As I mentioned in the morning, it was the third push up from the triangle and the pushes are now complete. Before today, the last seven trading days was a churn. The market was going round in circle and was making it difficult to find any direction. With today’s price action the direction of the market is becoming much clear. I will have to wait for tomorrow to decide whether I will close my short position on January 12 or 20. But either way I expect the market to go down from here. But may be one last attempt to retest today’s high will be made tomorrow.
It was just 11 point gain in SPX for the day. And I think the market will soon give back those 11 points and some more. The interesting thing to notice is how the sentiment changes. Before the year end, when I was talking about Santa Rally, there was general skepticism around. Not many believe that SPX will come close to 1300. And yet today, there is talk of SPX crossing 1400!
But I think it will be 1240 before 1400. The picture will be clear at close tomorrow. The pivot point tonight is whether AUD can hold 1.0260. As per CBOE, the equity put call ratio today was 0.65, indicating retailers are ultra bullish and index put call ratio was 1.40, meaning big guns have purchased more puts and are hedging for a downturn. In the mean time various divergences are cropping up all over the place. $NYHGH:$NYLOW vs. SPX shows a huge divergence.
(Hat tip to Alex. Grant)
I am not a TA guy so I have problem finding positives and room for more upside from the current charts. I have difficulty in believing that the Q4 results will be great but that would not stop the Banksters to jam up the market. I quote the following from Phil Davis;” This is, of course, a gold mine for the Banksters, who KNOW they are going to jack up the Futures so they just wait for a nice dip, buy from the Retailers (using the money we lend them for free through the Fed) and then they jack up the Futures and dump it on the suckers who chase the rally in the morning. It's nothing more than a 3-Card Monty game where EVERYONE is in on the scam except the mark – and that mark is the retail investor! “
But it is not our job to question the market. We just want to be the right side of it. We just don’t want to be fooled again and again. We do not want to chase the bus or fall for the trap. If the Gods of the markets want SPX to be at 1400, we have no quarrel with that and we will be happy to accept it. Let others scream and shout how impossible and wrong it is.
On the other side, Elliot Wave guys are going all over the place. Their Guru is calling today’s move as end of cycle 2 and asking everyone to be super short with a stop loss of 1360 in SPX. (What a joke, another 5 % up). Some other wave guys who collect $100 per month are calling it wave 5. I do not understand this theory of major wave, minor wave, infant wave even stillborn wave and ignorant of this wonderful magical science. So I would rather stick with my own system which says not to worry.
My problem is I will be travelling to Asia on business tour from January 13 and will not be here in North America for about a week. And I do not want to keep open positions unattended. So for me, it is very crucial to find out the direction of the market. I am sure about the correction but will have to get a hang on the magnitude of it. So, for me, tomorrow is very crucial.
