Tuesday, June 22, 2010

Yuan-a have a Reversal Day?

It is days like this that investors who approach the markets from a technical perspective sit and marvel as the day unfolds. Traders were greeted Monday with the news that China ' signaled' an end to a 23-month peg to the dollar--the operative word being 'signaled. Overseas markets were buoyed with the news, the exuberance enough to cause U.S. markets to gap up at the opening. A collection of shooting stars and bearish engulfing lines were formed as a result of today's textbook reversal.
Today's action suggests that the market could only muster up enough strength to make an attempt a the first set of harmonics it faced:
  • SPX extended 1.382 from the may 25th-June 3rd rally. (whether that was a 'a' or a 'iv')
  • The market peaked at the 50% mark of the April 26 - May 25th decline.
  • Monday's high touched the R1 resistance from the 1219.80 high.
  • The market made the low on June 8th (energy date) and today June 21st was a Energy Date.
It is looking more likely that the market may start to fall apart here, but it is possible that this decline could be a 'b' of an ongoing a-b-c that is headed ultimately to 1150.00 before a wave 2 top can be anticipated. (perhaps 1150 on June 28th). However, a decline below 1085 SPX would be warning of possible trouble--a break of 1075 could mean trouble in the very near future.

The next Energy Date is expected on the 28th of June. This next energy window will likely set off fireworks that will last for most of the summer--with periods of ferocious intensity.

Watch Copper and the Baltic Dry Index.: both are in precarious technical states.


Ruminations of a Bear.
The chart below shows some of the possible harmonic levels for the SPX if the market were to decline below 1040. This may be helpful for option spread strategies.

1 comment:

Anonymous said...

Can you please post new developments in the sky? Are you expecting smooth sailing for markets or serious troubles?
Thanks in advance...