Sunday, December 13, 2009

Immediate move down...

We need an immediate move down for the count to hold true. We have had a 3 day up move on declining volume. The dailies are not over bought as 4 weeks of sitting in the channel has relieved any extreme conditions. Typical TA would suggest this has been a consolidation period before another move up. The only issue has been that the consolidation has had an upward bias, which normally points to a move down.
The VIX hit support. Its time to rebound or move to the lower BB. Similar to the BB on the SPY dailies, the VIX BB has been contracting. The move coming up will be a big move.
Of course we have the ever popular "Batman" formation, which I feel is just a sharper head and shoulders formation. This is a reversal pattern in a rising market.
In conclusion, my bet is that the market will make a big move to the downside. This is OPEX week, so it will be interesting. Max Pain was at 105, the last time I checked.
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