INDEX UPDATE
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Well, just got back from my 16 hour round-trip drive to Asheville, and all the posts - just cant keep up.
Per my short-term technicals, the overall market is now a CLASS BUY to start at Monday's lows, and should have some sort of upswing even if it is only intraday early next week.
The best way to explain it to take the converse situation. During the JAN-MARCH strong uptrend, I was still obtaining CLASS SELLs on my short-term technicals. In each case these CLASS SELLs did work and there was down movement, but the downswings were so small. In most cases they were only good for 100-250 DOW points off of the highs, where it was almost impossible to make money on PUTs. In a few cases there were only intraday swings of 50-75 points to the downside and that was it for the the pullback. It is very possible to have the same situation in reverse.
As for resistance line, I believe the previous supports can now be considered resistance, and there are also some 5-30 minutes resistance line which I have not calculated. For now, I see the resistance at 8200, 8317, 8450, 8585. Since my short-term analysis is hinting the the upswing should only last 1-3 days, it is more probable that the 8200 and the 8317 are the ones most likely to be in play, if it even gets that high, keeping in mind that all we could get is an intraday upswing.
I am still sticking to SEPT 3rd as being the top/starting point of the next decline which could be the major one. It is somewhat depressing to think that we dropped about 650 points last week from the highs to the lows, and that may not have been the major pullback.
I am now in cash and my strategy is to initiate another PUT SPREAD is/when the DOW is up 50-100 points intraday, and that position will not be large, since I am fully aware that it could go higher. If we get to the next resistance line at 8200 I will again add to my PUT position, and will do it again at 8317. If we exceed 8317 by more than 50 points, I will need to re-evaluate the situation. Simply put, I think the DOW will top off in the 8100-8300 range by latest SEPT 3(THUR), and I will be initiating PUTs again in the 8100-8300 range.
If I am correct and we start turning down near/after SEPT 3 but it does not break 8000 to the downsidy by latest SEPT 11, then that could be a stronger sign that we may be bottoming out, although do not think that will happen.
I was glad to see that the psychological support held on Friday and the close was at the 8050 support area. Lets hope it can hold for a few days, in order to initiate more PUTS. At this time there is really no evidence that this mid-term downtrend is over; we are just at a short-term bottom.
I would start to consider a short-term bottom if we rose and took out the 8450 resistance, then came back down and retested the 8000 area and rebounded firmly from there forming a double bottom. Please keep in mind that such would still not indicate that we reversed to an uptrend but that we would be in range-trading trend. To be back in an uptrend the market needs to set NEW HIGHs, not just HIGHER HIGHS and that wont be confirmed untill the DOW got back to the 9300-9500 range.
I do not have good charts that go back 15 years, but my understanding that the longer-term BULL-MARKET would still be intact even if we dropped to the 7400-7600 range, but a drop to the 6000 range would signal that the BULL-MARKET could be over.
Again, unless we see a break of 8450 to the upside in the immediate upswing, if there is one regardless how small it is, the following downswing is firmly implying that 8000 will be broken to the downside, which is a very bad negative for the market. Even a break of 8450 to the upside still requires other confirmation, or it just may negate my timing and nothing else, so please dont think a break of 8450 is that positive - its better, but the market would still need alot more to stop this downtrend.
Seeya |
