Sunday, May 24, 2009

An almost perfect storm

The charts below contain my most important tools and indicators. They will define my trading going forward, just as they have in the past. With each chart a brief comment stating the obvious.

Weekly SPX

The bars remain blue going into next week. But the False Bar Stochastic, channels and wave count are all warning that the end of a multi-month corrective Wave 4 is upon us. Still unconfirmed, but running out of room and running on fumes.

Daily SPX

The Daily chart above flipped SHORT last week. The wave count and FBS are warning that another leg up is possible, maybe even probable. A recovery from last week's decline would certainly suck in a lot bullish sentiment, just the psychology needed for the icing on that Weekly Wave 4 end, a culmination rally sucker-punching the bears.

240 minute SPX

Not all charts help the analysis, as is the case with the above 240 minute chart. But it does define our dilemma; Which way, which way?

30 minute SPX

So we drill down to a chart that does add tactical perspective. At first glance, this looks eerily close to the Weekly chart. But it's a 30 minute SPX. The portrait here is of a definitive end to a Wave 4 correction and the first red bar of Wave 5 down. On the shortest tactical time frame we see what could be the beginning of a massive bearish formation that will infect all of the above charts and bring into the play a significant decline, or more accurately, the significant decline.

Bottom line is that the resumption of the Bear Market in a big, big way is upon us. If it hasn't started yet, it will soon enough. Significant weakness next week will seal the deal. Absent that, another week, maybe two will be needed for an almost perfect set-up for an almost perfect storm.



Anonymous said...

if S&P closes below 834.597, would the weekly be a 'sell' or it has to wait until the end of the week (=Friday's close)

Wayne said...

As of Friday close, the new 3-week low to cause a weekly down triangle should be 878.94

Anonymous said...

Hey Allan
Thanks once again for your blog. One question I have in reguards to a downgrade of us dept whick will cause financial armageddon. When would anticipate that to happen and how would that effect NNVC? When do you expect a severe downturn in the market?

Thanks a lot