Friday, March 20, 2009


We gave back some of the gains as anticipated and for the first time broke the up channel. Of course this break can either be a small violation (unlikly) or the setup to form a base here in a 30 point range below the 800 range for a break of the 800. As this rally is quite a bit different then any previous rallies we have to be a bit careful - of course all indicators are screaming top but we did not have this type of outside interference before in any of our other rallies.

Its quite odd to see VIX shot up this much on such a small drop, almost sideways like. Additionally volume was quite strong yesterday as well. The most likly scenario is people taking some profits, adding hedges and of course protecting themselves for the two major scenarios we have described - 100+ points on either side.

It further goes to show the indecision in the market place as no one knows what to make of the feds interference on wednesday. You may remember a few weeks ago I said "bad unless prooven otherwise" - thus far we have not seen the proof that things are getting better.

Option expiration today - so it "should" be a sideways day. However, we are really moving in uncharted waters here so anything is possible. Many have held on to great gains on financials and may be looking for a way to take profits - or addition of hedges if you are convinced of further up turns.

We should be giving the 771 a test here today - it is very likly to hold this range here if this is the setup for a base for new highs. If we end up breaking the 771 I am confident we will see our 50% retracement and head back to 741-751 range. However caution is required here.

How to trade this?
We are not at a point yet where we can clearly define the direction.

To quote schismatic in the comments yesterday: "Next week will be, it seems like I say that every week to myself" - trust me I am in the same boat. However you may remember my long term forecast I had posted beginning of the month. I said that March will give us MANY clues for what is to come for the remainder of the year - I still feel very strong about this statement and as you can see we are setting up for a rather large move here. Patience is everything and properly identifying the signs and making the right calls based on this is everything.


  1. Ok decision time now. 60 min charts, 10, 20, 50 unit moving averages all together, MACD on centerline about to give us a great center line cross over signal. Break of 790 we go higher, break of 780 we go at least 771.

  2. sorry I meant 15 minute chart not 60min.

  3. It looks like trending down. to 771

  4. yeah slowly. Remember what I said yesterday "It is very likly to remain in a sideways pattern here for the next 3 days with minor down turn but not exceeding the 771-773 range." also option expiration today so expect it to stay light even into the close.

    So far its still too slow of a downtrend to make me believe we have a chance at a break of the 771. We will have to wait and see.

  5. added pic. Expect a bounce here, depending on how it forms we can make some conclusions if we continue on acclerating or hold before the weekend.

  6. you mean accelerating down or up?

  7. if you look at the 3 trendlines in the pic you can see that we are currently in the steepest, depending on how we retrace we have to watch out on how we continue downwards after the retracement (if at all). We have 2 hours left, a lot can happen if we continue on the steepest accleration here.