Tuesday, July 06, 2010

What rally?

Here is my SPX_240m trend model, which shows prices hitting trend line resistance in here, with compelling Fibonacci resistance just above current levels.



In other words, there is much ado about nothing here, a typical relief rally in an ongoing bear market.  The next big trade will be to the downside.

A

8 comments:

Anonymous said...

Agreed. They ran it up in the premarket, and then gave it all back since 10:15. If this were a rally, there would be some follow through. I'm seeing butkus. We just hit the 2:30 follies, so expect them to try to put some lipstick on this pig. Maybe we'll see the same type of selloff like we saw during the last 15 minutes on Friday. It will be a riot to see the web claim that was just static (again).

Brian F.

Allan said...

Re: gap-up "rallies"

No one is buying them anymore, so what will they do next to fool most of the people, most of the time? The structural damage may be terminal, trust in the markets was eroding, now it seems to be in a waterfall decline. Prices are likely to follow. Meaningful lows may be farther away then we can imagine.

Anonymous said...

If Elliott wave theory works....and we know it does...at least sometimes,

tell me if I'm incorrect.

After 5 waves down
comes a 3 wave ABC correction of some sort.

Fibonnacci levels are interestingly prescient...thats why they are used in TA.

EW theory says the abc correction often targets the previous wave 4 zone.


put all this together and we ought to see a rally correction back to the 1056-1070-1085 area

before any next set of 5 waves down.

what rally? it maybe just getting started now .

If market doesnt give us any such short term rally, and continues to plunge from here... I conclude two things.

Your model works well
and
elliott wave methodology doesnt work well.

you cant have both.
you cant endorse both.


I'm looking for the small rally back to 1075
first, then the next wave down.

Anonymous said...

with some follow thru so far today

Anonymous said...

allan,
SPX is over 1038 now. does that mean we should long SPX?

Allan said...

I sent out an alert earlier this morning covering fresh LONG signals on some intraday models, including this one. This suggests that shorter-term trends have turned up, but the key question is for how long? Based on the intermediate term models, probably not for long. Nonetheless, as you pointed out, the trend did reverse up.

A

t said...

Thorough technical measurements yield these price points as fibs and trendlines and EW formulas

From the top at 1220 to bottom at 1010
gives us a fib zone between 1090-1115-1140.

From the last wave swing top at 1130 to the 1010 bottom
gives us a fib zone between 1056-1070-1084

From this first wave up of 1010 to 1045, adding 162% yields a target of 1103.

From this first wave up of 1010 to 1060, adding 162% yields a target point of
1141.

The 200 SMA is 1111.
The 200 EMA is 1095

The previous cycle wave 4 zone is between
1090 - 1105 - 1131

Major S/R points are at

1068,1070-1074 Gap.1084 area,1092,1100,1108

3 month chart- 50 SMA = 1100
6 month and 1 year charts -50 SMA = 1106.

IF the price action tops here as wave A at 1060,corrects 50% in wave B to 1035,and wave C rallies equal distance (50points)=
ABC target 1085.

Thats the Elliott wave and fib Math

Anonymous said...

Not sure what will happen when spx hit 50 ma (1085)?? Any guess?