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Thursday, January 28, 2010

Believe it or not, there still is some downside left !!!
Resistance on the longer term Fib fans is around 1115, and support at 1055.


Not much upside room left on the Fib fans before the price can break out, 1095 and things would be bullish. This will be one of the charts I will be watching tomorrow, really close.


After the close, I am getting that bad feeling that the optional count might be the right one, with more downside to go. The rally from 1078.46 is really looking corrective to me, with lots of over-lapping waves, not very impulsive at all, and the breadth is still bearish. I was expecting to see a quick and strong start to the 2nd wave up as the dip buyers jumped back in, and it is not happening. Now that we have had some upside, the indicators are back out of over-sold conditions leaving room again for more downside. I am staying neutral over night until we get more price action to determine the short-term trend. Breaking above 1100.22 would void the extended 5th, and breaking below 1078.46 would void the 5th wave already in.
Another strange thing is the VIX is not making new highs, as the indexes are making new lows.
Breadth for the day ended at 2.77:1, decliners, and the SPX did make a new low, without making any higher highs, so that trend is still down.
The Russell finally broke and closed below its 50 day MA.

FWIW, In Wall Street Survivor I tried two quick scalps today, and they both got stop out, 100% cash overnight.

11:29, Here is another option I have my eyes on, an extended 5th, this is really bearish though, and will stay valid until 1100.22 is taken out.


10:45, My prefered count, with the nested sets of 1-2's has been completed at 1078.46, five full waves can now be counted. For the next wave up, wave 2, I have a target of 1114, both by the Fib retracement levels of 50%, and conveniently, the 50 day MA just happens to be at 1114.54.


8:05, The Dollar is back to making higher highs again, currently $78.93, after hitting $79.07 this morning.


7:34, The is still the most likely option IMO, unsure at the moment if the high of 1100.22 at the open was the ending of wave "A" of 4, or the completed 4th wave. The STO and RSI are painting a picture that it was only the "A" wave, and if so we would now be in the "B" wave of the 4th, with another boring day trading in the range of 1083-1100. My second option is still having the 5th completed yesterday, but I am not seeing much to confirm that. Breadth currently is 1.65:1, decliners, and that spells boring!!!

Click here for an updated Fib. fan chart!!!

7:23, FWIW, I exited my 25% short position bought right before yesterdays close in Wall Street Survivor for a 3% gain, 100% cash now.

6 comments:

  1. Interesting site.

    What do you make of the A/D ratio today? Doesn't seem to favour an end to this yet. Is there a possibility this move might go all the way to 1040 or so? This would certainly give the longs trying to pick a bottom a taste of what the shorts have been going through for six months. Plus I have my doubts whether Bernanke keeping his job will matter much to the market right now. Either way it looks like it could be an excuse for more selling.

    Cheers!

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  2. hettygreen, yes, breadth is up for the bears, that is why I added that optional count. Anther thing is that the indicators are diverging, but that also puts then back up to where they have more room to run to the downside.

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  3. Great count Mike. I agree with your 1045 post that Minor 1 is likely over. I think the chances of an extended fifth minute in a Minor 1 are pretty slim. How do you do those fib fans of yours? That's pretty cool!

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  4. Blankfiend, I wrote an article all about the Fib fans, you can find a link to it, in the upper right-hand corner of the blog :)

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  5. why is more downside bad? are you long???

    i think the VIX is ready to make new highs soon... it's locked in a triangle for now, but ready to pop

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  6. Cementzak, LOL, I really am long term short, just wanting to get the 2nd wave up, over with so we can get on to the meat of a 3rd wave down

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