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Friday, May 7, 2010

Friday updates

I did some tweaking on the squiggle chart since the close.
After the close, The market spent the day is tracing out a triangle for a 4th wave, but still unsure at what degree would be the correct labeling, so I am sticking with the most bearish option. That 1138 level, that marks the top of the "a of 4" wave should not be broken at this point with the bearish count, a break above would most likely signal that the sell-off was a corrective wave down, and the triangle today could be part of a 2nd wave with higher highs coming. The trend does remain down since we had no new higher highs and we did make one minor lower low.
Breadth for the day ended at 2.52:1, decliners, on heavy volume, giving us another day of follow-thru, that is very good for the bears having this many days of follow thru, meaning this sell-off does have legs. The SPX bounced off of the 200 day MA this morning at 1095.72, this is now the first level of support for a sell-off, breaking thru the 200. The next level would be yesterdays low at 1065.79, followed by the low back in February at 1044.50. The biggie, for a P3 down would be breaking that 869 level!!!!
* No Hindenburg Omen triggered today.
** The VIX closed at 40.95, very close to its highs of yesterday, this is not good for the bulls, and should help provide an interesting day of trading when the markets open Monday.
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**** Warning, Kenny copyrighted todays triangle, please acquire rights before posting this triangle. ;)
Click here for a live, and updated chart!!!
10:23, The squiggles, and the most bearish option with the bottom at 1065.79 labeled with the smallest degree 3rd wave available, hopefully in the next couple of trading days the price action will help to clarify what the correct labeling of that spike down should be. This Chart shows how investors that were fleeing to safety caused yields to plummet yesterday.
This Summation Index chart from last night shows how it is accelerating to the downside now, also the trend is clearly down!!!

9:56, The VIX has broke out and made a higher high, and still is not in over-bought territory on the STO and RSI, next upper target is the 54 dollar level where it will challenge resistance from the next major higher high from late March '09.

8:58, If this sell-off stays impulsive, here is an early attempt on how I would count it out longer term. With only three wave down so far, there is also the risk of this sell-off turning corrective as all the previous sell-offs have, followed by new highs.
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8:24, The SPX did find support on the very last Fib fan line, if it breaks to the downside again, this rally for the last year+, would be in serious jeopardy!!!!
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8:11, I added some labels, because of the RSI, which most likely bottomed yesterday, I labeled it as the first 3rd wave (black 3), as it normally hits its extremes in the iii of 3 wave still leaving more downside for rest of this count to play out. The market has no business above the 1160 level as the 4th wave would be entering the 1st, and the trend remains down until we start making higher highs, breaking above 1150 would be very worrisome!!!
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7:53, Updated Fib fans, I did set the last fan on the bottom of that spike yesterday because it was an extreme.
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7:21, The 1-2, 1-2, 1-2 count is the most likely option right now, just not sure how that spike down fits in other then being the first 3rd wave down (Stockcharts is having problems this morning so I was unable to add annotations to this chart). We are still getting some follow-thru to yesterdays historic sell-off. Breadth is currently running 3.38:1 decliners.

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