noon. A pop followed by a sell wave. After 15 minutes of healing, another pop followed by a sell wave. Believe me, there is quite a bit of distribution happening quietly on days like today. However, the best is always saved for last. Look at how hard it was to break the down trend line. I count 5 hits - each met with selling - but once it broke there was an obvious short covering rally. Note how the gappy price movement diverged from RSI each time it formed a peak. This was a clear signal to short this end of day pop - which I did and the ES sold off nicely after the close.
Anyway, today's session (and perhaps a few sessinos to come) may simply be some of the last "great" shorting opportunities on the S&P in 2009. Remember, when we start to fall, it will be fast and furious. I hope everyone is in position!
Cheers!
10 comments:
Hi David , I was gonna ask you about the Rsi , pegging over and over today, but you covered that in your post thank you.
I played it ( not traded ) today thinking its a ABC , A off the bottom , B to the days lows , then C should take us higher then Fridays high.
An impulse wave would follow taking us under Fridays lows .
( C is having a heck of a hard time getting there )
Unless Im wrong , I see an Island reversal pattern and a big bear flag, fridays drop is the pole.
( 2 weeks in a row we had both )
Could ES be forming a little down slopping wedge ? or some kinda triangle ? ( mostly todays action )
The Bulls are raging , arrogant and fearless . :)
Thanks again , Best of luck out there
Why do you think it will be fast and furious? Aren't there too many shorts still in the market for ppt and fed and gs to let that happen. Do Technicals still matter in this market?
No disrespect to your skill and acumen in this field. I may be oversimplifying too, but that is where my mind is at.
Thanks for your blog.
Hey CBS,
See my post late last week regarding the move down and areas of support, fib retracements, trend lines, MA's etc. The technical case for a forceful correction is in place. I try my best to make all decisions based on objective TA.
Cheers.
Hey Payline,
I think the A-B-C correction is finishing up and we'll see the next impulse wave down.
Originally, I though we had a bear flaf forming - and perhaps we do - however, I am more motivated by the inability of price action to cut through the resistance band and retest the lower trend line of the up channel.
We are a "close below 084" away from a major down move.
I tried to short this morning and was 1 minute too late. Market immediately fell as I put in my order.
Hey Kerry,
Always time for a setup to develop. Missing one makes no difference. I missed the Thanksgiving eve crash. 30pts on the ES. Ouch..
Watch out as a bull flag is forming on the SPX, which is looking like it may break out. I will reload shorts if the breakout is weak.
Cheers!
I am going to short over the next few days if we get some more upside. Would like to increase my financial short position, but do not think it is likely we'll see much more upside here.
I missed the Thanksgiving crash as well. We might have a little more upside in this squeeze.
Did you guys see aapl?
Hey Nicasurfer,
AAPL Took a dive into the close and is recovering after hours. I suspect a major distribution followed by public feeding...
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