Today was quite the vertical blast. I suspected something in my recent “What IF?” blog posted Sunday evening. It seems turn-around Tuesday is aptly named. Now what? Will wild Wednesday bring the indices down? If the options market makers have their way, the market should stay in the general vicinity the rest of the week, or slightly up or down, wherever the sweet spot is located, to collect the most money and squeeze the little guy.
Let’s review the waves on SP 500. Wave A down from 1422 was 65 points and took 5 days to get to 1357. Wave B is a countertrend rally and should be completing after 5-6 days, and is nearing a 0.618 fibonacci retracement at 1397. Wave C should at least be equal with wave A or some fibonacci multiple of it. So downside projections, assuming a full retracement, may be: 1332, 1307, 1300, and 1292. Some of these levels line up with resistance and some don’t. This ABC should end the correction, and I am favoring the 1292 level, but we shall see. The time element for wave C should equal wave A or some multiple of it, depending on final level. To invalidate this wave count, the market must clear 1397 or a little higher and stay up there. This scenario would climb back above the downtrend line drawn from the October, 2011 1075 low and connecting through the 1159 momentum low in November, 2011 and extending upward. The SP 500 dropped below this line 6 days ago and is now strong resistance.
You will notice my Uptrend Trend Cube is not buying this rally in the intermediate trend, as it is on sell for C, S and I. The turn-up of this intermediate trend is the buy signal. Market breadth is solidly on decline, so this suggests that this week is nothing more than market manipulation. The short term trend are near buy or a buy condition (I fund), but may reverse in a few days or less. These whipsaws make TSP trading difficult.
I don’t know how many readers have seen the Citigroup Economic Surprise Index, but thought it was interesting. “The indices are objective and quantitative measures of economic news.” You can clearly see it is sliding in April, although there was a big spike today.
Citigroup Economic Surprise Index - Major Economies Analysis - CESIG10 - Bloomberg
Let’s review the waves on SP 500. Wave A down from 1422 was 65 points and took 5 days to get to 1357. Wave B is a countertrend rally and should be completing after 5-6 days, and is nearing a 0.618 fibonacci retracement at 1397. Wave C should at least be equal with wave A or some fibonacci multiple of it. So downside projections, assuming a full retracement, may be: 1332, 1307, 1300, and 1292. Some of these levels line up with resistance and some don’t. This ABC should end the correction, and I am favoring the 1292 level, but we shall see. The time element for wave C should equal wave A or some multiple of it, depending on final level. To invalidate this wave count, the market must clear 1397 or a little higher and stay up there. This scenario would climb back above the downtrend line drawn from the October, 2011 1075 low and connecting through the 1159 momentum low in November, 2011 and extending upward. The SP 500 dropped below this line 6 days ago and is now strong resistance.
You will notice my Uptrend Trend Cube is not buying this rally in the intermediate trend, as it is on sell for C, S and I. The turn-up of this intermediate trend is the buy signal. Market breadth is solidly on decline, so this suggests that this week is nothing more than market manipulation. The short term trend are near buy or a buy condition (I fund), but may reverse in a few days or less. These whipsaws make TSP trading difficult.
I don’t know how many readers have seen the Citigroup Economic Surprise Index, but thought it was interesting. “The indices are objective and quantitative measures of economic news.” You can clearly see it is sliding in April, although there was a big spike today.
Citigroup Economic Surprise Index - Major Economies Analysis - CESIG10 - Bloomberg
