Wednesday, January 13, 2010

How quickly the tide turns...

This market is really grinding me now. Well folks, while the market can do whatever it will, based on the price action we got and solid base that was formed in the 1133/1134 support area, we are looking at testing the upper side of the channel at SPX 1060. While a 5th wave can die anywhere in the neighborhood of the 786 retracement (market poked above it and closed beneath it today) to a double top to test of the upper channel, I'll be expecting the bulls just keep this churning.

While this looks like a normal 5 wave move on the hourly chart, the 5/15 min cash charts have overlapping waves all over the place, so while this doesn't look like a textbook ED, that is how I am counting it. This places odds on an overthrow in the 1160 area depending on the timeframe of when it gets there.

With the volatility the last couple of days the 10 day ATR did close above the 13 SMA. This may mean that we sell off starting tomorrow (unlikely) or that contraction in the market resumes and it drops below it until we get to the top. But it is an indicator to watch. Should we close down big tomorrow, I would throw in the towel for the bulls as the ATR would really jump along with the VIX, which is showing some signs of life.

Key resistance levels:
- 1150
- 1159/1160

Key support levels:
- 1139
- 1133/1134

I'm going to go ahead and say a close below 1130 and we have a confirmed trend change.
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