09/09/13: Tomorrow's opening half hour is very important

There are two items I am watching heading into tomorrow's kiddie hour
1.   Hourly OBV trend (circled in pink)
2.   233 hour moving average

Why these two?  Today's move had us closing right at the edge of the OBV downtrend.  Price meanwhile broke it's downtrend AND also closed above its 200 hour moving average.  Does this mean that the bears are toast and the bulls have it all?

It is hard to say until all evidence unequivocally points to one direction.  Right now, the bulls have price in its favor but volume has not supported the break yet.

Why I say the kiddie hour is going to be important is because if we close the kiddie hour with a strong move up then it is off to the races because OBV would break its downtrend.  If, however, either of the following happens, then we have a possible failure and the resumption of the downtrend:

1.  Pop and drop: maybe some data point is bullish or someone says something which causes markets to pop at the open.  If bears don't beat it down then this wave up may in fact be bullish.

2.  Gap down: I would totally prefer this since it leaves no doubt on the table that new lows will be visited.


The second item I listed is the 233 hour moving average.  Why do I use the 233 hour moving average?  First of all, 200 MA is widely used by novices and is the default setting for many software.  To get somewhere in this game, you gotta take some chances at looking at other angles.  You may do your due diligence on this but you'll notice the 233 MA is very good at tough resistance or support.

You may notice if you have the 200 MA set, we closed above that on an hourly basis.  This would tell a lot of people to be bullish but look at the 233 MA!  SPX failed to close above.  It tried once and got beaten down and it tried again in the final hour.

Therefore, these two are very important going into tomorrow's open.  Good luck.

09/08/13: Looking ahead to this week

To me, SPX is nearing completion of this rising bearish wedge which, after completion, targets the origin of the bearish rising edge...in this case 1620s.

My belief is that we are still in Wave B of intermediate wave iv.  This means a devastating C wave is yet to start.  The preliminary target is around 1580.  I believe this will generate enough bearish sentiment to give the markets one large wave up.

Looking towards Monday, there is the potential for the markets to test 1661 and maybe move up to 1666 again.  This would not violate the rules of the bearish wedge.  If there is enough euphoria build up, then it's possible to see 1670s.  I am keeping this in mind since I am always thinking about risk management.

Currently holding 2.5 lots of short SPX (via SPXU).  The entries are marked with the red arrows.  The next timing window is the 11th.

09/04/13: Shorting SPX, looking for lower low ~1600

We've had a roller coaster ride the past couple of days with serious swings on both sides.

To me, the market is probably completing a wave B of iv.  If that is the case, then we should be peaking soon and then another swift move lower (approximately 80 points if A=C) to take us to roughly 1580.  Whatever it is, it is likely below 1600.

I really don't think we are going to new highs yet.  The scenario I am going off of is we move down to 1580s late September which is right around where super-long term support is now (this is the meridian line dating back to the 1930s).  We crossed that resistance line before the Boston bombings and the bombings took us down to support level.  After the test, markets rallied huge and are now in this more expansive corrective pattern.

If 1580s holds, then we are likely heading > 1705, maybe to 1750.  That would be ideal in my opinion.  If we fail (really don't want to get into this whole Syrian mess), then we could be ushering in a brutal bear trend.

Anyway, I've marked in pink where possible grind higher could go.  OBV is showing a disconnect here...it's made lower lows but price hasn't.  Usually OBV is a leading indicator and tells us we are heading lower.

08/29/13: Hoping to open low and then rally up to 1650s

Been awhile since I updated.
Currently markets trying to digest all the negativity in the news.  I like the volatility but I hope there is no war, and nothing comes out of all this.

SPX looks like it's setting up a expanding wedge.  According to Bulkowski, breakdowns occur 70+% of the time but first we need another hit of the upward sloping wedge.

If that's the case, then we should see somewhere in the 1650s and then a breakdown.  However, what if it's a partial decline?  In that case, we may see prices rally all the way up to 1680s.  Not out of the ordinary.  All it takes is someone to say "no strike."

So right now, thinking target first is 1650s but I want tomorrow to open slightly lower...better entry.

After 1650s, the odds are in favor of a trip south but maybe that's not the case this time.  Not that there is a new moon around 9/5 so maybe prices fly into 9/5.  Let's see.

08/13/13: Back on the bull train

Today's move down after the open took me a bit by surprise.  I thought perhaps the market was going to break neckline and make a wicked H&S.  Instead, I decided that there were some bullish divergences forming so I took a UPRO position.

Currently sitting with UPRO and holding into tomorrow.  The timing window is EOD 8/14.  The next one after that is EOD 8/16 or open on 8/19.

My gut instinct is telling me markets are making one final attempt at the high.  We still have this open gap at ~1705.  Hoping that gets filled.  That may be an ideal target for this last attempt up.

08/09/13: stopped out

Sitting in cash, I guess this H&S really is forming.

08/06/13: Still looking for a higher high

Markets were significantly oversold today on a relative basis.  What this means is if we do achieve a lower low, this will set up a significant positive divergence that could be the springboard to higher highs.

Secondly, today we have a "positive reversal."  The CCIs on all timeframes were significantly oversold relative to the most recent CCI low however price is making a higher low.  This means that the sell off was not strong enough to drive price lower, and bears did not get the job done.

This setup is very prone to a short squeeze.  It could be last leg of this particular wave.

Still holding UPRO but today really put a damper since I bought at the close yesterday and today we had a gap down and a drive lower.

Again, still looking for a higher high.