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Friday, August 14, 2009

Are you Bearish for Monday? Hold on a Sec....






Yeah yeah, the ascending triangle failed miserably. That happens. The A-C line was trying to walk a steep angle. Those kind can fail.

Bears were probably feeling pretty mighty today. Even I was even when the triangle failed (I suspected it would when I saw the open) as I still hold a half piece of FAZ at $24.18. (yes I sold the other half at $28 - I learned to take at least half profits after a plunge)

I showed a bullish running triangle today http://2.bp.blogspot.com/_TwUS3GyHKsQ/SoXHm-4DqiI/AAAAAAAABYM/g_ynrZ78pv0/s1600-h/daily.png and today's market action would have been the "[e]" wave. "e" wave psychology is where bear traders are sure a new trend is starting in their favor.

Raise your hand if you thought that today was the start of a new trend down if your a bear?

And the lack of bounce for 6 hours just reinforces that thought as much as a lack of selloff reinforces the bulls. Who is correct?

Well that is when you have to weigh every factor you can. So I run down the list and here is what I objectively come up with:

1. VIX - Looks kind of faltering. Market down, VIX down. Bullish for the market. Also look at my 60 minute VIX chart. I have a wave [iii] down plotted for the past 2 weeks. I haven't changed this chart. Will it play out?

2. Daily Tick. Possible positive divergence. Its been "correcting" now for a few weeks.

3. Down volume ratio. It ended the day pretty low. Expecting this to get buried on Monday would be more risk than what usually plays out (a bounce at least) . In a hard bear trend down it can and will head lower in extreme situations. But are we in a downtrend even yet? Or even a confirmed trend change? Betting on the down volume to head lower Monday after a .25 reading?

4. Daily squiggle chart. Show me a bonafide 5 wave move down from 1018. I have a hard time counting one. Intraday today the price action "felt" very bearish yet look at the tape at the end of day! SPX - minus .85 % . DOW - minus .82% Yeah that's all.

5. Three week correction on indicators on the charts. The RSI and MACD has "corrected" down and shaken out a bit on the index charts at all hours. Yet prices maintain. This is more bullish than bearish.

6. Total down volume. Less volume on the pullbacks the last few days then the up volume days to get us to 1000 SPX. That is more bullish than bearish.

7. Market down today, BKX banking index was up.

8. QQQQ's Gap. The qqqq's have bumped under their huge September 08 bear gap down for three weeks in a row. They have a knack for closing those gaps and if it does close, they may run a bit. They just seem to be consolidating.

9. "BAD" news today was glossed over. We had every reason to selloff with the "surprise down" numbers reported today in consumer confidence and manufacturing , etc. (not that I believe in "news").

I have every reason to believe that the B wave correction is over on all the indexes and that Monday will be more bullish than bearish. Maybe I am dead wrong, but at least I am trying to weigh all the evidence.

Does this mean the Minor Blue C wave will be super-bullish? By no means I have no sure bet just how high the market may go. I have a 1032-1044 target as an ultimate P2 target. A spike over 1050 is not out of the question.

I just question why the market would dip down to 925 and then magically rally yet again above 1000. That is not consistent with the 1930 rally in which the last zigzag up maintained a beeline to the top at the end.

Bullishness made a new high today (over 81) on the $BPSPX. I think P2 will be one the greatest rallies ever. Bullishness could reach the 90's. I half expect it.

Anyways, do your own due diligence and all that. I am holding my half load of FAZ because I have the luxury of it and I failed to sell today... I covered my Apple short today near its low (small loss) it just wasn't working out.

I'm trying to be a good bear and plot nasty down moves, but I only see sideways triangle action....and it may be over. Remember I am usually a day early with up move calls.

For my sake I'll take a move either up or down to help clear things up.




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