Thursday, December 4, 2008

End of Day 12/4

Another wild ride…

The DOW closed down 215 points, the S&P fell 3%, the NDX lost 3.3%, and the RUT finished off 3.1%.

Tough nut getting there, but all-in-all almost exactly what I expected for today. If you remember back to yesterday’s closing comments, I listed the reasons why I went short at the close. Today we fulfilled what the stochastic waves were saying and finished right at the bottom of the potential triangle that would be a part the large B wave up/sideways. That triangle is bullish, if confirmed.

The fundamental situation is actually quite sickening to me… CEOs that were chastised for flying corporate jets to beg for handouts are now driving in their electric cars to beg for even bigger handouts! Big difference – not. Pure after-the-fact marketing theatrics and I AM SICK OF THE SHIT. When are we going to CUT THE CRAP?

Not until the drug addict is found on the floor, I fear.

So, let’s talk about the charts. Below is a 60 day, 60 minute chart of the SPX. It’s busy looking but there are several possibilities in play and so let’s point them out.

- In the middle of the chart is the old, original blue triangle. You can see that the 850 now 856 level is a magnet. We go away from that line then we come back to it.
- Note the 60 minute stochastic. It still has plenty of room for further descent on both the fast and the slow.
- There is a potential down sloping channel that we just touched the top of.
- There is a potential inverse head & shoulders pattern with the neckline about the 900 area.
- There is a bear flag (far right) that actually confirmed today, targeting the 760 area.
- There is a potential, unconfirmed bull triangle forming which is best seen on the second chart.

So, we still have cross currents in time. And we also have cross currents between the bond markets and equities. Mixed signals. Not so mixed anymore, I note that the daily stochastic has turned up again matching the fresh buy signal on the weekly stochastic.

Let’s take a look at the 10 minute SPX chart. You can see that the fast stochastic reached oversold and bounced. That leads me to believe that we may have some very short term upside potential, but now it has to regain that same old 856 area and then break above the triangle top line which is now at about 867.

I went out in cash again, after a small but successful day, and will not play again unless we break 830 on the down side or 867 on the up side.

Hope you have a great evening,