Thursday, April 22, 2010

Never mind!

Earlier today I said that the high volume break below 1190 meant that the market was headed for 1175. But now things look different. A stack of successively lower boxes had formed (the last two are the purple rectangles on the chart). If the market was going to drop to 1175 I don't think it would have broken above the top of the last box near 1195. But it did in fact rally above the top of that box (on a wide range bar to boot) and in doing so put in the biggest rally of the drop from yesterday's early morning top.

Now I think this mornings selling on the news from Greece was a shakeout of weak longs (me included). If I am right about this we should see a stack of higher boxes start to develop. If so the market is now near the top of its second box on the way up from this morning's low. I estimate that the low of this second box is about 1193 and this should be support going forward.

I have drawn a trend channel using the last two lows to give me its slope. I think the market is now headed for 1225 or so (green oval). At that point it will become vulnerable to another 30 point break.

11 comments:

Nick said...

haha I like the title.

Thanks for keeping us posted.

TMG2010 said...

I think this goes to show just how dangerous this market is right now. It even is hard for the best traders to figure it out. Until this market gets out of the range bound situation it is going to be scarey at best...

tellzhang said...

THanks, Carl.YOu are the true trader without bear or bull bias.

Thanks

Tony

Yāvar said...

It reminds me of the market fluctuations of mid-January. I prefer to bet on the downside.

tempo said...

Your honest comments demonstrates how difficult it is to day trade bottoms and tops. It makes me feel a lot better. This retrace will likely move a lot of overbought signals to neutral and set up the next large move up. Thanks again for your super blog.

Joe said...

Classic Mercury retrograde fakeouts on both sides. It also looks like a triangle forming.

Joerg

Enky Nakamura said...

Dear Joe, correlation does not imply causation, i stopped using planets for forecasting stock markets years ago.

Aarpenn said...

I think it's headed to 1205, followed by a pull back of 10+ points again

curt said...

the bears should now officially be defeated, yet again...up up and away

Edwin said...

curt,

Bulls won the price action today but Bears may have also scored on the "topping process".

The bulls would have officially won if SPX can break-out to the next (higher) Darvas Box. Until then, we are likely to get whipsawed.

dcatlowpj said...

Good reads today...very tough trading market.