Tuesday, March 16, 2010

Take a look at this count...

With the incredible price action we've had since the Feb low, I went through it once again and came up with the plausible count. This count would correlate with a several different market characteristics:

- The market has a tendency to reverse the gains/losses made during a fed day over the course of the following two days
- The market has an annual tendency to make a key high/low during the month of March and often during the 3rd week
- Key S&P sectors are not confirming the up move (XLV 61.8% retracement from high, XLK just over 78.6%, XLF currently at 100%, XLE under 78.6%)
- Market is overbought on all timeframes
- We are at a 21 week cycle high/low pivot time frame
- Volatility is once again at signaling a major down move is in the works

Now, that doesn't mean we don't trade what we see, so price needs to confirm the count. I have yet to see any confirmed sell signal in price action. Here are the levels I'm watching:

#1 - a drop below 1154 will peak my interest
#2 - I'm starting to get excited with a drop below 1141
#3 - When 1134 goes I hope I'm seeing impulsive action
#4 - It should be just a matter of time once 1116 falls that the Feb lows goes with it.
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