I must say that the price action has been ugly. Looking at the hourly, daily, weekly, and the monthly - I'd say we are having either a strong correction or the pre-amble to a major break. The pull back is simply not "orderly". I don't see a channel with parallel top and bottom trend lines. I just see a lot of weakness.
Open the hourly.
Once we broke 1130 it was pretty much a free fall to 1090. Support at 1090 failed at the third test bounced only once off of the famous 1080 level. The hourly sticks tell me that this might get even worse. Look at how the bottom bollinger band never had the chance to flatten - it is now opening further suggesting further down slide in price. The 20p and 50p MAs are sloping down with some fair aggression and there seems to be some strong selling along a single top trend line that has been tested several times since the start of this decline.
At the same time, I see a significant RSI divergence where with each reaction low the corresponding reaction low in the RSI is climbing. This explains why we see these recent mini-rallies. However, these mini rallies just don't have the legs needed to overcome the significant selling pressure. For this reason, I can't say that we'll get that bounce just yet - though it would not surprise me.
Another thing that bothers me is that I can't say for sure that I see a completed EWT. I thought that wave 3 was completed at 1090 with wave 4 being the pullback to 1100ish. I expected the final capitulation to take us in a fairly straight line down to 1080ish. We kind of got that, but it took two bounces at 1090ish before we broke and touched 1080. At that point we see another mini rally intraday that took us near 1100 (yet lower than the prior reaction high). From there we see this progression of lower lows and lower highs with another sharp drop to end the day on Friday.
This is a tough one to call. When I look at the Daily chart, I have every reason to expect a trip to 1030 in the coming week or so. Regardless, there will be a bounce at some point soon. The resistance levels seem to be 1090 and then 1130. You know it is a bounce when price action cracks above the top trend line. Until then, we are headed lower and this entire move may simply be wave 1 of a much larger EWT that could take us much lower indeed.
It is good to be back, though this week is again full of travel.
Love to hear peoples thoughts on the market - especially the Thursday and Friday sessions - as I had zero time to monitor the action. As a side note, my company won an award from Microsoft for the "Most Technically Innovative Solution" at the NYC BizSpark event. Got a trophy for the effort.
Looking forward to catching up!
12 comments:
Hi David , This been something ,
My EWT count , puts us in Wave 3 of 5 , but who really knows :)
We seem to alternate in and out of overbought.
Perhaps you hit it on the head last week , as long as everyone is looking for a upside there will not be one, A load up and shorts and them a squeeze , would produce the bounce.
Maybe abit of gap resistance at 1070ish , from there it " looks " like a 40 point water slide , Perhaps that leads to the pile in short , an bounce.
Besides your post 1090 and 1103 look like they would provide resistance on the way up .
I do find it interesting , Bears waited 9 months for a trend change and when it comes , they spent most of it looking for a bounce , there is something ironic about that . Bulls never think the market can go down , ever .
If I can be crazy guy for a moment , On the up leg , several corrections started ( including the current on ) on a new moon , and ended on a full moon , ( 2nd of the month ) , Maybe that pattern holds , perhaps it flips around.
I think we can continue to expect to be frustrated and surprised .
Clues will be in the Xlf , holding or breaking 14.
My Best
Hey Payline,
Looking at the Daily chart it is very possible that we are in fact in the beginning of wave 3 of a large EWT which could ultimately land down near 960 at the end of wave 5.
Lunar cycle - it is tough to give creedence to the theory - but you never know!
Anyway, seems Pretcher is convinced that the top is in and we are headed for fresh lows.
We shall see.
Hi David ,
I agree the daily chart we still have not seem 5 down ,
I looked at the 17 month down , there are a few spots that 5 dont show on the daily , ( but do on the hourly) .
Or it could be an irregular top and Friday Tuesday , down up are waves 1 and 2 .... The up on the daily looks much more like a four than a 2.
I feel silly even mentioning the lunar cycle, but well who knows ?
Pretcher, despite his detractors has been solid , very solid, almost spot on .
On the EWT Pretcher says , if you cant count it chances are its not done yet.
Time will let us know
good old fashioned panic. we will head up a bit and then who knows. I think the trick is to play the grind but have hedges that favor a range type of market. Because we are going to grind and squeeze and panic for a long fin time.
Kerry,
I agree. Still think there is a bit more to the downside here, but the range trade is likely going to be the smartest play this year.
David , what kinda product did you win the award for ?
Dave,
Where the hell are you?
Still celebrating?
We need you out here. They are making bears extinct.
Help ;-)
Paulus I miss David too :)
I do not thing the up bounce is over yet, really should be at least 1110 before we go down again , 1120 is also possible , I will take anything under 1147 :)
take care
Payline,
It's really hard finding any affirmation.
Have been stopped out on futures a few times this week, with some scratches only.
Teddy is right saying it is hard to go long when it seems against the facts.
Sideways till employment numbers friday. Do not think this is sure to give a direction, as todays numbers were received rather neutral.
However am now full short as I have been adding on strenght on swingaccount.
Am not confident on this position. Which is bad, dangerous and against my rules.
But I could not bare being out of the market if a correction occurs.
Hey Guys,
The award was for best "Technology Innovation". My company has an equity interest in a startup company for which we developed the software. It is in the social networking/media space. We competed against 22 other companies and were judged by a panel of MS execs and NYC based venture firms. Nice honor - but has kept me away from the desk.
I'll be posting tonight, but it is fairly important that resistance above 1100ish hold - if not, a trip to 1110 is a definate and a trip to 1120 would be a very bad thing.
I'll ge the charts out tonight.
Cheers!
Hey David,
your overdue. (just kiddin man)
Missed your TA (technical analysis)
sorry for the sarcasm and silliness. I finally killed it today, (for me) and I thought I'd drink a little.
Anyway, lookin forward to your thoughts on the current market conditions. I tend to think we can either go up or down. he he
Seriously hope all is well, I truly do appreciate your work.
Paulus , this is a wave 2 ,they are zig zagy and very hard to play , they hurt both bulls and bears , it should last about 1/2 to 62% of time of the down , and come back up 50 to 61% of the fall ,
But there is still a chance we make new highs , if so forget what I just said :)
Good Luck out there ,
We await what David has for us , but look for a move down to 1090, then a large ziggy move back up to
1110- 1120 .
Post a Comment