Saturday, January 29, 2011

Update: 8 to 10 new highs on weekly SP500

Well folks, the pattern is working perfectly the only question now is: will SP500 still make the 10th new weekly high or has a correction started?

Of course after Friday's sell-off (with the biggest trading volume of the year) we tend to think that the 9th new weekly high was the last one for now and we will see new lows next week, but would you bet ALL your money on that idea? I wouldn't!

I have learned the hard way that anything is possible in this business, who in his right mind can say for sure that we will not make the 10th new weekly high next week? Although it looks so much easier to think we will really go much lower next week...

But let's just have a look at the charts (look at your own charts as I'm not posting any today) and see what the possibilities are: we can say that *IF* it breaks 1270 on Monday we will probably see 1262 and then 1255-54.

BUT *IF* it does not break that number above we may go back up to 1285-88 (may be area for shorting) and then, if still strong, go to 1296-1300 and above that... surprise!! We would see the 10th new high where I would be looking to SHORT BIG from 1310 to 1320, if it'd go that far. (Have in mind ES has a difference of more or less minus 3 points from cash).

For the time being ALL we had was a one day sell-off with good volume, but everyone knows one day does not make a trend.

Have a great weekend and trade well this week.

Sunday, January 16, 2011

New 8 to 10 new highs developing on SPX and SPY

After ten weeks this pattern will be back again in play, this week, *IF* we make a new high, it will be the 8th consecutive new high, we might still see the 9th and 10th on the coming weeks, or NOT, because this is how this pattern works it may stop making new highs on ANY of those 3 next new high bars, so what we need is to see if there is any confluence, some important resistance, when it makes new highs this week, how high can it go?

Will it cut the 1300 psychological barrier like a hot knife on butter and just keep going up or will we see some kind of pullback when/if it tests that important area from 1300 to 1307 (CASH)?

Click on the chart to see it bigger.

SP500 Weekly Chart

The same pattern is in play on SPY, let's see what "the boyz" want to do when we make this new high, I intend to start building a short position this week, but of course we might see it going much higher, remember, in this business, anything is possible.

Have a great week every one!