On the 5 min chart, the upper trend line of the channel bracketing the downstroke that started yesterday is the "buy to close" trigger. That trend line was at SPX 1187.50 at today's close and dropping at about 15 points a day, roughly 2 points per hour. The low this morning looks like the end of the thrust, and the pattern since looks corrective, signaling more selling to come. Today was almost certainly a 3rd wave, or possibly wave 1 of an extended 3rd. Either way, should be more to come.
Next chart is a volume profile study on the ES. The blue bars on the right side of the chart represent cumulative volume at those price levels over the last 24 months. This study can be used to identify potential resistance/support levels. Note that I had identified 1164.00 as potential support, today's ES low was 1164.25. Next strong support below that is 1138.50
Stay tuned, looks like more thrills right around the corner.
I am right behind you with inverse etf - go Vindicator
ReplyDeleteI think we bounce first before heading down further (and we might not head down -- if this was an ABC) maybe up to 1185 on SPX. I'm seeing many divergences across different asset classes. E.g. compare price action in JNK with Jan/Feb. $RMZ set a new high yesterday. IYT set a new closing high yesterday. I guess we'll find out tomorrow!
ReplyDeleteYes we could bounce - however some of the oversold from this morning was worked off through the rest of the day. Oversold and overbought are relative terms - markets looked very oversold on Sep 19, 2008 and we all remember what happened after that. But I do recognize the possibilities, that's why I'm watching the trend line.
ReplyDeleteI won't make the same mistake of earlier this week, i.e. ignore the trendline - if we see a breach I'm out. However, depending on EUR action overnight, it's entirely possible to see a stronger down day tomorrow. This situation needs close attention.
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