Sunday, February 1, 2009

Here you go...

The daily looks like we are going to drop out the bottom of the symmetrical triangle this week. Note the trend line on the stochs. I expect that line to hold on the next bounce on the dailies.

I am in the camp that believes we have started the move to a major bottom. In Elliot wave terms the move started at 94 and wave 1 finished at the purple 1 in the chart. Wave 2 ended at the island top reversal from Wednesday. We have started wave 3.

I expect a bounce at 81.87 up to around 85.5 then another move down from there. That is what it looks like to me at the moment. The move up may overshoot as it may line up with bail out news. In any event watch the volume. If the move up is on diminishing volume (on a daily basis), start layering in more shorts.
A major news event and change in sentiment could morph the structure into more corrective up and down choppiness. Also don't go by any time references on the chart, these are swing targets only. I moved in short on last tuesday and added a little more on wednesday. Exited part of my SRS position and some mar puts at eod on friday. Why not exit all of it and play the bounce? Well there is a chance we may make a big move down monday and I didn't want to miss that and I had to balance that with the likelihood of the bounce (very high).
Key factors: O's new bailout, Bad Bank plan, Jobless claims, Employment Situation, Overseas bank problems, Retail closures.