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Monday, June 15, 2009

SPX Support Layers

Beginning of a significant decline? Futures point bearish. Here are the support layers that exist from 878. There exists support (which may quickly become resistance) at 935. The next support layer spans from the top of the gap at 923 - 927 or so.

After that breakout support at 914 and a little below that the 200DMA.

900-904 offers a zone as well. Ultimately 875 - 878 is the bedrock support for P2 at this stage.

At this point EWI's primary count that this was a 4th wave triangle (a distributive kind of triangle I suppose) and the 956 push was a 5th wave top is looking pretty good at this stage. Indeed if their count is correct, than the gap at 920-923 may be filled today or tomorrow. For if their count is correct then any decline today would be a 3rd wave down and Friday's goofy action was just a pause in the decline. I guess all of Friday's ABC structures were just that - correctives.

Ultimately though, I still am looking at 910 - 914 support as a key to the whole wave structure. Thats a key EW marker for now. If 910-914 maintains, then any decline might be considered an ABC pullback from 956. If 910-914 breaks lower, then you're looking at a potential significant decline and a signifcant impact to the overall wave structure with larger impulsing patterns down.


  1. Dan,

    Thank you so much for posting your comments this early in the morning! It's always good to hear EWI's view as well.


  2. Drawing daily trendlines on a linear scale using closing prices (per the textbook), the trendline from the top in May 19th 20008 and August 28th 2008 cuts right through 950 and is heading lower at like 10pts/week. Clearly the pros are respecting this major trendline.

    If this continues to be respected, then 910 will be lost fairly soon as price heads towards the other side of the down channel.

    You really don't want to know how far away that is!

  3. And the lesson is that the retailers can't push a wave to it's final wavelength!

  4. Thats because there may not be that anticipated wave...In my humble opinion, the last wave up from 666 was an ABC topping at 946.

  5. any one charting today's EW move? where is the bounce and how much? 38%. i do see 880 by wednesday and then significant bounce. any thoughts?

  6. dan, here's my IT view on things and it has been somewhat consistent for several wks now. I've been confused with short term, but recall a week or two ago i made the following statements

    1) we wouldn't cross 960
    2) we're not going to kick off P3 shortly

    i still stand by these. take a look at the $compq 60m since march 6 (it's harder to see in the spx). i see 5 beautiful minor waves within a single intermediate ending recently with a diagonal. i'm calling it (A). now we start (B). it takes us AT LEAST to 875 and lasts 1.5 months or so (half of our 3 mo rally). after that we rally hard til fall then the crash of our lifetimes. this has been my perspective for a while now and continues to play out. we're still no where near crash status on my most reliable indicators. let me know what you think

  7. I seem to agree with Jhonyblue.

  8. Dan,

    i too stand by my previous comments of a few weeks ago. Those who read and believe this bullsh!t have no freakin' clue what they're talking about....How about 1 final post where u concede that u have no f*cking idea what's going on !!!

  9. That`s the usual shit, when you`re right you`re the best, when you`re wrong you`re a beast.

    Keep it up Dan, you have a great blog and u do a awsome work.

  10. Daneric,

    I can understand low volume push to 950+ that failed; bulls are tired. What do you make of these low volume pull backs? Seems so long as drops are on low volume they are seen as entry opportunity for bulls.

    Do you want to reconsider you position on bulls in a hurry and P2 top being near? Does it not make sense for this bullish sentiment to remain in force most of the summer and thus P2 top would take another 2 months to develop?

    What do you think are the odds of a more significant (more than 10%) drop at this point?

    JohnnyBlue said...
    "it takes us AT LEAST to 875 and lasts 1.5 months or so"

    I don't think that bulls would handle such a protracted long lasting pull back. Too many would be frustrated and rush for exit doors. Therefore any significant drop would take much less time, more like days. For instance if 910ish doesn't hold I think the market would drop to 875 in a hurry.

    As for "AT LEAST to 875" the odds are very much against any drop below 875. It would require a significant damage to the bullish sentiment to loose 875 level.

    Keep in mind that Q2 results are around the corner. Odds are they'll be again talking about bright wonderful future, inventory rebuild, etc. things looking better every day, bla bla

    Don't expect too much on downside. Bears will get killed yet again I am afraid.

  11. Don't expect too much on downside. Bears will be killed again.

  12. Great. Grammer cops on the beat. That's just what we need around here. Not.

    Ninja, MMs may also be looking at whatever profits they managed to gain in the last 3 months and thinking I don't want to lose it in quarter end bum rush. So Q2 results could have the opposite effect, i.e., bearish. I for one found it very dubious that everyone was counting on if not demanding a "blowout end" to Q2. 88% positive sentiment, higher than Oct 2007? Uh uh. Mr. Market doesn't allow everybody to be on one side of the trade. High time for the Pavlov's trading mutts to get slapped on the snout.

  13. if...if....if my Aunt had balls she'd be my Uncle.