03.05.2012 -- Potential roll over..

As a side note, I am finding it harder and harder to make the time to do these with our 2 month old and our 2 year old right now, so they may not continue to be 4-5 days a week and might just be 2-3 days a week for a little while.

Moving to the markets.. i think we have a rollover in process. The outstanding question is what kind of top it is. The power of the eventual selling will help answer that question.

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Key Levels

Upside -- 1366-1377

Downside -- todays low to 1360, 1319 (big drop to next support), 1275, 1258

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SPX Daily;

So you can see there what happened today. We sold back into the wedge, which qualifies as a false break north, but would have liked to see a bigger blow off. After falling back into the wedge we fell to the bottom of it and then bounced and closed back in the bollingers.

I think within the next few days, we will again test the bottom and break lower out of it. Which will produce (after a possible back test) at least a 50 point S&P selloff just to start.

Could we have a fake out here and THEN complete a final surge that is the real blow off I was looking for? Yes.. its possible. But if we break convincingly below this wedge on close, that will be it for the rallying for awhile.

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Lots of rotational selling going on right now. The Russel 2000 and Transports were very weak last Thursday/Friday while the market tried to hold its own and stocks like Apple still closed green. Today the Russel held up o.k. while Apple sold off hard and sent the NAS down hard.

Right now.. the Russel 2000, Transports and SOX are being a drag on the market. Leadership had really narrowed and we have parts of the market starting to show cracks in the armor.

The trannies, Russel and SOX are especially important as a group. The Trannies failed to reach a new high and therefor have a non-confirmation of a DOW Theory buy signal. A non-confirmation is bearish. The SOX is important becuase its the semi-conductors and they often lead during bull markets as strength in manufacturing shows up and chips are needed in so many products. The Russel is important because it represents small business in America and generally is a better represention of the local economy and not so much how our economy is benefiting from the debasing of our currency and government deficit spending.

Without those three sectors also participating and hitting new 52 week highs with the S&P and DOW, it's really a bearish divergence in the market.

GL

CJ