Saturday, May 1, 2010

Weekend Analysis

The bulls certainly put the pressure on Thursday and Friday morning running the index all the way backup to the left shoulder pivot before rolling backover. We now have a situation where we should get a sell confirmation with a weekly reversal next week (at 1173) and hopefully a lot lot more with a monthly reversal (1077) and eventually the start of new trend should the key weekly pivot at 1044 fall.

Also of note is the ATR sell signal that we got back on 4/16 never went back to buy, and hopefully it will stay that way for some time.

Let's look at some projections. We have major weekly support coming in around 1135/1140 next week. The way I come up with that figure is essentially drawing a trendline from the high of two weeks ago to the low of last week to get an extreme projection for this week. Seeing that we should be in a 3rd of 3rd, we should be able to make it to the extreme. The weekly ATR is at 30pts, so a powerful 3rd wave move should be able to muster up 45-50pts. As my current short position consists of May and June FAZ calls, I'll look at taking off 1/2 of my May calls should we get to that level. The other 1/2 is targeting 1080. My June calls will have a trailing stop, and my target will be the 3rd wave low once a 4th wave is confirmed. I'll be trailing my stop above the weekly highs.

A gap down Monday is not required but preferred. The count could change if there is a little rally in the morning before putting in new lows. Any move above Friday's high would stop me out.
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