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TAM's Pedagogics: March 11, 2011

Well, that’s it then… probabilities (determined by the weight of evidence I’ve discussed over the last week) didn’t steer awry. If you’ve been following TAM’s Pedogogics, you were prepared for a day like yesterday. Now investors and traders alike must turn their attention the next set of probabilities.
The last post mentioned the potential for all 3 other Sisters to follow the tech-laden index’s lead before the end of the week. Considering this transpired within the span of one trading day, we have to reassess. First things first; as simple as this may sound, two things may occur after this massive “Across the board” abandonment trend break. The bulls may challenge and provide some miniscule buoyancy to scare the shorts. Technically, the likelihood this will be successful (because of the type of convergent break this is) is extremely slim. But if they do; attempt that is, it will be a perfect opportunity to exit any Longs you don’t like and increase your Short exposure.
Technically, even though the previous formations (Broadening Wedge) have been violated, some of the sisters still have horizontal supports to yet contend with… (DJIA = 11,980; SPX = 1,294; RUS 2K = 795). For today we’ll stay focused on one – the SPX. Since we all know what the daily looks like I focus on the hourly chart to ascertain more specific levels. 

SPX Hourly

If the Bulls hold the 1,294 line today and attempt a move north there is now, not only the 1,320 resistance from above, but also the backside of the IT trend just broke (a new Floors & Ceilings). However, if the Bulls have completely retreated back into their corral (recall – bull markets take the stairs while bear markets take the elevator) and 1,294 gives way immediately; we could see another day like yesterday. If so, look for short entries in stocks which didn’t surrender just yet. 
Good Luck & Keep Your Wits About You!