S&P 500 - September 23, 2010

A Dr. Jekyll and Mr. Hyde Day!

This is a chart of S&P futures


Quite a Yo-Yo, eh? Yet, nothing compared to this


Notice that NQ did not fully retrace. It may have ended its correction. I am not making a statement, just that it has enough waves for a correction, and the rocket this morning can very well be a wave 1.

It may be a good idea to keep an eye on the NDX/NQ, especially, if S&P does poorly.

This is a weekly chart of S&P


Not a pretty candle so far. The blue lines have kept price in check like we thought they might. The chart has nicely aligned MAs cradling as technical support.

I would like to remind myself every now and then that the rise from March 2009 to April 2010 was a 5-wave affair by my own count. The drop from April into August-September 2010 was a 6th wave, and we are now running the 7th wave(I have made that point quite a few times). Therefore, I have a somewhat higher probability assigned to higher prices. That is so as long as I can see an impulsive wave structure as price moves up. Ideally, I would like to see corrective structure for the declines. So far, we have had that, but it is still not clear whether our impulsive advances have been an ABC or a 1-2-3 with the third ongoing. Of course, as long as the 1040 area holds, the bullish alternate is alive, and that may be too far of a stop for those who missed it, but that’s the way it is as far as waves and my waving knowledge are concerned for now.

I am still following the two counts I said I preferred in this post

http://markettime.blogspot.com/2010/09/s-500-waves-september-18-2010.html

And, of course, I may be wrong, and, if so, at some point, I will pay the price by either losing money, or losing an opportunity, or both.

This is a daily chart


Index is at breakout point. Ideally, it should stop dropping around here and either run up or go sideways. For now, as long as index is above my higher purple line, it’s either consolidating or advancing.

Daily volume shrank. Daily breadth was negative


McClellans dipped further


Faster oscillators are around neutral and the slower summation is still positive. As long as summation does not get deeply below zero, I may be on the lookout for a possible turn in faster McClellan.

I had a question from a reader (Fred) about index dropping to 1100. As I told him, I have no knowledge of the future. With that out of the way, 1100 coincides with 55 EMA (as well as 34 EMA), which is widely watched and respected MA, and may serve as support if index drops further


If you play with different MAs, you’ll see that we have a number of MAa going through the 1080-1110 area making it an area of technical support.

Before 1100, I would like to see how 1110-1120 performs. That is an area formed by two VWAPs that have done well as resistance and may now become support


This is a 60-min chart


Market took it time around 1135 for a few hours before finally turning lower and giving us a short term downtrend. For now, as long as index is below 1135, the short term downtrend is in force.

OEW pivot support at 1107 and 1090. Pivot resistance at 1136 and 1146.

Long term trend is up. Mid-term trend is up. Short term trend is down.

Have a Nice Evening!