Sunday, January 17, 2010

A look ahead...

The above chart assumes that P2 is over and we have started P3. The drop on Friday looked very impulsive. We either finished a wave 1 down or are about to finish it. The red line above assumes that wave 1 is finished and shows about where the wave 2 retrace will head before continuing down for a wave 3. The blue line assumes there is a little more down in wave 1.
The above chart shows various trendline supports. The red lines represent a bearish falling wedge. SPY finished just on the trendline leading me to believe that wave 1 is over and that we will travel to the middle of the wedge before collapsing out of the bottom in a wave 3.
The VIX looks vary odd having painted multiple shooting stars outside the falling wedge. At this point the VIX's next major move appears to be to the upside.

Still waiting for BPSPX:CPC 20ma to cross the 50 before I get too happy.
The VIX:VXN made an all-time low this week.

Basically looking at a move up in the near future to some point around 114.5-114.8 before a sharp drop down to the 111's.

Bonus Chart:
Nice shooting star on the Monthlies and the monthly stochs are extremely overbought.
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