(Update Fri 12/2/11 4:15PM EST)
The System is now short from 1246 after being in a long trade from 1170 to 1246. There are rumors of a Fed discount rate cut and more downgrades, so I don't know which way it will go on Monday. Technically, if SPX gaps down on Monday, I'd guess SPX is in 3 of A down from 1260 to 1230-1235 with an ABC ending at 1220-1230 or 1210ish. The NYADV, VIX, TICK and RSI negd setups would certainly support that scenario over the next couple days. But, another slight high on Monday to 1260-1270 wouldn't really change my projections much for the next couple weeks. Dec 8-13 looms large as a turning point of huge proportions although I expect SPX to somehow close at 1200ish or above at end of year in order to keep Dow positive for 2011. Good luck and great weekend!
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The System never got a 12pt pullback during the last few days to reload long (missed by a few pennies once), but it finally occurred this morning at 1248. However, I am shifting the System into neutral mode which means it will temporarily shift from long to short on a 2-candle support break currently at 1246.03. The current long trade entry from 1170 is one that will appear more profitable on paper/chart than it actually was because I took 50% profits too soon, but it pretty much averages out in the end with choppier trends and my public 60min chart reflects the System entries/exits.
Here are my reasons to go short for possibly the next 2-4 days once support is broken.
1. The 200dSMA is a key MA s/r level to the System and it was nearly touched today while Dow already did so.
2. SPX is overbought with 15-60min negd and the 1200 breakout or long-term 1220-1230 s/r level would normally be backtested.
3. 15min DRSI indicates 5 waves up from 1159 to 1260 and it os on the verge of confirming completion.
4. Many stats regarding NFP days, NYAD scissor tops, VIX lBB20 breaks, money flow etc indicate an imminent 20-30+pt pullback.
5. My primary short-term count still remains a triangle. 1265+ would not necessarily eliminate it, but it is resistance and 1260ish is near a 78.6% retracement of 1293-->1159 which fits a long triangle leg.
Having said all that, I plan to go long again very shortly because...
1. The new System cycle is nascent and my spending analyses favor upside pressure a couple days to a couple weeks longer.
2. There are numerous supports from 1180 to 1230 including the 20dSMA, 50dSMA and 89hEMA/SMA at 1210-1227.
3. SPX is in a historically bullish configuration in that it closed above a 61.8% retrace, 3-candle daily resistance and the 20/50dSMA. The missing piece is the 200dSMA.
Those are also reasons why you may want to use the next pullback as a more favorable long entry point rather than trying to short it especially since I am only expecting 2-4% downside for the next week.
If SPX completes 5 waves (as DRSI currently favors) for 1159-->1260+, we should end up seeing a 5-3-5 at a minimum regardless of any count and regardless of whether that 5-3-5 completes a triangle leg to 1260-1270 or a final ABC to 1293+. Since we can't be sure if the 3-wave retrace will be part of a wave 2/B/triangle/flat, it could retrace any percentage. So, the best thing is to figure out the Fib retracement levels and match those up to other key supports. Using the 1371, 1075, 1293 and 1159 pivots, there is a cluster of 4 Fibs at 1221-1226 with the 20dSMA likely at 1224-1227 over the next 2-3 days and previous key pivots at 1220-1230, so I think 1220-1230 is a likely strong support level. Below that, there are 2 Fibs and the 50dSMA at 1209-1210. Then, there is another cluster of strong Fibs and pivots in the 1180s. So, strong support coalesces at 1220-1230, 1210ish and the 1180s.
Although I am favoring a 60%+ retracement triangle leg down in the near future, DRSI tells me to expect a 5-3-5 up first which means the next 3-wave drop is only likely to retrace 30-50% before retesting 1260-1270. Of course, that fits perfectly with 1220-1230 support or a possible brief dip to 1210ish. Those levels are where the System will start looking for another long entry. I suspect the whole 5-3-5 could end around all the news events planned for Dec 8-13 and that may be the last time I will personally trade on the long side until mid-to-late January. Good luck.
Hi S2,
ReplyDeleteSo much conflicting information, hard to follow !
You are short but expect only a dip to 1220 / 1210 (possibly extending to 1180 without breaking your count) where you make an argument for going long. Your time window is from Monday 5th to Tuesday 13th (which includes the European news event window of Dec 8/9) and which you qualify as a turning point of huge proportions .... obviously to the upside, since you mentioned you wanted to go long very shortly ?
Yet, you also say that the whole 5-3-5 could end around the identified time window of Dec 8-13 and that would be the last time you trade the long side until mid-to-late January !
If it's the last time you want to go long, it implies you expect prices to go down, then it contradicts the whole previous demonstration justifying why one should go long in the first place !
Like I told you before, shorter sentences, shorter paragraphs and less peripheral explanations would go a long way to better communicate your ideas.
Trigone5,
ReplyDeleteIt's very difficult to get beyond your negative energy. Hopefully, my new post makes more sense to you, but, as usual, it's not a quick read. You get what you get and it's free to boot. Good luck.