Thursday, March 4, 2010

Man this one just won't die

From the price action today, I hate to say, but we now have another subdivision...which means, of course, that our 5 waves are not yet complete. So, tomorrow I'm expecting the 786 retracement to be tested and hopefully hold. If not, then of course the market will be pushing to new highs and p3 has not yet started.

A few things to note, however.

The 10 day ATR has been dropping fast. It currently sits just above 12pts. We are getting ripe for a range expansion day, and that fits nicely with a resumption of the downtrend. We'll have a confirmed down move when it pops above the 15 SMA currently sitting at 15.5 pts.

Historically, March has been a key turning point in the market. We all remember March 2009, but it also happened in most of the other years going back over 10 years. If it holds up, next week will be the first of many selling weeks.

The market has a tendency to rally into the monthly employment report and sell off the week afterwards. This also fits nicely into the pattern.

Tomorrow, expect a gap up, test the 786 retracement and get rejected. If price holds up there, then get we best get conservative on any bear positions until further confirmation.

Key support level: 1115/1116
Key resistance level: 1127/1131
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