Monday, September 14, 2009

Morning - Let's Set Up Another Fall Shall We?

Ah, to what degree will this fall be? Let the prognostications begin. The really screwy volume on Friday was bothersome. The /ESU9 channel that I have shown you over the past week or so has finally cracked (and cracked with authority). The VIX has completed the dead cat bounce and back test of the massive falling wedge.

You know me, one step at a time. Don't get ahead of yourself and look like an idiot making bold and brash statements (LOL, that was a joke). Let's just start with the retracements for the last run up, then some S/R work, then look for a lower low below 991 (then we can begin to talk about a major fall). They have had an uncanny ability to turn each fall into sucessive short squeases. I'm thinking the dollar will be the ultimate key to P3's arrival.

The big question right now is, is this just a 4 of 5 down with the 5th and final wave up to top out the ABC and P2, is this just another leg in a double zig-zag, is the just 4 of 3 of C or is this the big one? The form of the waves will be a good clue as to the potential depth of the fall. On to the charts.

SPX Daily - The daily indicators appear to want to roll over (somehow SC blew up and erased this chart and it needs to be rebuilt). Bottom line is that with this near parabolic 5.75% run up (on ZERO fundamentals), the weeklys so overbought and the daily SPX trading at it's upper BB with the upper channel line adding to resistance (not to mention a plethora of other issues giving pressure down) this fall may have some momo.

Daily fibs are 1025, 1019 and 1013 with major support zone at 980 area. If the last bottom at 991 gets breached, then we can talk about a more significant move south, but not till then. First lower trendline (purple) if breached will break the near term downtrend. Then the gap at 1018 and the 1015 support. Then you have the lower blue channel line, then the 991 low and then support and the road block at 980. Keep an eye on all of those. With each support taken out the fall may gain strength which it will need to get thru 980 (also 38% fib for the whole run from 667). Also look at what the lower BB does.

SPX 60m chart - Big negative divergences everywhere. I am not a fan of the 60m as having any meaning right now as the last time they fell for a month the market rallied from 908 to 980.

/ESU9 Daily - The daily /ES chart below simply shows the orderly channel patterns it has followed and to a good degree within the 75% and 50% channel lines of the larger channel (red lines)

/ESU9 60m - Clearly the channel is broken down. As soon as I ID a stable pattern for the fall I'll post it.

GL trading.

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