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Monday, November 15, 2010

Monday, After the close!!!

6:53 PM on the west coast and futures have gone down, making another lower low, odds are better for this sell-off being a corrective double zig-zag down, also there is a slight chance this is one ugly series of 1-2's but we would need to see one large (monster-sized) 3rd wave down with very strong internals for this option to have any chance at all. The reason I keep bringing up a larger size move is because there are a few signs pointing to a larger trend change taking place.
The Summation Index made a large move to the downside today, A very bad sign for the bulls. This acceleration to the downside normally confirms a top has been put in and a new trend is underway. This really opens the door for something larger happening with the equities besides a 4th wave.

I did add Gold to the Trend Finder today and plan on adding more indexes and futures as time allows. At this time Gold is showing a sell signal on the daily chart.

The SPX most likely finished printing a "X" wave today meaning that the A wave of the 4th down has turned into a complex corrective. If the SPX does not make a lower low, then it could be labeled as part of the B wave up(blue). I am leaning towards to "X" wave because this 4th wave in this larger degree needs a few weeks to play out. 4th waves usually take the most time to fully develop compared to 2nd waves so it would be un-characteristic for this wave to play out in only a couple of weeks. It should be a long, drawn out series of corrective waves during a period of consolidation to burn off all the over-bought conditions, ie. BORING. There is also a very small possibility that something larger is happening, something that has not been out of the normal for the last few larger trend changes, where they start with a few over-lapping corrective waves that eventually turn into a more tradition looking impulse wave. There has been nothing normal about this whole rally from 666, with many over-lapping corrective waves that keep getting more complex, so nothing is out of the question. Adding more weight to this option are the Summation Index, and the Percent of Stocks above their 50 day MA, both of which are suggesting a new down trend is underway.
Breaking below 1083.56 would be making the first lower low, another sign that the up-trend is in danger.
The SPX closed right above the 20 day MA, an area that has provided firm support for this entire rally. Really interesting how the indicators are suggesting that the SPX still has room to decline before reaching over-sold conditions, quite possible that the 20 day MA might not hold this time.

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