Thursday, March 14, 2013

03/14/13: added to short SPX

Markets trudged higher today and pulled off a 1563.23 so out of the past 13 trading days, 11 have been positive.  I am still holding onto shorts with a cost average of roughly 1555 with one last remaining lot to add if we still head higher (stop 1576).  I added more to the shorts today in what I believe is the start of a wave 4 of a higher degree.

On the daily chart, there are some small cracks forming.  There is negative divergence vs. NYMO.  Negative divergence vs. CCI 8 and CCI 21.  However there is no negative divergence on the longer CCI timeframes and with ADX.  OBV is also not showing a negative divergence.

The period now is very reminiscent of same time period last fact the fractal is almost identical.  Back then, SPX was trading 8 out of 9 days positive and finally made an immediate lower NYMO high.  It proceeded to correct the next 3 trading days before ramping up to another new high.

It is unclear if we will follow the same path but a lower NYMO high + the possibility of this being the ending wave v of 3 tells me I have to take the bet.  Hence shorted more at the EOD.  If we move fast down tomorrow then it is likely wave A with a wave B to follow up to 1563 again.  Then a C wave to take us down to 1500 area.

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