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Tuesday, August 10, 2010

Tuesday updates

The percent of stocks above their 50 day moving average has stalled, in the past once the 20 day MA (blue line) has caught the price action, a top was put in around that time. If the SPX were to sell-off hard tomorrow, odds are this chart would become bearish with a cross-over.
The bears finally broke out of the rising trendline on the Breadth chart and the decliners made a lower low.
The Summation Index which follows the larger trend, also stalled today, although it did print a black bar, it is very possible that it is consolidating and will roll over if we have more down days this week, moving the larger trend to bearish.
After the close, The SPX had a wild day of whip-sawing with the FED announcements today. The count above is one of few different ways to label this rally, but this is the one I have the most confidence in, with a flat 4th wave instead of a 1-2, down scenario. I just do not feel comfortable with the 1-2 down because the 2nd wave traveled further then my liking for a 2nd wave retrace, 88.22%, beyond the 62% range where the odds start dropping like a rock, that the correct count will end up as a 2nd wave.
The SPX never did make any important higher highs, or lower lows so that trend remains unchanged as up. The Trend Finder bounced around between 25-50% bullish in that time span the FED released its report, because if that, I elected just to keep it at 25% bullish, until the market stabilizes tomorrow morning.
Breadth for the day ended at 2.71:1, decliners, nothing particularly strong, but on improved volume.
The SPX needs to have follow-thru tomorrow if indeed the correct count is a 1-2 down, if not, it will work its way higher challenging 1131.23, where it is very possible that it will break-thru, taking the stops out the shorts have, and create a bull trap where it will immediately reverse back down. The same story, only reversed happened last July when the SPX made a lower low below the previous low of 878.94 from mid-May, and bounced at 869.32 trapping the bears, in the biggest bear trap of the year.
The important highs and lows are on the above chart, with 1107.17 being the most important for the bears, a break below here would opens the gate to 1088.01. Breaking below 1111.58 would be an early warning sign that the up-trend is in trouble.
As far as putting together a bullish count, it is very tough unless this rally is a Leading Diagonal for the 1st wave up, or a long series of 1-2's. Again, I discount that series of 1-2's up because when this many stack-up, odds are that will not be the correct count.
TNX, which tracks the yields of 10 year treasury notes is still continuing to make lower lows, and is trapped inside the middle bearish Fib fan, and is firmly inside the down channel. A break, up, and out of either of these would be the first sign that a new up-trend might be starting to take place, other-wise, there is more downside to go.
8:10, If the SPX cannot take out that trendline of support with conviction, the odds really increase that this mornings low would be the 4th wave, and not where I have it placed now, making the 4th wave more of a flat correction, with the 5th wave still not finished.
8:05, The Euro has broke-thru the trendline that has been providing support, this could be the start of another sell-off in this currency, and definitely something to keep on the radar.
The BKX is now testing support from the bullish Fib fanline, a break below 47.50 would put it in the lowest, least bullish part of the fan, with support around 45 from the bearish fan, and 41 from the last bullish line.
Click here for a live, and updated chart!!!
7:42, 1131.23 is some tough resistance, if the SPX sells off with-out making that higher high, that really increases the chances for a longer-term sell-off, robbing the bulls of that higher high, only leaving lower highs, and lower lows for the last four months.
Click here for a live, and updated chart!!!
7:22, Possible that the SPX has put a top in, but some more downside is needed to confirm so, and a break below that previous low of 1107.17 would help. The SPX did break the trendline and the 200 day MA to the downside. One thing that is bugging me though, the Ending Diagonal did not have a throw-over for the 5th wave. If 1107.17 does get taken out, next support from a low would be down at 1088.01, the trend does remain up until the SPX starts making lower lows.
The Trend Finder has one of the buys going to a sell, moving the trend to 25% bullish, down from 50%.
7:14, The VIX opened gap up, and was able to break above the 200 day MA, but has to break-thru trendline resistance to keep this rally going.
Current Breadth, 5.43:1, this sell-off might have some legs to it!!!!

1 comment:

  1. Thank you for such detailed analysis. I am looking for a top on Fri or Mon. Bought FAS for a 3 day blowoff top trade this am