Wednesday 29 May 2013

Seeking another wave lower

The main indexes closed higher, but well below their highs, and on balance, we should see some weakness early Wednesday. Daily Fibonacci might suggest a marginally lower low in the sp'1632/30 area, but weekly fib' is offering far lower levels, first prime target would be 1540s.


sp'daily3 - fib levels



sp'weekly5 - retracement, from the Oct'2011 low


Summary

Well, today was rather good. I was looking for a re-short somewhere in the 1660/65 area, but managed 1672, and I'm very pleased with that entry.

I think Wednesday will indeed open somewhat lower, but as ever, the Fed is messing up the natural cycles, with a QE of 3bn. That will doubtless take the edge off whatever downside pressure there might be tomorrow.

Best guess..we have a 'moderate' chance of hitting sp'1632/30 tomorrow, but I'd have to guess we'll rally back upward as the day proceeds.

It will be a bit tricky tomorrow morning with the latest QE, and frankly, I'll settle for an exit anywhere in the low sp'1650s early tomorrow.


For those seeking a big down wave

I am trying to keep in mind the mid-term issue that we are over due a multi-week down cycle. Obvious target would be the rising lower weekly bollinger band - currently @ sp'1459. This is of course a rather huge 200pts lower.

sp'weekly'4 - hyper bullish scenario


However, by early August, the 'best case' downside would be around the 1550s - which is interestingly where the weekly Fib' chart suggest.

So, despite my seemingly bizarre obsession (if not terror) of regular QE-pomo, I am keeping in mind the bigger weekly/monthly charts. At some point, we WILL see a significant move lower. Whether that began last Wednesday...that is the big unknown..

That's all for today...goodnight from London