Wednesday, June 30, 2010

Not a Pretty Picture

It has been sometime since a chart of the TSX (Toronto Composite) was posted. As the potential of global market disintegration heightens, a look at the TSX indicates that it is definitely in the same precarious position.

July 2007-June 2010
  • When the radius of the bear decline (May 2008-March 2009) is projected forward in time horizontally, the Fibonacci harmonics are coincident with pivots. (see .38, .50, .62 & .78) Therefore, one can assume that the cycle energy that was present during the decline is still 'active' and predominant.
  • The cycle influence is due to subside in mid September. (when the horizontal projection is equal in length to the bear market decline vector.)
  • The predominant cycle is about to exert some significant downward pressure on the market since prices are approaching the ARC-RESISTANCE (blue arc)
  • The market recovered approximately 61.8% of its decline (63.09%) which was in the vicinity of two important lows made before the 2008 top.(possible 4th waves of lesser degree) (purple horizontal lines)
  • 10990.41 is the critical support if the possibility of a further bull stampede is viable--which is highly unlikely




November 2009 - June 2010
The shorter term graph shows how the 2 wave (March 2009-April 2010) high was formed and how the corrective wave played out. (assuming that the 2 wave is in).
  • the correction was a volatile 78.6% retracement structure.
  • the 10990.41 support is indicated on the graph. (last stand line)
  • Tuesday's opening was a candlestick gap which blew through the 200 day ema with ease.
  • At the same time prices re-entered the initial down channel formed from the April high.

These charts paint a very disconcerting picture of what could happen as we move towards autumn. (literally and figuratively)

Tuesday, June 29, 2010

Robert Rubin: Architect of Doom (except for his buddies)

Soon it will become apparent that we have been conned by a bunch of immoral plutocrats.

Institutional Risk Analytics

Transports:

David Rosenberg: Paul Krugman's Doom Warning Is Spot On

Words of wisdom from a VERY astute analyst.

David Rosenberg: Paul Krugman's Doom Warning Is Spot On

Downside Targets on S&P 500

Copper

The trend in copper has correlated with the S&P quite well since the March 2009 lows. Although longer term charts show less of a correlation it will be interesting to see how copper does over the next few sessions. Perhaps it is making a A-B-C correction before breaking to lower prices--or perhaps the 38.2% retracement of the March 2009-April 2010 will be just that--a retracement of an ongoing bull market. If the SPX-CPR correlation is to continue, the next big move on copper may be similar to that of the equity markets.

Sunday, June 27, 2010

Global Proxy

Since the status of the markets remain unchanged--the same harmonic levels are in play.
Tonight's charts are of the NYSE World Leaders Index (NYL). The World Leaders Index combines the U.S. 100 and International 100 Indexes to create a well-diversified group of NYSE-listed companies that represent 27 countries and all 10 industry sectors. This chart is an excellent proxy for determining how the Global Economy is doing. The chart is almost a replica of the S&P 500 but should be monitored to see if it resolves itself earlier than the U.S. markets.
If the market breaks to the downside, the targets for the next support suggest that many well known global corporations are going to be in crisis--their share values plummeting. It is not difficult to imagine this occurring: the manner in which our societies conduct themselves is morally reprehensible. The malfeasant behavior of many politicians and corporate leaders is merely a symptom of a greater contagion that has permeated society. The markets are not only a barometer of economic activity but also are an accurate reflection of the state of balance in society: Washington is coming apart at the seams--Wall Street is still dazzled by Ponzi schemes.
If the markets don't hold above the May 25th lows, the probability of a severe market decline becomes significant. If the markets are entering the 3rd wave of a 'generational bear market', the collateral damage that will spread through the economy--and society in general-- will alter many perceptions we have about the stability of civilization.

Friday, June 25, 2010

NASDAQ BEAR PROJECTIONS

The rally from the June 8th low retraced 50.81% of the April-June decline on Monday June 21st. The possibility that this rally has ended and thereby marked the wave 2 high in an ongoing bear market has increased: the next wave down could be significant.
The 2100-2140 area remains the point to watch. If this level is broken, a swift and steep decline could take place in July. The NASDAQ Advance-Decline line is showing signs of weakness and if it were to breakdown on a session with lopsided breadth, the stage could be set for some extraordinary drama on Wall Street.
The cycles are lining up and the market is beginning to reveal its hand.

Thursday, June 24, 2010

Update on Visa, M/C and Baltic Dry Index.

Consumers are saving--and producers are shipping less.

Battle Lines are Drawn.

Something to Contemplate



I felt my first earthquake today (5.5). It struck me as an omen of things to come. The 21 day ema and 200 day ema are together @ 1100 and the 55 day @ 1119 repelled prices at Monday's abrupt reversal
The battle lines are drawn--the market action over the next week promises to be fascinating--after that, the real non-linearity begins in earnest. Whatever way this price compression is resolved, it will be sensational and compete in the media for top billing amongst all the other fiascoes popping up. The boundaries of the concept of 'the wall of worry' will soon be tested.
Ever get the feeling that the Earth is beginning to spin really fast?

Wednesday, June 23, 2010

Advisors News | Economic | ADVISORS - G20 agenda leaked

Yet another 'surprise' !!!!!!!!!!!!

Advisors News | Economic | ADVISORS - G20 agenda leaked

The Golden Truth: "The Housing Market Appears To Be In Trouble" - Bloomberg News...

OH Really?

HOW OBSERVANT.

The Golden Truth: "The Housing Market Appears To Be In Trouble" - Bloomberg News...

Wave 'c' or 'iii' Commencing.

The market appears to have tested the 50% retracement from the June 8 - June 21 advance--stopping just below the 1086.70 (50% and the first support of the DAILY PIVOT. (1086.83)

Time to watch the rally for clues as to the markets intentions. A move above 1170 would be interpreted as bullish and leaning towards a five count impulse wave.

Cyclical Confluence

The market is at an extremely interesting juncture. The depth of the decline commencing from yesterday's reversal will reveal the technical structure of the market. A drop below 1075.00 would indicate that there is nothing below the current that would support a break in prices. There has been minimal volume since May 25th and therefore the energy of the market coming off the lows has dissipated quickly. When the short term turns down, which it may be doing currently, all three cycles will be in snyc. (21-55 & 200). Note: The 55 d ema was tested yesterday and prices could not hold above it.
If the market holds between 1075 and 1085 then the probability of a further rally into the 1150 area would increase. (a-b-c)
The minor, intermediate and long term cycles should begin to synchronize after June 28th--from then until mid-August should be filled with drama--as if we don't have enough already.


The chart includes the Russel 2000 Small Cap Index which has a very distinct wave structure. Like the other indexes, the path of least resitance will resolved in the near future.



Astro-markets.
This is a chart of the partial lunar eclipse that will occur on June 26th. Note how the planets are forming a square. This is usually interpreted in a negative manner by astrologers. This square is energized several times over the summer months--especially on the 11th of July and Aug 7th.

Also included is an 'astrograph' of Earth: where the planets will have their greatest effect during the eclipse. The eclipse occurs over the mid-Pacific and will not be widely viewed--plus it is a partial eclipse. The astro-cartography lines suggest that the Eastern United States,the north-east tip of South America and a north-south line stretching from the tip of Africa through the Middle East and Eastern Europe could be most affected. The astro-cartography lines also span across Canada before dipping into the Eastern Seaboard of the USA. Is it possible that energy will be infused into the G20- G8 Summit being held?

This partial eclipse will be followed by a total solar eclipse July 11th which will exert more 'energy'.


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.

Thursday, June 17, 2010

Brazil and India

The BSE and the BVSP are two indexes worth watching. The pattern since April has been quite similar to the SPX. However, at this stage both the BSE and BVSP could be making a c wave of a a-b-c corrective rally, whereas the SPX may be in the process of forming an "a" wave. The unfolding of wave c in the Indian and Brazilian markets may present a clue as to where the SPX may be headed.
The longer term chart shows that the BVSP is in weaker shape than its Indian counterpart. The recent low was made below the previous lows of Oct 09 and Feb 10. The BSE has not broken below its corresponding lows. If these markets were to negate the corrective view and start to rally significantly higher it would suggest that the period from October 09 to May 10 was a huge sideways correction in a massive bull market. If this were to happen chances are the American markets would follow enthusiastically.

Watch how 'c' resolves itself--or--is it actually a 'iii'?



Where's the Beef?

The rally from May 25th has been lacking a key ingredient if it is going to continue in both time and price. What it is missing is volume. Although the 'stats' are impressive with regard to A-D rations and volume ratios (TRIN etc.), it is missing the punch that heavy volume contributes. Extended bull market moves form its base with substantial volume as well as solid price gains. Corrective rallies tend to lack volume--impressive at face value--but lacking the essential ingredient to sustain a rally. Impressive volume will have to enter the scene soon if the bull is to take command.

Wednesday, June 16, 2010

Yet another alternative.

Using the the conventional (popular) Elliott count of the recent rally, a case can be made for a corrective A-B-C formation to terminate at the 1150 area.
  • current rally would end at 1130 (a)
  • decline to support at 1105-1107 (b)
  • advance to 1150 (c) (50% of a) or 1160 (61.8% of a)
  • This would be a 2 wave high followed by a wave 3 decline--breaking the May 25th low and possibly headed to 890.
The alternative bullish structure would delineate the April 26- June 8 decline as an ABC in an ongoing bull market. If, after a peak at 1130 and a decline to the 1107 area (i & ii), the bullish alternative could have a massive iii wave that would take the market to the 1190 or 1248.

In all scenarios, 1150 is the 'sweet spot'

SPX 1150: Harmonic Attractor.

Using two (unpopular) 'wave counts' 1150 appears to be a harmonic attractor. The reason it is unpopular is that the 5 wave down is assumed to be from April 26th to May 25th. An corrective A-B-C view(bullish) uses the same dates.

Bearish Scenario: The market rallies to the 1150 and turns down to begin another wave to the downside--i.e. primary trend is turned down in April and a 3rd wave is commencing--the nasty summer scenario.

Bullish Scenario The market rallies to 1150 and turns down in a minor correction to the 1105-1109 level and resumes the bullish thrust wave--the to infinity and beyond scenario.

If the market rallies to the next harmonic level--1170-- the likelihood that 'the tape' is tracing out a corrective wave 2 (bearish) in a primary down are diminished substantially and ostensibly negated on a move above 1175.00. Note that under the wave count being used 1173.57 is wave iv of lesser degree.

With either scenario 1150 seems to be the most attractive point. A move to the 1150 level followed by a decline would set up that level (1150) as being the decisive point from that period on. 1150 will be established as the harmonic balance point.

An extrapolation of the momentum indicators and natural S&R fan-lines suggest that the June 25-28th period would be the best fit in the time-price horizon. This date certainly aligns with some significant astro-phenomena falling between June 25th and June 28th.

Monday, June 14, 2010

Possible Paths

Correction or Thrust?

The charts below show the Advance-decline line and the SPX. The First chat is from the Feb 5th 2010 low, and the second graph is from the March 6 2009 low.
Although I don't profess to be an Elliott technician for demonstration purposes we can hypothesize about 2 scenarios.

Scenario 1. The recent downdraft in the market took the form of a A-B-C correction which has ended and now the market is in the early stages of another blast to the upside. This is marked by the green ABC and i, ii ii...etc.

Scenario 2. The recent decline is a five wave structure with wave 1 down ending on May 25th. with the subsequent activity forming an A-B-C corrective wave to the upside. This scenario is marked in the red i, ii, iii, iv. v A-B-C...etc nomenclature.

The standard technical indicators suggest that the path of least resistance is to the upside--favoring the bullish scenario. But in a bear market blind reliance these indicators can destroy a trading portfolio quickly by terminating their pattern abruptly. RSI, MACD and ADX should be respected and monitored constantly--if they reverse themselves there are usually serious consequences.

The key indicators to watch are the Fibonacci retracement levels and the Fibonacci fan lines on both the SPX and the Advance-decline line.

On the SPX 1109.17, 1130.29 and 1151.41 are key levels. If the markets reverse at the 1110 area and break the recent lows there is big trouble ahead. On the other hand, if the S&P breaks through the 1151 area the bullish case will be substantially fortified. The retracement levels on the AD line are as important.

It should be noted that there has not been too much damage done to the advance decline line during this decline which may be interpreted as being further evidence that the market just underwent a correction and not a major break of the intermediate trend.

A S&P close above 1155 would likely cause me to abandon a bearish market view. If the long term cycles are really putting as much pressure on markets as I suspect they are--the market will have an VERY difficult time getting above the 1130 area for perhaps more than 2 days in a row before turning down.

Friday, June 11, 2010

Anatomy of a Five Wave Structure.

The structure of the advance or decline is an important tool to use in attempting to anticipate what path a market will follow.In addition to looking for harmonic time-price relationships in the waves, indicators such as the VIX and the CBOE Equity P/C ratios can be helpful in dissecting the structure.

In the chart below the pattern of the VIX indicates that fear reaches its apex during the third and usually the most violent of the primary waves. The option ratios, which reflects market consensus, often imitates the pattern of the VIX--both coinciding with the wave count.

This analysis suggests that the market has just completed a five wave structure which because it was a decline suggests strongly that another 5 wave decline will follow after a a-b-c pattern corrective rally. There are two harmonic points in the remainder of June that may coincide with the completion of a corrective rally: June 14th and June 25-28th (wknd).

Thursday, June 10, 2010

Time to Test the Bear

Today's impressive thrust has turned many short term indicators around and suggests further upside in the near term. Points of interest:
  • The 21 d exp. m.a. dipped slightly below the 200 day ema. The interplay between the moving averages can be quite indicative of the market structure. It is not unusual for the market to change trend when important moving averages come in close proximity to each other. The 55 day moving average, and how the 21 and 200 day ema interact with it, will now play an important role in revealing the structure of the market.
  • As mentioned in the earlier post the ADX gave a short term buy signal.
  • The Transports have not been as weak as the S&P or the DOW and has found support at the S4 and S2 support vectors.
  • Both RSI and the MACD Histogram has been diverging from price levels since the May 25th low.
  • The initial low was on May 25th just after the Jupiter-Saturn conjunction and the Venus Pluto opposition. On June 8th Jupiter was conjunct Uranus. The next major astro-harmonic is June 26th. Markets could rally into this time frame or possible only until June 14th if weakness prevails.
  • Time Price Harmonics are June 1th @ 1110.00 and June 2 at 1130.00
This is definitely a time period to be cautious and to not let emotion cloud objectivity. Remember: MARKETS REALLY DO NOT KNOW OR CARE WHAT YOU THINK...but they are more than willing to indicate what they are thinking.
click to enlarge

Don't Sit Too Close To The Campfire

The chart below shows the ADX signals generated over the last 2 years. The signal I am referring to is generated when the ADX is above either the +DI or -DI lines and ticks down. When the ADX ticks down from being above the Directional Line it is a sign that the markets are about to change trend. This occurred yesterday June 9th one day after the market made a low near the May 25th low.
  • June 8th: Jupiter conjunct Uranus--S&P @ 1042.17
  • May 25th: Venus opposed Pluto
  • May 23rd: Jupiter opposed Saturn
  • May 25th S&P @ 1040.78
Although I am still in the bearish camp, prudence dictates that one be prepared for a change of trend. This may be a short lived bounce that merely relieves the oversold market situation--or--it could be the recommencement of the drive to infinity and beyond by the markets.

  • Bearish sentiment is increasing as demonstrated by the unusually high 5 day TRIN readings and other market technical indicators.
  • Bullish Volume Ratio has not broken down
  • Transports holding 241 points above the February 2010 low.
  • Option ratios are not screaming buys but have receded significantly from the exuberance indicated in April.
Probably the most disconcerting sign that a important bottom could be in place is that a major Canadian banking-brokerage institution released a research report that suggests investors go to cash. The causes my contrarian nature to be very suspect of further declines. When was the last time you saw a brokerage house tell clients to liquidate?
It is time to be cautious and adjust market exposure (long or short) accordingly.




If this rally fails and the markets decline below the November 2nd 2009 low @ 1029.38 it would probably be the pin the bursts the bubble and result in a MASSIVE decline that would be violent and unrelenting (Historical South Sea Bubble Style).

In the mean time be cautious--be aware--and be flexible.

Trouble in Paradise?

Wednesday, June 9, 2010

In Limbo Until June 14th?

Tonight a chart of the Dow Industrials will be used. The reason the Dow chart is being used is because there was a bullish engulfing line formed at the close--albeit a rather unconvincing one due to the relatively small difference between the bodies of today's and yesterday's candles. Nonetheless, considering that the market is significantly oversold on a technical basis and that both the RSI and MACD Histogram are showing divergent formations, a rally of some kind cannot be ruled out. I suspect that if a rally does ensue it will not deteriorate the overall bearish intermediate trend of the market.
Points of interest:
  • The R line has acted as resistance since the high of April 26th. This week this resistance line will decline from 10100 to 10000. It is rare that a market stays below the R line (1X1) for long periods of time--except in crash scenarios.
  • The R line from the mid-February peak(10438.55) has recently contained the decline--resistance becoming support.
  • The 21 day exponential moving average is close to the 200 day ema. The energy of these two averages in close proximity could support prices temporarily.
  • The ADX is above the -DI which often portends an imminent change in the short term trend in the markets.
  • A brief rally to mollify the over-sold condition of the market could possibly set things up for a sensational decline that could be relentless for several weeks--or months.
  • The markets are entering the window where many cycles will be synergistic, which could result in some unprecedented market activity. From now until the end of August could be full of nasty surprises.
June 14th is an interesting Date since it is:
  • 34 trading days from the April 26th High
  • The time from the April 26th to June 14th is 61.8% of the time from the February 5th low to April 26th.
What the market does between now and June 14th is anybody's guess--but if the markets were to rally into that date, there will be a high probability of a subsequent turn to the downside--which could become vicious. Conversely, if the markets continue to decline, June 14th may represent a short term low. The June 17-21 Energy Date period could represent a period of great volatility in the markets.
click to enlarge

Tuesday, June 8, 2010

Dow Transports Break Previous Low

The Dow Transports closed at 4037.98--122.53 points below the May 20th low (close). The Industrials made a new low close--since the April high--but did not break the May 25th low of 9756.11. Dow Theory fans will understand that this is not a positive development for market bulls. The chart below presents a case for lower levels in the month of June.
click to enlarge


The USDX chart suggests that prices will reach the 92.5-93.5 level this summer.
click to enlarge

Saturday, June 5, 2010

A Thought Experiment.

Let us assume the following:
  • There exists an investment vehicle that mirrored public sentiment and was a barometer of the cultural ethos.
  • The investment vehicle was named Massive Awakening.
  • Western civilization sinks into a deep deflationary depression due to the hubris of 'fiat addicted bankers' and their spineless sycophants in the legislative bodies of the West.
  • Massive amounts of debt is extinguished as economies grind to a halt due to the paralysis of the banking system. Creditors are pissed !!!!!!!!!
  • Western civilization is forced to deal with the consequences of a culture living beyond our means. Life styles change--not through choice-- but through necessity.
How would the investment perform--better yet--the speculation perform? Considering the economic shape the world is in--investment--may be too flattering.

The attached chart is a wonder of the magic of PHI. Perhaps it will reveal the consequences of the mess we have created.

Take some time and study the amazing market geometry revealed in this chart.

If Massive Awakening breaks below 191.00, it will probably see 64.00 before it sees 270.00

CLICK TO ENLARGE

Friday, June 4, 2010

The Approaching Financial Tsunami

In the May issue of Crawford Perspectives, Mr. Crawford makes the following observation with regard to the MAY-NOVEMBER 2010 time frame.
... a very serious decline will take place, and we imagine it will be much worse than a double dip that is envisioned by that set of analysts intent upon a “corrective phase.”
This may be an understatement. Arch Crawford has an enviable record as one of Wall Street's eminent market timers. For investors not to heed his warning is reckless if not irresponsible in my opinion. This time period could be coincident with what Elliott Wave aficionados refer to as 'the third of the third of the third wave.'

Astrological events--I can hear the clicking of the mouse of wary subscribers exiting this post already--do not occur spontaneously, rather their effects are felt like an approaching hurricane, becoming more pronounced, culminating and then dissipating as the aspects fade into history. The chart below shows my interpretation of how the T-Square of 2010 will influence events on Earth. As the climax approaches the effects will build gradually with events increasing in frequency, significance and scope. But like a tsunami or earthquake, after the passing of the eye of the storm, the aftershocks will linger--decreasing in magnitude as time passes.

Significant Astro Events for 2010

  • January 31, 2010 – Saturn square Pluto (4 degrees Libra – Capricorn)
  • April 27, 2010 Saturn opposition Uranus (29 degrees Virgo-Pisces) with Pluto at 5 Capricorn, still in orb for a t-square
  • In mid-May, Saturn (Virgo) opposes Jupiter-Uranus (Pisces). On May 27th, Uranus enters Aries with the Moon-Jupiter conjunct at 0 degrees. This forms a T-square to Pluto (3 degrees Capricorn) and Saturn (28 degrees Virgo).
  • The June 26th eclipse: A lunar eclipse at 4 degrees Capricorn conjunct Pluto. This activates the cardinal grand cross with Sun-Mercury (Cancer), Jupiter, Uranus (Aries) and Saturn (Libra).
  • July 26, 2010 Saturn opposition Uranus (0 degree of Aries-Libra with Pluto at 3 Capricorn, forming a cardinal t-square in close orb
  • August 6-7, 2010: cardinal grand cross is activated between Jupiter-Uranus (Aries), Pluto (Capricorn), the Moon (Cancer) and Saturn-Mars-Venus (Libra).
  • August 21, 2010 – Saturn square Pluto (2 degrees Libra – Capricorn)
If the astrological signature of the summer of 2010 has any validity, the consequences of this historic T-Square will linger for years to come--changing many aspects of life on this beautiful orb that we call home.
click to enlarge

Three Peas in a Pod

The three charts below--SPX--TRANS--Copper-- are highly correlated. The copper is weak as well today and should be monitored closely to give an indication of the direction that the equity markets are going to take. Copper, a major industrial metal is a proxy of economic activity in the productive segment of what is left of the economy--other than the Ponzi delusion conducted under the auspices of the gods of Wall Street.

Parallel Price Channels

An example of the power of parallel trendlines and channels.

S&P 500 Harmonics

The 1107-1108 level on the SPX is critical to revealing the short term bias of the market. If the 1107-1108 level is surpassed, the market will likely advance to the 1120-1130 level.

We are definitely entering into a period of 'interesting times'.



The graph below depicts the Harmonic Levels which could serve as targets in the event that the markets break to the downside during this Energy Date period.
A break below the 1044 level would probably be followed by a VERY quick drop to the 981-1006 level. If matters were to get out of hand, a mini-melt down to the 875-876 level could occur.

Thursday, June 3, 2010

Dances With Bears

The major markets continue their dance with both the exponential moving averages and the Fibonacci support and resistance levels (S1, S2 S3,S4 R1,R2.R3,R4). While the S&P 500 is experiencing problems getting through the 200 day EMA (from below) the other averages are holding ABOVE the 200 day EMA but experiencing resistance at the 21 and/or 55 day EMAs.

As the markets enter the first June Energy Date period a resolution to this may be at hand. A break to the upside would set up tests of the nearest EMA (above) whereas a break to the downside would test the 200 day EMAs. The behavior of the S&P may reveal what averages will come under pressure. A break above 1108.50 will set up a test of the critical 1125-1135 level.(55 day EMA & Fibonacci harmonic.)
As the moving averages converge there quite possibly will be an increase in volatility as the energy in the markets get compressed and set up for a violent break one way or the other. The markets--and the world in general-- are entering a cyclical period which portends great danger.


Friday's Pivots
R2: 1113.96
R1:: 1108.40

Pivot: 1100.10
S1: 1094.54
S2: 1080.68


right click for enlargement options


The chart below shows the distribution of Fibonacci levels for the Transports and S&P Midcap.
right click for enlargement options



Wednesday, June 2, 2010

Storm Clouds Gathering

Despite the 'thrust' injected into the market with the massive Adv-Dec Volume Ratio on Thursday (36:1), the market is experiencing difficulty getting above the 200 day exponential moving average. (1101). The 21 & 55 day emas are trending down and approaching the 200. While it may be too soon for the bacio della morte, the bear can be as unpredictable as the bull is relentless.

A convincing move above 1103 would set up a target of 1135-1140. A break of the 1040 level would leave the 1008-1020 level vulnerable. A distinct decline through 1008 would be a warning of probable violent downside action in the near future. The market is hanging by a thread.
right click for enlargement options

Tuesday, June 1, 2010