Friday, October 1, 2010

S&P SELL READY

  • A few more analysts that I respect a great deal capitulated to the bull today. This is not to say that they will not rejoin the bear camp but it is a sign that a top is near.
  • The chart below shows several Fibonacci relationships that suggest that a pivot point is due in this time frame.
  • As you know I have been constantly harping about the importance of 1141--as well as 1107. I also mentioned the power of the Sept 21st-24th time frame. Since that period the market has tried to break away from the 1141 area but to no avail. If you take the low since the 21st (1122.79 on the 23rd) and the high (1157.16 on the 30th)--the median price is 1139.97 and the Sept 30th close was 1141.20. The market is resonating around 1141. While a break to the upside Gann harmonic of 1175 is possible it is beginning to look like the market my turn down from this very important harmonic level.
  • RSI and MACD are suggesting that the market is quite vulnerable to a decline at this point in time
  • If the S&P breaks below the 1122.79 low established on the 23rd, prices are likely to continue to decline. If the market does decline further the 1107 level becomes VERY important. If the 'Great September Rally' is not over 1107 should be strong support and a further rally to the 1175 harmonic is possible. A close below 1107 would greatly decrease the probability of 1175 being seen anytime in the near future.
Energy Dates for the S&P 500 are
  • October 4-5 ******
  • October 8th *******
  • October 11-12 **
  • October 21-23 ******
  • October 28-30 ***
* indicates the relative energy of each period.


The McClellan Oscillator is looking weak--diverging from the apparent market strength of the last few sessions.


CBOE Put/Call ratios--although not at the extremes seen in January and April of 2010 are in slightly bearish territory. This ratio combined with the high bullish sentiment numbers does not bode well for a continued rally at this point.



Risk reward parameters are well defined for establishing positions in this time frame.

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