Tuesday, October 27, 2009

Almost to 1057 but not quite...

Today's low only got to 1061 (although several times). The bulls were there each time to turn the bears away. Today's chart shows we have prime buying signals:

- perfect divergence on the hourly macd (see how the red line's 2nd pivot is above the blue line when price makes a double bottom?), which is a very high percentage signal
- we are sitting right on support
- we are in an oversold area of the RSI where the bulls have typically bought the index.

Now that I have said that, here is what we can expect:

If the bulls take it above today's high (1072) tomorrow, then expect a likely retest of the highs.

If the bears take it below today's low (1060) tomorrow, expect a range expansion move to the downside and very likely the start of primary wave 3 has begun.

I personally am leaning towards a massive selloff tomorrow from the get go (or even a gap down). Why? Because it would trap a large number of bulls and a lot of bears would have missed the entry point. Should this be the case, we will likely have persistent selling all the way to 1000 with small (10-15 pt) rallies that get killed quickly. This would be consistent with a change of trend.


  1. Hi Rich,

    Was wondering your thoughts on NeoWave? Thanks

  2. njcct84,

    Sorry it took so long to get back to you. I actually forgot about your post there. I have never been a subscriber to NeoWave although I have read several issues. I personally am not a fan of subscription services for trades as I find the trades too crowded. However, overall I found the analysis sound and he gave lots of different stock recommendations based on EW with good stops and price targets. So I guess I would say it is one of the better ones I have come across.