Monday, March 7, 2011

S&P500 Ends Below Trendline On a Log Scale

On a linear scale, it sits right on the trendline from September 2010.

So here's the chart on a log scale. The index sits inside the lower bollinger band, thanks to the late buying (again). RSI shows negative divergence, but not on MACD, Slow stochastics. MACD histogram is negative. Despite the jerky moves every day, not much of a clear sell signal, yet.

It's hard to see on the chart, but the bollinger band is very tight, again. Big move coming? But then again, you wouldn't want to join hundreds of hedge funds who want to pick the top and be a hero.

If it is indeed correcting more than it already has, I've put Fibonacci lines in the chart. Don't hold your breath for the downside, because I don't sense much negative sentiment in the market. This may be just a minor correction, even smaller than the November 2010 correction (the pattern looks similar), and as soon as it retakes the trendline it may be off to the races again.

But then again, my personal, unscientific indicator is saying more downside. Spammers are still there. The know-it-all jerk is still there, spewing insults and calling the end to the downside. We'll see. I'm happy with all my positions - almost all long (gold, silver, iron ore, oil, VXX), and one short (AMZN). I'll think about the next move if the index retakes the trendline.

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