Today was a Marker Day in the System, so closing beyond the hi/lo extreme should set the next trend, but my recollection of uptrends formed in the current 20dSMA scenario is that they don't often last more than 1-3 days so quick profit-taking is recommended. A new uptrend would likely be a small 5th wave or B wave of a flat or something like that. A gap > .5% would also set the next trend. If SPX does decide to head down and keep my evil plan alive for an LDT, it will likely reach 1168-1175 first in a 5-wave A leg. There is an OEW 1168 pivot, 1168 lBB20, 1172 50dSMA and the 1173 previous pivot where positive RSI divergence could form. In any event, a breakout of 1187 or 1207 with confirming USD/VIX/Bank/Copper action would be ideal for a setup. Good luck.
(Update Mon 11/22/10 4:15 PM EST)
I obviously did not like the way things closed. My evil plan may be thwarted tomorrow. NYAD actually ended up making a small change today which portends a large move tomorrow but the direction is uncertain given SPX and NYAD are kind of in the middle of ranges. The VIX was rejected by its 20dSMA which happens, but further downside tomorrow may mean C of 5 in the wedge is still needed. SPX was rejected by the key 1187 level which is fairly normal, but then it bounced quite far off it which would be bullish if 1207+ can be reached. Banks and financials still closed down 1.5% and 1.2% respectively which is bearish. USD retained about 75% of its overnight bounce which is bearish for stocks. Copper actually fell about 2.5% right at its 50dSMA retracing halfway back to its recent spike low. TRIN closed a little high at 1.58 but not quite 2ish+ which usually leads to a bounce within 1-2 days. SPX closed 1pt below its 20dSMA and 10dSMA. So, signs are mixed and 1187 and 1207 are likely the key SPX prices especially if you see VIX, USD, copper and bank action match a break of those levels. I'll probably have more later. Oh, by the way, you'll also notice the lower pitchfork line on my daily chart and the X marks the spot on my 60min from earlier today chart served pretty well today. Good luck.
(Update Mon 11/22/10 12:55 AM EST)
I am micro-managing my short position around 1186-1187 due to its importance and in an effort to improve my trade basis while staying primarily short. I expect to be 100% short on any bounce to 1190-1195 if possible with a resulting 1196-1197 basis with stop at 1202. Daily NYAD has dropped hard. Based on my projections and typical NYAD behavior, I am expecting a larger SPX drop tomorrow (maybe SPX closes 1187 +/- a few points and gaps down large) with a small NYAD change portending a reversal upward starting Wednesday probably after a Wed morning small drop or consolidation fulfilling the typically positive Wed/Fri seasonality around Thanksgiving. If that setup occurs, I'll close my short position into late Tues and/or early Wed and then reload mostly or fully short at end of Friday for a minor capitualtion low to 1145ish where I'll close my position again expecting a rally for the first 3-7 trading days of December. We'll see if I'm that lucky. There is a small chance SPX just dives from here in wave 3 without another decent bounce today, but I'm plenty short enough to be happy with that and my brain says things will setup for a morning gap down from within the OEW 1187 force field down to the OEW 1168 force field initially.
(Update Mon 11/22/10 11:30 AM EST)
The key is still the OEW 1187 pivot area which happens to match the previous 1227 downtrend line (depicted in my 60min chart below). USD is up sharply today to 78.8. There is still a chance it falls back in a C wave to its 20dSMA especially if SPX 1187 holds, but it fought off 2 consecutive overnight drops near $77 and has only been able to pierce its 50dSMA. Plus, look at the start of the USD downtrend from 88.71 in early June. It went down 8-9 days sharply and bounced 3 days before resuming the downtrend albeit choppy for a week. A nearly identical setup in reverse has occurred thus far and it's hard to see SPX retesting 1227 under that scenario. Copper is pulling back a little but nothing to confirm the bearish case yet. VIX has made an outsized jump and that definitely falls in line with my VIX wedge completing its 5th leg just below 17.90 on OPEX. Financials are relatively weak. Nobody was expecting this and so the evil plan is still in tact, but 1187 must be broken...probably by early Tuesday. The Evil plan chart is below with untouched projections. The market is setup for a possible wave 3 of 3 of 3 down Tuesday with initial target of sub-1160. I went to 75% short at 1197 (average position now at 1198-1199) on the morning bounce to 1199. I will likely go 100% short on the next bounce which could be a nested wave 2 to 1194-1197. I will lower my stop to 1202ish for a small loss with expectation any higher would likely lead to a larger ABC to 1207-1216 at which point I'd re-evaluate for a short re-entry depending on my daily indicators and the USD, VIX, XLF and copper status. Good luck.
Futures reversed more than 1% overnight. So much for getting my wish for a Monday gap up to 1202-1210. SPX closed just above a steep uptrend line from 1173 on Friday, and that is likely to break on any gap down. The previous downtrend line from 1227 that was recognized about 4 times is now at 1187ish falling to 1182ish by Tuesday morning. Around 1182 late Mon-early Tues is when that line crosses the shallow uptrend line from 1173. Does X mark the spot very near term?
S2,
ReplyDeleteGood luck. I'm afraid that FOMC minutes tomorrow might be a bullish event.
Iwa, tough to know but I'd say it's likely to be used as an excuse for a move one way or the other.
ReplyDelete