Thursday, June 10, 2010

Wacky Thursday (if you were a bear)

Yesterday in the DISQUS comments section I posted 30 minutes SPY D-Wave chart.

It looked like possible 1-2 and my thinking was reinforced by TDSequential Countdown 13 Buy completed right into the close (it was deferred from 6/8 14:30PM [meaning "13 has to be below 8"]) Here is that chart for your convenience.



Let see what we have today.


So, bounce we had (I like to go site after close – in order not to influence my vision – and see that yesterday's Brandt's post was named "Bounce" as well – we see things through different prism per se, but quite often very similar in terms of action)


Today's action was, no questions, a killer for anyone holding bearish positions, especially in derivatives – IV collapsed before open and bears were hit from both directions.  But as seemingly bullish today was – I am not yet convinced that it is really a beginning of UP wave.


Green arrows point to low of wave 2 (possible up wave) and corresponding RSI crossed into "bear land" – below 40 – which it should NOT do if it is a corrective wave (such as w2 or w4).  AT the same time (see red arrows) w2 of possible down wave has complied with this requirement and RSI has not move above 60, so for now it does look like counter trend move.

BUT (big one too) – I will wait with final decision till Setup or Sequential (could be on different timeframes) confirms top for w2 (of possible down wave)

And here is 20min SPY chart (20min signals were amazingly accurate lately) and it has target at 110.50 and. most likely, by 10:30-11:30 tomorrow it will be touched and IF it will turn down there – I might look for some long puts plays.


10min chart (not posted) looks quite similar in terms of wave, but suggest slight downside tomorrow morning first.


On the longer term direction: quite frankly, new [changed] wave structure would explain that 23% only w2 back in July 2009 and if so – wave 4 could go as low as 950sh and it still going to be bullish wave up.  I am just speculating, but I think we are done with volatility and will be just gently drifting down over the summer.

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