Monday, October 4, 2010

Daily Chart Musings


Ok here is a more detailed update. We have a lot going on at the moment and the market is poised for a directional change. At this point I am considering three distinct scenarios.

1) Breakout to the upside - during this scenario we will overcome the MACD bearish cross and may remain at a "close-to-zero" MACD divergence. The market has done this before and considering that everything is bullish it can do so again. A break on the upside would be a challenging technical endeavor as we have to overcome the Jan 2010 resistance.

2) Pull back to MA cluster - we have a HUGE extremely tight cluster of key moving averages. Ranging from 20/50/200 dailies and 34 exp. All of those are extremely bullish at the moment and are clustered in a 25 pt range. Its extremely rare for all of those averages to converge in such a tight range.

3) Bearish ABCD for a larger AB with C to come - the light blue lines could indicate a quite bearish gartley pattern and at the same time setting up for our B leg having completed last week thursday and now entering Leg C towards new lows below 1K.

This week will be crucial to let us know what pattern will play out. The highest probabilities lie within scenario 2, scenario 1 and 2 are considered the lowest probable scenarios but depending on price action below 1130SPX we can identify what the market holds for us.

2 comments:

  1. taking some profits here @ 1134 - concerned with last hour rally into the close. In reality it should make a new low but a bit too scared to let those nice profits run away.

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