06.13.2011 -- Parabolic moves and Doji's

The S&P printed a flat Doji candlestick today. By itself it's a neutral signal, but what does it signal in the middle of a parabolic selloff? I guess we're about to find out. I lean towards a neutral signal in the middle of a heavy selloff probably being a positive sign, but at the same time, the fact that the market could barely muster a gain today after the selloff we've had doesn't leave warm and fuzzies for the dip buyers.

The market tripped my tightened stop today on TNA. I locked in a gain on that trade of a little over 20%. I am sidelining myself here to see what happens in this relatively tight spot from 1270-1253(200 dma). If we open red tomorrow, I may jump right back on board here in anticipation of a quick drop to the 200. Otherwise, I will be watching for a bounce to re-enter.

If you have no position, I would not enter a new position here.

Our targets and patterns have not changed, so I will just present the charts with the notes;

The S&P printed a neutral Doji today. This sell off has a parabolic feel to it as I've marked and we are inside of 20 points to the 200dma;

The Russel looks similar to the S&P, but it has even less room to the 200dma;

The XLF has only a few weeks at most until it gets a death cross. It will need a pretty hefty rally to avoid it;

The 200dma's will obviously provide some type of resistance to this selloff considering how oversold we are, but I am certainly leaning towards taking out the 200dma's after we bounce off it. That would take a move to new highs off the table. If we hold the 200's, we still must consider we may see new market highs this year.

GL

CJ