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Wednesday, March 31, 2010

Wednesday updates

After the close, Twelve days and running now stuck in a corrective triangular pattern. It is getting to the point that time is running out for this rally. I see three options, two of them extreme, the first, this rally is going to truncate and go into a sell-off with-out warning, and second, all this consolidation is going to lead to an explosion to the upside. And the third option, the boring one, is that the rally from 1044.50 has already wrapped up as an "A" wave, and now we are in the "B" wave just as back in November thru December where the market went sideways for close to a month before breaking out to the upside.
The indicators on the daily chart above are starting to give sell signals now. The MACD has now crossed and the histogram is in negative territory, the RSI has peaked and diverged for the last couple of weeks. In the past the RSI has always peaked before the sell-off started near the end of the 3rd wave up, then diverged for the 5th and final wave. And lastly volume is drying up after peaking at the same time as the RSI. These signs can go both ways right now, and that is what worries me about an extreme move upcoming. With the indicators now out of severe over-bought territory there is quite a bit of room for an upside run for the price action without the RSI making a higher high, and vice-versa, this also can show the weakness in the market right now and the price could collapse at any moment.
Breadth, once again, a meager 1.49:1, decliners. BORING!!!
The trend is still up, with 1152.88 making a lower low and changing the trend to down. There is a minor low of 1161.48 that would make me question the up trend as the SPX has no reason being near this level in the immediate future for the count to stay valid.

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8:15, The gap down low was right on track this morning at 1165.77, the only worries I have at this point is the wave structure from that low, the move up looks corrective, instead of the impulsive move I was looking for, for the start of the 5th wave up. This is looking like the never ending correction, now in its 12th day.

Click here for a live, and updated chart!!!
7:45, I added the red dashed line for trendline resistance to the Fib fan chart.

1 comment:

  1. hey man

    we are doing E in my opinion... stop at 1177...

    thats the reason up is corrective and thats the reason we came out of the channel... D was 1165 and E can be another triangle or stait down... i think will be triangle inside a triangle...