The Bear presses on (and the sighting of the Bear’s twin brother)

Asian markets are down and the evening trading of S&P500 is also currently down.  The evening star formation does foresee the bearish stance from time to time after all.  Without a doubt, I can see that, in tomorrow opening, SPY will surely drop below the median line support (see my note on the daily SPY chart).

I also see 2 supports ($135.89 and $135.263 on the chart) that if taken out tomorrow will mean that the Bear is taking over in the intermediate term.  Although I closed out my TZA and SKF positions before Friday close, I will restart my short campaign if price actions shows that the Bull cannot recover from the downdraft.

Below is the daily SPY Chart:

Regarding the sighting of the Bear’s twin brother.  Take a look at the weekly SPY chart below.  Follow the bracket numbers in 2011 and compared it to 2012.  Notice both have the downward sloping trend lines.  While (1) to (4) don’t exactly match in shape and form comparing 2011 to 2012, but you have to pause to notice the subtle similarity that, with current S&P500 evening down move, a down (5) bar will pretty much “confirm” the possibility of the twin status.  What does that mean?  It means watch out for the next week weekly SPY bar formation.  If it going to reflect a long down bar like bar (5) in 2011, we “may” have a similar bar (6) in 2012.  Remember, we are only dealing with probability, not sure thing; therefore, there are always room to make adjustment during the week.

I also see 2 supports in the weekly SPY chart.  $133.82 is my estimate of the lower median line for bar 5 penetration; and $131.54 is the bar 5 trendline penetration.  If the trendline penetration become a reality, watch out!

Below is the weekly SPY chart:

Below is a broader view of the SPY weekly chart that also showed the general uptrend line before the “correction”.

Good Hunting!

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