Wednesday, June 5, 2013

06/05/13: continuing to short, looking for 1590-1600

Ever since my last post, SPX has dropped from the 1660s to 1610.  This is approximately a 3-4% correction.

I was looking for 1680 but SPX failed a couple times...the more predominant one was post the triangle breakdown and retest of 1645.  The CCI 8 recorded a negative reversal (CCI level was higher at 1645 than at 1660).  This prompted further deterioration.

These reversals happen very quickly.  For those who were thinking about 1680 (like me) it was a wake up call to reverse positions and go the other way.

When you think about trader psychology, it is during these instances when prices really fall (or rise) faster.  The velocity of price deterioration has really woken up some sleepy, complacent bulls.

CCI shorter term cycles from 8->21 are all showing positive divergence however the longer term cycles HAVE NOT.  In fact, longer term cycles are still projecting deteriorating price but I expect shorter term cycles to start making price "choppy."

NYMO recorded a close < -100.  It's been awhile since we've seen one of these.  The problem is NYMO isn't spiking.  We have to wait for trend power to diminish (ADX) but it is in fact rising on the hourly chart.  This indicates that while shorter term cycles are indicating a bounce (probably to retest failed levels 1620, 1630) those rallies should be shorted.

Target is somewhere below 1600.  I think it fills the gap, and then when media starts piping SPX < 1600 it's time to load up because the bull train is going back up.

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