29 Jan 2014

The targets we were looking at for the SPX is at 1810 - 1800.  The 1800 target were hit during the afterhours in the futures (ES).  I don't know what this says about the cash, and whether it should also test these highs.  There area a few things to note at todays market move and Ben BernanQEs Fed talk.  The fact that they did more tapering might cause the market to rethink about who will be propping the markets if the last resort is not there anymore. 

The patterns seem to suggest that we are making a 5 wave move to the downside.  Whether that is done is not really a concern at this point, but a rally could just form a 2nd wave or a B wave.  This should be watched for the possibility of a impulsive move to the downside in a Wave 3 or C manner.  This also allows the cash market to push higher to test the 1800 range that the ES hit last night.  Again, theses are probabilities.  I do not think that we have seen a setup that pushes us to higher prices.

We are still holding the sentiment of a downtrend, although just by a few pts.  I was concerned that we might cross up and cause the ST to change up, but the shorts are safe, and we are also still in oversold position.  Acceleration is not out of the question, so patience is key if you are holding for more short profits.  We also manage to close under the red dotted line we spoke of numerous times in the past few days, and below the daily 75ma. We felt that it is an important support which only held for 2 days.  Today should be concerning and we are looking at 1750 at the least to make a 5th wave low before making a rally of sorts.  All I can say is, if you think it cant keep going.. it will.  Just like the bulls pushed prices up and seems to never end, so can the bears.

MT: DOWN
ST: DOWN (OS)
PA: DOWN

Prices need to close back above the daily 75ma.  The longer it is below the harder it is for a bull case.

Chart below shows the possible support at 1750 - 1740 as a best bull case scenario.

Here is an interesting take on the H&S I drew up over the weekend, which is still in play.  But I will add another possible pattern that could show itself in the near future.

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