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Thursday, August 5, 2010


Market recap:

It looks like the end of a wedge so I'd expect Monday to come crashing down, but the forks look like they could extend to about 1150.
The candles went short on Friday when Price dropped past the previous lows, but the afternoon recovery places some doubt about that signal.

My indicators are Bullish on the hourly but turning down on the Daily. As can be seen in this chart, price is following the Daily Kumo. This is not a strong Kumo so I'm not placing a lot of faith in it. This new study (Top chart - Bottom graph) is something I just finished. I'm not ready to rely on it, but it has an interesting quality.

The market is unclear at this point. That can be determined by the candlesticks (small bodies and long shadows) , but it appears the Bears need to hold the 1120 area, and the Bulls will want to hold the 1103 area. Once one of these is violated the picture may become a lot more clear. The chart below shows the Squeeze indicator and how the pressure was released on Friday. You may recall 1121.44 is the 50% level from high 2007 to Low 2009.

I see a lot of moving averages congregating just under 1100. This is also where the forks and the Ichimoku place support. The bears will have their work cut out for them as there are many levels of support down to about 1050, but after that it free fall.

The Kagi chart back up everything I just said.

12:30 ET
Referring to the /ES:
Price has reached and exceeded my target by a couple points. Now what... Here's the forks. 1112 looks like resistance, but if 1103 is broken today I'd say Price goes directly to 1088.
1120 is locked in as a wall of resistance, but 1110 is more likely to be the high side of any bounce.

By the way do you recall my recent emphasis on a big move?
Do you recall my comments about weakness in the Kumos?
Now you know why I have been so excited for a last two days.
If you have studied my technique, this did not surprise you at all.

Candlesticks have confirmation of a bullish reversal. I probably did not have to say that, but I would not want to leave any doubt.

Expecting a bounce off the Hourly Kumo right about here.

10:45 ET

SPX will find first support at 1116.
Overhead resistance at 1120
Target for Friday is 1107 to 1110 SPX

/ES Aftermath
This is just the beginning

Analysis presented on this Blog has only informational, and educational purpose, and does not represent a proposal for buying or selling contracts, equities or currency.

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