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Thursday, February 18, 2010

Thursday updates

Here is the initial damage to the ES-minis, down to 1096, after the FED came out with their surprise announcement of the discount rate increasing to 3/4 of a point. Right now it is on Fib fan support, but as news circulates I would imagine that the futures will continue to tank, and the Dollar will strengthen. FWIW, at the time of this post, the Dollar has already made a new high at 80.97. This is the sort of event a lot of us that have been holding short overnight were half expecting, waking up to the markets that were selling-off hard in after-hours trading, and missing the move. This will be a very interesting open tomorrow, and of all things, on OPEX Friday!!!
BREAKING NEWS- The FED just raised the discount rate to 3/4 of a point!!!!!
After the close, this is turning out to be the never ending correction, the SPX closed up near resistance of the 50 day MA and also near the 61.8% retracement levels from 1150.73. The SPX also broke above 1104.73, making a higher high, again that confirms the trend is still bullish, and will stay so until we start making lower lows.
The VIX also managed to stay with-in is falling bullish wedge never breaking out and also made a lower low, breaking down below 21.08.
Breadth for the day finished at 2.26:1, advancers on low volume. Momentum is waning across the board now, and divergences are showing on the MACD and RSI, as the SPX makes higher highs, the indicators are not following suit.
On to the breaking news, since I was only half down with the post when it hit. And the futures are tanking, I will update in an hour after I see the damage.

9:31, The Dollar is on a tear again today, with a high of 80.73, breaking above 80.75, would make a new high.
Click here for a live, and updated chart!!!
8:58, With all the consolidation going on, the Bollinger Bands have really started to tighten up, and that normally results in a large move on the horizon. The Bollinger Bands on the daily chart is also showing the same pattern, and I will post that chart after the close.
Breadth is currently running 1.35:1, advancers. The SPX opened and made a higher high at 1103.56, and then went into a contracting triangle making lower highs, and higher lows that could be part of a micro second wave, of the sell-off, with 1103.56 put in as the top of the correction.
Click here for a live, and updated chart!!!
The VIX had a quick spike up out of the falling bullish wedge, but quickly recaptured it first thing this morning. Support is at 21.08, and a healthy break, up and out of the wedge would more then likely signal that a large sell-off on the indexes is commencing. Click here for a live, and updated chart!!!
7:25, Very possible that we have five full waves in, for the final "C" wave of the 2nd wave up. A break below 1094.93 would help confirm that the trend has changed, to down. Breaking below would also be making a lower low. The RSI on most time frames are also showing negative divergences. The VIX still has not made a firm break-out, but that would be a great sign for the bears when it happens.
Click here for an updated real time chart!!!
6:55, So far an uneventful open, we still need to put the 5th wave in, so expect a little upside this morning.


  1. Continued nice work Mike.

    So far, all I see at the half today is equity shorts getting their n*ts squeezed and naive yo-yo's plunging into the short US Treasuries wood chipper. Can the volume and A/D possibly be any more pathetic? US Dollar sure is lively though. Perhaps still a few $ shorts left with their n*ts in a vice?

    Why do I get the feeling the real action won't get started until most of us are asleep? I mean aren't most of us asleep now watching this?

  2. Hetty, feels like the calm before the storm. Some big is brewing, the Bollinger bands are going to snap here soon!!!

  3. Great charts Mike.

    My daily indicator went on a buy today suggesting a double top or a new high for the indices.

    My weekly indicator has yet to turn over suggesting one more leg up for a new high.

    Accordingly, the decline was an A-B-C correction.

    Something is brewing!

  4. Yes the decline was an ABC. However given the shape of the entire rally from the bear market low, that ABC cannot stand by itself. It might be wave 'A' of a sideways triangle eventually leading to new highs. In which case the present rally is wave 'B'.

  5. I am all for this being a wave B rally.

    It seems as though today was the top. Today saw the .618 retrace in the Dow both in time AND price. At 1108.24 I think that is close enough for the SPX!

    If a C wave down is to follow, from today's highs if C=A then look for about 1102. There is a H&S pattern easily seen on the 30 min chart that is confirmed that measures down to SPX 990...that's close enough for me for a wave C!!!

  6. I've got approx. 1005ish on tap...... gotta live a little....... lol.....

  7. Michael, that last black 3 and 4 on your top white chart - the 4 looks way too small in relation to what has gone before. Perhaps this is 3 and 4 and 5 are to come.