Thursday, December 13, 2012

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The market indeed put in a top and now we await confirmation through price and breadth. The daily S&P registered a mild reversal candle via the shooting star. The Nasdaq showed off a dark cloud cover after a bearish engulfing candle just a week earlier. The Russell sported two bearish engulfing patterns. One yesterday and a week earlier. These candle clusters speak of a top forming. 

 

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Nice rejection on the phantom DeMark TDST line. The Naz and the RUT tell a different story since they both have closes above their respective TDST lines. A bearish flip will help negate their significance. A bearish price flip is a close lower than the close of the previous four bars. For the nasdaq composite, that will be 2878.04. For the Russell, 822.27. 

 

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Another look at Apple. It’s still fighting the TDST support line. A close below indicates the DeMark setup will continue. 

The Fed has spoken. Rates won’t rise until the unemployment rate tags 6.5% or if inflation expectations tags 2.5%. If inflation expectations does exceed 2.5%, The next option according to the Fed is to monitor other labour and inflation indicators. It sounds more like the Fed’s tools are running slim in the utility belt. Interesting times. 

For support levels, SPX 1415 -18 is the first stop. That’s the projected Fib 127.2% extension, and the 50 day moving average. Base case is this is the start of a high degree selloff. The 11/16 low of 1343 will hold. A big buying opportunity will occur around 1380. Despite this, there are plenty of wave structures that indicate a very messy selloff. Markets are dynamic so we’ll take it day by day. Currently the portfolio is 120% short but will be 70-100% short by the end of day. 

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