Sunday, August 22, 2010

The week should finish down...

The wave ii retrace should take us to somewhere between 108.17 and 109, before we start the descent for wave iii of (iii) down. We should be below 101 by mid September.
The dailies showed that SPY pierced the neckline but regained it by the end of day Friday.
BPSPX:CPC is still living below the 20ma, which means the 20ma is curling over down. The next week will be an excellent time to finish building out a large short position. On a time basis it probably should be done on monday. Wave i took about 2 days. Wave ii should end with in 1-3 days.
SPY and VIX were down. The VIX kiss off the 20ma should signal the start of wave iii down.
Here is the longer term SPY chart with the huge HS pattern shown.

I was going to right about the Hindenburg Omen this weekend, but of course life got in the way. Suffice it to say we had a confirmed second signal on Friday. A key point to note about the Omen is that a portion of market is making new highs while another portion of the market is making new lows. This is not just a few stocks but a significant portion in each direction. Basically the internals of the market are no longer moving together and this generally happens right before sharp down turns.
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