Wednesday, July 21, 2010

Market Timing Update (7/21/10 Close)

[1045PM] A bullish perspective
This chart plots the closing levels of SPX and RUT to remove some noise and hopefully not too much signal, with MACD, RSI, ROC on the SPX stacked below.

The RED labels highlight the main bearish count (i.e. 3-down already in progress).

On the other hand, the BLUE labels highlight the main (near term) bullish count (i.e. 2-up still in progress).

You be the judge on which one, RED or BLUE, has the better/more right look.

But the positive divergence (vs. stock prices) in those indicators (highlighted by the GREEN lines) is notable.

If 3-down is indeed in progress, it'd better push the indices to DEEP fresh lows very soon.

[4PM] A 2nd wave retrace or the start of the 3rd of 3rd ?
- a battle of triangles

First of all, the top counts are still tracking the waves so far (Chart 1 updated)

But Chart 2 shows a battle of triangles. The gray triangle is near term bullish as it is supposed to be followed by a terminal move if it is indeed a triangle. The red triangle is near term bearish on a post triangle thrust down.

On the near term bullish side, a second wave retrace may be developing in both stocks and the euro (Chart 3).

Again, YESTERDAY's low is an important differentiating point.