Friday, January 9, 2009


Markets dove after the open… the DOW is down 120+ and the SPX just pinned the 890 area. That’s a very important level, it’s where the 61.8% retrace and the 50 day moving average are located. Here’s a 20 day chart:

And here’s the daily, note the sell signal on the stochastic. I have my slow set pretty slow, so this cross came slower than others that I track. You can see that we have already engulfed yesterday’s candle:

TLT moved up to fill its morning gap as equities sold off. Perhaps it will remain in this range a little while longer, but I began scaling into short positions here regardless, but just a small position to begin with. We’ll see, that 3 peaks and a domed top chart pattern are talking loud and clear… Here’s a 6 month chart, you can clearly see the 3 peaks, the ramp and the domed top. This is a classic parabolic chart, one that says there is downside coming here. Also note the volume pattern… during this latest move down volume was increasing and now that it’s leveled off in the 112 area the volume has fallen off. Watch to see if the volume picks up on a break lower, that will be a sign that we’re headed back down and interest rates are headed up. That would be a bad deal for equities.