Monday Evening 18 April 2011
Can it be that the most blatantly manipulated, Fed-financed rally
has ended? We noted the topping action for the recent highs.
What is in evidence is not how a market typically tops, but then
again, it mat turn out that the top was in February. Sometimes,
the truth of a chart can only be known in hindsight, and that is not
unusual. Market activity always needs some kind of confirmation.
It may well be that the cluster of closes confirms February as
either "a" or "the" top, and even now we are now certain which
A clustering of closes very often denotes a market turn, and the
market has turned. The April high is a lower high compared to
February, when the large range down bars showed up in earnest.
We had a short position the day price broke 1320, 6th bar from
the right, but covered when price kept holding its decline, early in
the trading day, last Thursday, 4th bar over. Price closed near
the high for the day, and it continued higher on the next trading day.
The dark horizontal line across the 1320 area is where we expected
the rally to fail. Never happened. On Monday, price was lower, and
by the opening of the day session, the decline was fast and furious.
Almost all markets were affected and had large and surprising moves.
On a day like Monday, all one can do is wait for the dust to settle and
then look for a weak reaction to sell, at least in the S&P.
There was evidence of some buying, most likely in the form of
short-covering, at the early morning lows. The next resistance area
is from 1306 to the 1310 area, if price is able to rally that much from
the Monday close. The last bar shows overnight activity, down about
6 points, but it is too early to make anything out of it.
The target area is identified between 1240 area and 1260 +/-. It now
is a function of implementing one's rules for establishing a short
position. That, in turn, depends upon how the market activity develops