24 Jan 2014

There are a bunch of things that happened today, and I will try to list them as much as I remember.  Prices convincingly broke down from the past low that we were indicating was important for Bears.  This has now become a minor resistance line.  Our ST is still in a downward position so there are still high possibilities of lower prices to come.  That said, the movement today is at oversold and I would expect a rally next week when signals come out of oversold.  This should alleviate the pressure and reset some indicators.  Todays close is a flat bottom candle and usually indicates a reversal, and it also closed just a few points above the Daily 75ma.  I always say that this is an important MA.  The next level if this breaks is the red dotted line that connects past highs made in 2013 (currently within the 1780 area).

The Daily 200ma is at 1700 and should be watched carefully if the markets melt and accelerates past our supports, it would mean a long way down if the red dotted line that connect these tops break.  It would mean a severe correction that could lead prices to the 1600 area. This 1600 is also the area where the support made by the 2000 top and the 2007 top meet at current time frame.

Focusing on the weekly charts we have to be concerned.  It has given us a few indications that this down turn could turn to something big.  First of is that we have come out of our overbought range and this is bearish for weeks to come unless our daily indicators could manage to push it back up.  Not only that, but we also have a definite cross on our MACD.  The last time this happened was in June and August when prices have already started trending lower.  The same is true now.

Things to note:
Wkly - 20ma = 1773
Wkly - Lower BB = 1669 = DLY 200ma @1701
Wkly - 75ma = 1598 to 1600

DLY - 75ma = 1788

We might have a few options in terms of EW and cycle CIT, but we should acknowledge  that our STs, and our MTs have done its job warning us of a down trending move as early as Thursday Jan 16th (actual top Jan 15th).  Sometimes the simple indications are the best signals.  I'm not saying that we are going to crash, but to be in the right direction gives us that piece of mind in the case that a melt occurs.  Past crashes have been pre-told by a few weeks or days, and none have dropped right from the top without warning.  So be aware of this, and we should look for a lower high to occur from now till March 2014 where some cycle analyst project a top to occur.  This top might just be a lower high, but we cant rule out a higher high to occur with a target of 1860 to 1890. We will let our trend tell us where we are.

MT: DOWN
ST: DOWN
PA: Neutral to Down