Today’s almost perfect gravestone doji signals a reversal may be underway. Making matters worse was the increase in volume.
The SPX tested an intraday high near 1:45 this afternoon and formed a double-top. As the SPX failed to make a new high, sellers appeared and did not relent as bids were hit all the way to the close.
Looking at the charts, I find it hard to believe the bulls will press their luck tomorrow, with overbought conditions still existing and resistance looming near. Of course I’m short and talking my book, but it appears we will get the pullback I was looking for.
Same time, FAZ was double bottoming @ $35… Shoulda added =/
Quite informative!
I’m still not convinced by dojis.
Twirling, falling, rising, blooming, gravestone, whatchamacallit doohickey patterns not withstanding.
A nice pullback to about 6800, and I think we’ll see 9k by end of May.
Oh, get ready for summer driving season.
Agreed, Wood. That looks like churning action to me. We’ll need to see that all important confirmation tomorrow, but I’m already short too (my system got me short on Friday). Just hope the pullback is enough to take me out of the positions in case the trend truly has changed. We can’t override our systems, now, can we… Indeud…
I agree, as i posted that the upside down bounce off 775 was suspicious and it seemed that the treasuries sold off very much until the resistance on s&p 775. (38.2% fib)
If we do bounce off the fib and sell off hard, the system would be in trouble. Where can the capital fly to? Well, what happened to japan, capital flew to gov’t bonds. I believe it will be a repeat of the japan era. This would be a shoe-in if bernanke signals buying longer term treasuries to take in excessive supply that may disturb price. And china will bitch, but can’t sell, because thats like nuclear option in diplomacy. The assets will be protected in price denominated in dollars. dollar in open markets may devalue also in the long run, because everytime fed buys gov’t securities, its essentially printing new money into the system.
China can’t sell but, they could sure finance their economic stimulus in US Pesos no?
Pull back or new leg down? I vote for new leg down!
Why would they want to do that? They have a printing press for their own currency, which they can print as much as they want, and on another topic, no country can whine about currency manipulation to china expect US, which is only for show or to stop them from depreciating their currency in the future. Its kinda like punishing your kid for smoking when you know that he only thought of smoking and didnt do it yet. I mean, they already allowed so much appreciation, that any more can cause their job market to collapse, cascading to political trauma.
Cuervo, whether you like dojis or not (I read one time that candlestick analysis is not much better than 50/50) this particular one really does a good job of describing what happened. It wasn’t pretty, and so I like the gravestone name.
All I’m looking for is a pullback. I want to get long, for a change, and actually feel good about.
Junk, I just sent an email to a friend saying that worst case scenario with this trade is that it doesn’t pullback enough to satisfy the exit criteria, or that it just moves sideways, working off the overbought, and then roars upward.
That scenario really seems possible, but I’m not smarter than the system.
Wood,
that’s exactly my concern. I feel the urge to override and take profits prior to my system exit. I must find the iron discipline to stay in. I think I’ll make a “Fly Sweat Smoothie” for breakfast tomorrow. He claims to ooze discipline from his pores, no?
What do ya’ll make of the trannie’s apparent strength today?
Good post, I was thinking the same thing myself.
I think a break of the 5 day MA will be the tell if the rally is over.
Don’t fire until you see the whites of their eyes.
down to 740, 720, maybe 701. Prob 740 or 720 though. Then up to 800.
Then down to 550.
Then monster rally to 900-1k.
Then the real bottom. 450 or lower.
Then sideways to up I guess. Gonna be boring times compared to the present for sure.
There’s my EW crystal ball.
Wow what negativity! The Bamboo has this one nailed! The very best scenario for bulls today was picture perfect. We ran right up to tested levels to bring doubt? This is exactly what needed to happen for all involved. Need some SKF? grab it around 763 tomorrow morning. Need some BGU, try grabbing a little of that Wednesday morning. Grab what you think you have to have and simply hang on, you will get your turn. The week will end with happy faces and Jim Cramer trying to do his job in an absolute fashion (as he should per some Comedy Channel fuck face). For those of you long, I suggest adding to your feebleness around the 742 mark, and hedge even more at 732. If that doesn’t work out in your favor, consider something in the sub 700 area to look more intelligent (cuz now you are doing the right thing). Opex has never meant more than it will this week!
JFF
Happy Trading! (If you can’t handle this read, you need to find the penny stocks Timmy has for (fire) sale.
I did almost forget to mention that I do think 795 is still realistic this week. (Thursday morning at the latest)
I would rather enjoy a trip down to 720.
Honestly though, I’m tired of the Armageddon trade always being present.
I would prefer getting back to something a little more normal, for a change.
Shed, that’s bs, it’s all about the armageddon trade.
@ Wood…….to our 2009 Olympian Champion………Danny! (Does it get any easier than this?)
Although I agree with you, I’m going to have to go with Danny on this one: nothing will be normal until the government gets their hands out of the equation.
It’s like what made dad used to say to me all the time when I’d try to help him with a one man job:
“Two hands are better than four.”
I’m short, and on top of that, I hate tech names.
Wood, I see the many different trading styles of the tabbed bloggers. Fly tells the story of buying more stock into increasing losses before a win. Danny is defying conventional wisdom and shorting on the way up- needing lots of pepto Bismol i’m sure.
The point is that I am impressed with and dismayed at the shunning of “expert” wisdom which dictates not buying into losses i.e., catching a falling knife. I can see where having the courage of your convictions can make you broke.
I rue the day I read the quote from Jesse Livermore on Trader Mike’s site: “Never accept more than a penny loss.” I’m tired of running out of stocks I should have held for a day or two longer. Am I a chicken shit or what?
Cebu, great comment. It might need an entire post of its own, to be explored properly. Lemme think on it a bit.