I don't believe this sell off will be over until we've at least tested the 200dma, but I also thinks it's probably less likely that we go straight down to it. Tomorrow will answer that question, because if we go any lower there's nothing to stop us from going straight there without a bounce.
Yesterday I said we could bounce short term or the market may just head straight to 1286 and become more oversold. We choose that path. We now sit at 1286 which is the 23.6% fib retrace of the entire rally from June of 2010.
Almost every index/sector is sitting right at or slightly under the full extent of channel support on an hourly chart and we are extremely oversold on the hourlies and very oversold on the dailies.
For a visual picture, lets get to the charts.
Here's the S&P on the daily. It's pretty oversold and we are at a potential channel support line here on top of 1286 being the 23.6% fib;
Here's the S&P hourly. Extremely oversold and right on channel support shorter term as well;
We have the same general thing on the DOW;
And the Russel 2000;
So what does that all mean?
It means we are either gonna have a real dump in the markets tomorrow or we are going to bounce for a couple days, probably to touch the underneath of the 100dma.
I lean towards bounce because the selling has been consistent but not very implusive. Orderly selling usually does not lead to massive sudden declines..... BUT oversold levels do.
So put yer helments on.
GL
CJ
2 comments:
Wondering out loud if the psychology is set up for a waterfall. Here are my reasons:
Relatively low VIX = Bears are afraid to be right. They've been burned so many times by the Bernank and his bailouts that they can't muster the courage to go short.
Too much bullishness in the press. The debt ceiling is being treated as a big joke, and maybe it is, but if so the joke is on someone. It seems like there is no serious effort to do anything about spending and Obama is hoping that the tea party is bluffing.
There was an inverse head and shoulders pattern evident in your SP chart that has now been invalidated. That pattern projected to something like 1450. When an obvious pattern fails you sometimes get a big move.
Zappa,
I think whats missing is the impulsive selling. There isn't any real urgency to the selling.
We could just continue selling off, but I do think we'll get bounces inbetween.
And yes, that inverse head and shoulders was invalidated.
Post a Comment