Tuesday, December 21, 2010

It is Time to Pay Attention.

The chart below shows the Gann Square of Nine levels emanating from the Aug 27 low @ 1039.70.
  • The 360* (2 squares) is 1172.68 which is near the last pivot on Nov 116th low at 1173.00. This is clearly an important level in the current structure of the advance.
  • The 180* (1 Square) is that 1105.19. The area between 1105-1115 has been mentioned numerous times over the last few months. The four times since April that the S&P has declined through this level was during high periods of volatility. (May 20, June 22, July 29, & Aug 11.) 1105-1115 is an critical area--if the S&P were to decline below 1105 alarm bells should go off.
  • The 540 level is at 1242.17. This area may provide resistance--especially seeing that the S&P has reached the anticipated 1250 level on an Energy Date. (Dec 21-22.) When prices are harmonic with dates the markets often turn--or sometimes accelerate.
  • This week has several geometric points which are highlighted in red.
At this point 1173.00 has to be considered a structurally important level. For traders seeking to get short the market-the formation of another nearby pivot would set up an excellent formation to set up a short sale.

IMPORTANT: Check out the Transports--they are making a classic top formation at the 5080 level mentioned last week.

The hourly chart below shows the two minor pivots--1232.85 & 1219.50 that should be monitored. Aggressive traders should use these levels--if broken-- to execute shorts with appropriate stops.

The Gann Square of Nine chart shows that the S&P is near important natural squares
  • On the far left at the Sept 23 Equinox the levels 1041 ( Aug 27th low) and 1174 (November 16th low) are naturally squared. 90 degrees lower is the current date--December 21st--solstice.
  • 90 degrees from the Dec 21st is the Spring Equinox level which has 1243 as a natural square. The market closed slightly above this level. If the rally continues 1243 should become a strategic support level. However, as mentioned above, the 1243-1250 level could provide significant resistance to a continuation of the rally.
  • Note the 1010 near the Summer solstice at the top of the chart. 1010 (July 1st low) is only one away from the natural square.

The chart below is for entertainment purposes only. It is a pentagon--full of Fibonacci goodies--formed from the Mar 06 2009 low. Where the midpoints of the side of the pentagon are formed are coincident with some interesting market dates--pivots. Fibonacci relationships are wondrous gifts from nature.

This may be the last update until after Christmas. If so: Peace to All and Thank You for visiting My Squiggly Lines.

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