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Tuesday, July 13, 2010

Tuesday updates

Yields on the longer-term Treasuries broke their downtrend.
BTW, The last hold-out on the Trend Finder did go bullish after the close, now all indicators are bullish.
After the close, The bulls took the ball and ran hard with it today, at the high of the day it challenged the trendline from the top after clearing the 50 day MA. However, the trendline held, and the SPX closed underneath the 50 day MA, which closed at 1095.98. Very possible now that we have a full five waves for this rally, I did take the corrective count off after watching the shape and thrust turn more impulsive over the last couple of days and now we also have a decent looking channel going. Again, we closed with negative divergences on the indicators, which would support a 5th wave.
There is a gray 1 on the above chart for a bullish option, which at this point does not have the odds on its side, but that could change if the next sell-off does not make a new low, and traces out a corrective wave down, and that would be counted as a 2nd wave down.
The bulls did control the market today, with a really nice finish at 7.09:1, advancers, on 92.04% buy volume. That is now two 90+% bullish days since the last 90+% bearish day.
The Trend does remain bullish, and there is a high possibility that the only bearish indicator I use will turn bullish after the final data has been updated. This is a lagging indicator, not a leading indicator, so it would not be out of the question to have a strong sell-off and the start of a new down trend tomorrow, even though all indicators were bullish.
Levels on the upside are the 50 day, at 1095.98, the 200 day MA at 1111.89, and the last major high up at 1131.23 for resistance, and on the downside the 20 day MA at 1076.07, followed by the last low at 1070.45, which would be a great sign that the up trend was over, and a new trend underway.
BTW, the VIX never did make that lower low today and actually closed in the green, VERY unusual for the SPX to have such a bullish day, and having the VIX also closing in the green, this could have some meaning to it as investors might be getting nervous at these levels and grabbing some protection just in case this high does not hold.
7:43, The VIX is very close to making a major lower low.
Click here for a live, and updated chart!!!
7:26, Added a bullish count in gray now that the SPX has surpassed the 61.8% retracement level. Although the 2nd wave up is still a valid count all the way to 1131.22, odds start dropping once that 61.8% level has been reached. Both counts do have suggest that a top of some sort is near-by, so the size of the next sell-off will be very important in determining the larger trend.
So far this morning, this is the 2nd strongest day for the bulls since this rally started, breadth is at 8.33:1 on 93.57% buy volume.
7:14, The SPX is on the verge of entering into a more bullish Fib fan.
6:51, The SPX is now approaching the major trendline from the top and should bump into it around the 1100 level, this is something I consider very important to hold for this bearish count, if taken out, it will be time to rethink this whole sell-off. Before the SPX gets to that point, it will have to contend with the 50 MA, which is at 1095.83.
The SPX did make another higher high this morning and the trend finder is now at 75% bullish and quite possibly will move to 100% bullish after the close, so it is the bears last stand here.


  1. Hi, Michael, Could you please show the bullish count in grey in a larger scope? If it is (1), what degree it is? Thanks.


  2. Hey Michael - what do you think about this being a expanded flat or running flat?

  3. Interesting - I too thought of a running flat. However, time analysis doesn't support that pattern. The better interpretation is that this is part of wave 1 up of C (from the bear market low) unless or until proven otherwise.