Sunday, February 27, 2011

Weekend Update

Okay, first off I need to apologize for the lack of content. Truth be told, I've been spending most of my 'free' time on my automated trading system. With that said, look for a couple of posts a week to keep the big picture in perspective.

Last week gave us our first decent drop in a LONG time. In fact, we haven't had a weekly reversal signal since 8/13/2010. That one led to about a 90 point drop over 3 weeks. Nothing too exciting. The time before that was 6/25/2010, which led to a 125 pt drop over two weeks. That was quick and short lived...

Our last drop of any bear value was the flash crash that started on 4/30 and lasted 4 weeks after a drop of nearly 180 pts. So as this correction unfolds, we will keep an eye on those numbers.

From a technical perspective the 1200-1220 area is very important for the bulls. Should we get more than a couple of weeks of selling and 125 pts (which puts us in the range), then the bulls are in trouble. Look for a ton of buying to come in that area to end our correction (should it be that) or our wave 1 (should primary wave 3 have started).

The short term count down can be counted a couple of different ways depending on how you count the end of the previous wave. I lean slightly towards the wave 2/b flat pattern, but I wouldn't be surprised either way. The short line for this week is follow through so that we have another couple of red candles before March opex week.

Wednesday, February 16, 2011

Divergence is building...

We got the test of the trendline just like I was forecasting. The bulls were there to buy it up, so we had no break.

And now the market is gearing up for a big move: up or down. The RSI divergence is pointing down, but will the buyers come out in droves and cause a short covering rally? That is where we are and tomorrow should prove out.

Tuesday, February 15, 2011

Morning update...

Prices are in retreat once again this morning. The 1325 level in the futures is a key level to watch. A move below that could provide some selling that this market has not been inclined to do. Still watching....

Thursday, February 10, 2011

Count update

So we got some kind of correction off of my top labeling. So far nothing of significant size. The top label is either the end of our pattern or it was the end of subminuette 3. If that is the case, then we should see some more bouncing around but buyers should keep price above 1310. We're getting very close to that number in the futures, so it should be interesting to see.

A bearish count would see yesterday's price movement the end of a wave 2 irregular flat. Today's gap down will be an acceleration wave 3. Keep that in mind as price action unfolds.

Tuesday, February 8, 2011

Quick update

Sorry for not providing more timely updates, but the market hasn't been giving us much to work with. We're nearing a potential 5 wave pattern, so I thought I would at least give you a heads up. This last wave has been one that doesn't want to end!

Still looking for a close 1310 for an early signal that this wave is finally over. But we'll need to see something more impressive than one day of selling.

Wednesday, February 2, 2011

EW Count Update

Well, as my primary count obviously didn't prove out at the impulsive move on Friday was wiped out yesterday, I move to my next preferred count: wave 4 flat. Looking at the lowest level charts, I expect this final wave to finish in the 1310 area. We won't have full confirmation of the next move down until we break Friday's low, but a move below the 1290 at this point should tip us off.

Best of luck!