Strategydeskcode's  Instablog

Good Evening!

               It's always important to take a step back when the markets are very volatile and look at the bigger timeframes.  The low in July provided us with some key information, letting us draw a trendline to reveal a very important channel.  The approximate width of this uptrend channel is now geometrically similar to the width of the downtrend channel.  The two channels are intersecting at an important apex. This tells me that very soon over the next month or two, we will find out whether there will be a breakout to the upside to resume the March 2009 rally or a breadown to resume the October 2007 bear market.
              This pivotal time in the market is why there has been such a clash between bulls and bears.  One interesting way to define bull and bear markets is by using the RSI 50 level, but with the clash, the RSI has been oscillating above and below the 50 line indecisively.  Currently the Monthly RSI for the SPY is 48.6, leaning more to the bearish side of things. 
               Bulls and bears alike need to keep on their guard here as this breakout or breakdown of such a monthly proportion would be a big one.

Best Regards,
A.W.

Disclosure: no positions

Good Evening!
       
              The rising wedge pattern recognized in our last post for SPY is better seen here on the SPX.   Today's session closed below the troughline of the pattern, which is a bearish sign.   
              The algorithm is flat on both the daily and the weekly suggesting a trendchange or at the very least, a retracement, may be imminent.     
              Bulls stay on your toes.

Best Regards,
A.W.

Disclosure: "no positions"

Good Evening!

         I've outlined the most relevant chart pattern on SPY above that everyone should be paying attention to right now.  The rising wedge above marked by the two diagonal blue lines has been playing out on the daily chart. The Peak trendline was tested Monday - Thursday along with a June 21st horizontal resistance at 113.00 which failed to break resulting in a drop down into the troughline of the wedge on Friday which then acted as support along with the strong horizontal support at 111.00 .  
         The horizontal zone of play ( between red horizontal lines above) is currently 111.00 - 113.00.   For this coming Monday, if the upper line of that zone at 113.00 is broken, the rising wedge peak line will be resistance at 114.10.   This could then ride up along the underside of that rising wedge peak line to reach the January 14th, 2010 high at around 115.14 which would be a high probability daytrade to the short side with a target of 114.00 and 113.00.
         The internals of the algorithm on the weekly chart are more bullish than bearish but this signal would be considered sideways with a bullish bias. There is a sell signal on the daily chart.   The clash in signals in these timeframes suggests that the week could go sideways and end flat from last week giving our projection of time/price movement in the paragraph above plausibility.

Best Regards and good luck trading!

A.W.

Disclosure: "no positions