Friday, January 21, 2011

Markets are becoming Energized

A test of the 1261 pivot seems likely as all markets seem to have jolted in the last several sessions.
  • The lower tine of the Andrew's Pitchfork is providing support
  • The 1261 level remains the most important point on the chart from a short term standpoint.
  • VIX is edging higher and could break above 18 level. If this were to occur the likelihood of a further decline will increase significantly.

There is a possible Gartley '222' formation be set up.
  • if the low at 1267.50 on Thursday is the first leg down of a further decline then the market may rebound in a 3 wave structure.
  • the upside target can be estimated by the following formula: (B + C) - A = D = Target
  • (1280.25 + 1273.25) - 1267.50 = 1286
If the market turns down near or below 1286 a test of the 1261 level is highly possible.

Since the high was 1296 an 11-12 point initial stop on a speculative short would be placed at 1297-1298

Metals were weak on Thursday as well while the US $ held its own. Increased volatility in any or all of these markets will be a signal that an extended--intermediate--decline may be commencing in Gold, Silver and the equity markets.

More on this matter SUNDAY.

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