Tuesday, September 22, 2009

Morning Post

Tough call this morning. The channel on the /ES was broken pre-market. The levitation continues. My Market top on 10/12 call is possibly in tact. I'm guessing the mutual funds eventually get one more push to print some really nice QE statements, then all bets are off.

As I have been saying that channel down was part of a 2 or 4 of either 1 or 3 of C Not sure since I am questioning where B actually is. Time will be the only real difference as the two possibilities for B are only 14 points apart in price. Looks like the move off of 991 SPX was a 3 the more I look at it.

Daily SPX Chart - My conundrum is that the channel down possibly completing the 2 or 4 has broken up, but the daily indicators are rolling over, the daily SPX price is at the top of the wedge and the upper BB's are providing some resistance. Are the daily indicators gonna whipsaw and remain embedded? That would make for a nice set up to start P3 in a week or two. MACD hist is trending down RSI is over 70 and looks to want to fall. S Sto got the bear cross going on. ADX falling. CPC very bullish but does not have a divergence yet.

60m SPX Chart - 60m indicators are falling but showing signs of a reversal before bottoming out. There is still room for them to fall and embed.

/ES 60m - You can clearly see the yellow channel down from the 1071 top that some are questioning as the "top". The dark blue line is the top of the P2 rising wedge. Notice these 60m indicators are overbought and appear to be turning south.

Here is a longer view of the /ES 60m wave 1 or 3 channel and the 2 or 4 correction.

I'm gonna go against the manipulators and my better judgment and call for a larger corrective here or more consolidation with limited upside. The Two rising wedges ending and the position of the indicators scream NEAR TERM top and a larger corrective is coming. Now this has happened several times, and several times we all have been wrong. I just don't thing the corrective is big enough yet and might take one more leg down to play out. I'll be looking for the all too familiar triangle to form for the final push to the top. At this time I'm still tentatively short in SDS UUP and VXX with 5% stops in each. If the market should show any strength, I will be exiting shorts quickly and waiting patiently for more downside.

Is the top in? I do not think so. The Fed still has ink and paper. We still have GS running the show. There are green shoots everywhere. The dollar is staying nice and devalued. Regulation is rampant. All of that combined says slightly more upside. I'm on record looking for an external event to set the market on its path to righteousness. More talk about a war to end the recession/depression is perculating. Middle East tensions, oil, China, Russia, Israel - Swine Flu - something is brewing. Dan put up a nice chart on this (SPX 300 anyone?).

P3 should announce it presence loudly. Don't worry about missing the top. It is not that big a deal. You'll be able to get out and have PLENTY of time to play the short side ride. I will refrain from playing any upside from here since SPX is above the rising wedge. Extreme caution right now should be exercised as IMO is is dangerous for both sides up here. This depression is far from over. Welcome to the new Japan.

Koniciwa Bitches!

GL trading.

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