Consolidating or topping?

 Last time I mentioned that a top was forming SPX fell about 60 points to 1202. This time I think things are going to get more ugly. Eurusd is in a downward trend channel and stays frimly below the upper trend line. New lower lows and lower highs confirm the down trend.

SPX is at major resistance area. I think the new year is going to start with a decline. Any move higher is likely to be a throw off. Medium trend changes to down if 1215-00is firmly broken. Then targets like 1150-1100 will be feasible. If anything changes our view will be posted on time. 

Next week I'll be away for vacations. Any update and market comments will come through Twitter since I won't be able to update the blog with charts. So if you want to follow, just take a look at Twitter. 

Happy new year to everyone

SPX target reached.....next target?

My target of 1250-55 spx has been reached and now what? Will spx continue to 1300 and above as most people expect? My view and feeling say no. I think spx is ready to fall now....Eurusd looks corrective without any hint of impulsive move upwards. Next big move is a big leg down. I think that those two combined with a downgrade of a big european country looming from S&P will push the markets down.

European and specifically italian spreads rise to extremely dangerous territory (above 500). Long positions should be avoided if not starting a new short position to target below 1200. More updates will come soon as the volumes come back after the holiday season.

UPDATE 28/12/11 16:55

Eurusd breaks down short term support. 1.2950 medium term support will probably break too since the movement of the last few days has a corrective form and not a hint of an impulsive move. The decline from 1.3070 was steep and we could see a back test of the green support line or even the blue trend channel....

EURUSD ready to fall?.....part two

EURUSD is moving along the blue line support.....Being highly correlated with SPX, the last few days we see the pair underachieving relatively to the US index. I believe that either the euro will break down and spx will follow or we are about to see a huge rally in eurusd. The support is very close and could be used as a stop reverse point. My most probable scenario is that spx topped yesterday or will do today and both will start a decline after the holiday weekend. Things in eurozone haven't changed a bit and spreads continue to rise. The first big country downgrade is close....but we have to be patient....Back to eurusd, the recent sideways movement looks corrective and that is another point in favor of the bearish scenario. Follow me on twitter for more updates and comments regarding the eurusd intraday movements.

EURUSD ready to fall.....

This is my favorite short term count for eurusd....a steep decline is expected soon if my count is correct. As said yesterday there was an impulsive decline from 1,32. It stopped at around 1,3025 and started a correction that ended today between 50%-61,8% retracement. I favor short positions with a stop at 1,32.

SPX and EURUSD in the spotlight....

 Euro after reaching our target of 1.3150-1.32 has declined impulsively. Still inside the big downward sloping channel, has touched the upper trend line and plunged more than 160 pips. It now retraces that fall and finds support at the green line. Breaking it will resume the decline and most probably reach targets as 1.28.

SPX is running out of time and space and I believe will soon show us the direction it will take. I believe there are more chances topping around 1250 and then following the red path down. I hope I'm wrong but the blue scenario is expected by most people I read in the internet, combined with the Holiday rally.....so I have to be a contrarian. Either way a safe way to play it during holidays is to buy out of the money puts. Today as mentioned in Twitter I expected to see 1230 so that was a good short trade. Having first achieved the 1250 (before market open futures rallied) I saw a pull back to 1230. Now 1250-55 is a target to be revisited in the next two days, unless there is a sudden downgrade of France, or another big euro country.  

SPX finally moves impulsively...is 1300 coming?

SPX has finally broken the downward overlapping move that ended between 50% and 61% retracement. Another impulsive move was made from near 1200 to 1240 and futures now are making fresh highs. 1250 was our initial target and we stick to it. Most people due to the expected holiday rally and the big rally yesterday are even more sure of reaching 1300. I hope we get there but I'm not that sure it will happen. Nevertheless if spx is starting another move up, it will surely correct the first wave that started from 1202 and give another chance to go long for bulls. One of the things that make me skeptical about a potential rally to 1300 is eurusd. Things in europe haven't changed a bit although auctions in Spain have sent the spreads downwards. Eurusd as mentioned before had the potential to go to 1,3150-1,32. Now at 1,3110 may still has room for a new high. I don't see more upward potential.

Holiday battles between bulls and bears....(EURUSD-SPX)

 EURUSD still hasn't broken with a decisive way 1.2950. If done it could accelerate downwards towards 1.27, or even lower.....The pair is in a sideways consolidation period. Christmass holidays can see eurusd near the 1.3150 but as a correction target. Medium term targets stand below 1.29.

SPX battles with the support in the area of 1200. Our previous target of 1250 should be lowered to 1240. SPX at 50% retracement still doesn't have a clear downward impulsive form. The 1200 spot support hasn't seen a close under it so it still holds for me. If broken 1187 is a fast target....

61,8% retracements hold...for now (SPX-EUR-DAX)

 Markets quickly bounced back up from their fresh lows Monday morning. SPX futures near 1203 and DAX futures falling more than 1%, bounced again upwards from the 61,8% retracement area. This area is major support and SPX 1200 (future) looks able to hold it for now a give another push higher.

 EURUSD looks corrective but still able to move up to 1,32......1,2950 should hold for any upward chance. Medium term targets are below 1,28.

SPX still unfolds overlapping waves and no clear impulsive move.....Short term tartget, if 1205 spot holds, is 1249. All in all we have short term bull view towards 1249 but 1209 spot  should definitely hold.

SPX and MIB analysis

SPX bounced off the 50% retracement and finds resistance at the blue downward sloping trendline. We could see a pullback that can test 1210. 1249 is a feasible bounce target but a move much higher can ruin the chances for a sharp decline below 1200.

MIB bounced at 61,8% retracement and moves on the orange trend line. Today it may break this line and move much higher. This is a bullish developement that we mentioned yesterday. 76,4% retracement is very important not to break because the long scenario will have very few chances. The decline looks corrective and buying with a stop around 14100 may prove a profitable chance.

MIB at important point of support.....

MIB is at 61,8% retracement and should bounce up and break the downward sloping orange line if the down move is corrective. If 14180 broken decisively then things could go very badly for MIB. We remain short in this market and wait to see if the expected bounce of the major indices will affect and how much this index. The form of the decline is not my favorite for an impulsive wave down and that is why I believe this retracement is important. More updates to come soon.....

SPX right on track....

Good morning to all.....

SPX slides according to our view, lower highs and lower lows find support today at our red trend line. If 1209-1202 broken after the US markets open then the road to 1177 is open. If not then we could see a two day bounce. I wouldn't choose to go long even for the bounce....I would prefer closing part of my short position I opened at 1260-1270 area. Eurusd seems to have halted the steep decline and that is another factor that we should take into consideration. Markets may pause and bounce up, but in the end I give more possibilities to the continuation of the decline.

Still looks corrective but eurusd has different opinion.

 EURUSD has broken important support and is falling hard. Targets below 1,29 are very feasible. Green downward trend line should hold if trend is to continue down.

DJI has overlapping waves. Still looks corrective but if these waves are a couple of one-two's, we would expect a huge 3rd....however both coloured lines should be respected if either broken. If purple one is  broken then our bearish view will have diminished chances.

SPX has the same overlapping waves but again it still has to break the blue trend line and the high of 1266 to give bulls a chance to see 1300. This is my alternate scenario. Holiday rally is something everyone expects and is depicted in VIX. Even some perma-bears see 1300....these are signs that make me believe that the next weeks will be ugly. I hope I'm wrong and the market rises above 1260 in an impulsive way.

Quick US update....

Everyone is waiting for the FED to step up....markets are off their highs....I believe the report from the FED may give the markets a final upward push to even a new high, but in the end I see bears prevailing. Eurusd steep decline is a bad omen and the correlation with spx will force the index down rather than the pair upwards.

All in all, the two charts show the trend lines that should hold for short term upward movement to remain. Yesterdays lows are important supports that must hold. I don't believe they are going to hold since I favor the scenario as I mentioned in previous posts, that a medium to long term top was forming around 1260. Market form still need to unfold and regain downward velocity in order for the bearish scenario to have more chances than my alternative (1300 spx).

Markets slide again....

Eurusd continues to look weak and after breaking its support line will probably test soon 1,3140 with a view under 1,30. European leaders fail to provide a cure to the disease......the more time it takes for them to solve the problem.....the more the disease spreads.

SPX topped around 1265 as we were expecting last week and made a new low yesterday in the area of 1227. Overlapping waves could still be a couple of 1-2, but the index hasn't still reached even 50% retracement. It still has room to fall but shorts should be covered above 1266.

Dax revisited the 50% retracement and looks like it is going to bounce back up again. Breaking the 61,8 % retracement decisively would be bad for bulls. The form of the decline still looks corrective in europe.

Concluding I would suggest short covering if afraid but not going long. We live in dangerous times and I wouldn't be surprised to wake one morning in a defaulted country. Politicians have lost the battle and there is noone left to fight.

European indices stopped at 50% retracement.

European indices reached 50% retracement last week and the decline still looks corrective. If the correction ended then today's pullback might be a minor wave 2.

Although the markets look like they are topping, the decline is still far from impulsive. 

Eurusd as stated earlier in the morning looks weak....is it? 1,3140 and 1,32 might be last line of defense for the bulls. If broken things might get very ugly for the european markets.

Bulls vs Bears....confused?

Markets last week managed to break down and then pull back up. Near the recent highs, markets are without clear trend and direction. Bulls see a pause in the upward trend, bears see a top forming ready to collapse. 

Wouldn't it be wise to just wait and see, the direction the market will take and just ride along? Selling near the highs and buying near the bottom would be ideal with near stop orders. Even reverse stop orders could prove very profitable!....but also very risky....SPX broke the 1244 triple bottom only to come back and close near its highs!!! Bears confused! Bulls were expecting good news from the european summit to push even higher the markets but start this week with a very weak eurusd that may foretell more market weakenss. 1240 If lost again, we may see 1200 very fast!!

European markets correcting or starting a new downtrend?

Major european indices as shown by the charts, have declined sharply from their highs. However most indices pattern a 3 way decline up to now. Fridays summit and the news from the meeting of european leaders will give the market a lift or a deeper push downwards? 61,8% and/or 50% retracements must hold in order for the bullish scenario to be more strong. Last line of defence for the bulls are the late november lows. If broken......lets not talk about it.....

As mentioned several times this week, the markets were forming a top that after the ECB's president talk, although at first rallied, it reversed very fast...so fast that bulls didn't believe what they were seeing. However the mentality of a wave C (this may be the case) is very strong that the previous trend will restart(down). If that is the case then short stops should be placed at the intermediate top or todays high at most markets. Our view that markets have topped and probably for the medium term now looks stronger than when the markets consolidated. Stops should be strictly enforced on our positions....however I feel we are going to see great volatility and unfortunately a steep sell off the comming weeks. I hope I'm proven wrong this time.

Another day near the top....MIB-DJI-SPX

MIB has broken yesterday the rising trend line and fell almost 700 points. The european summit that starts today brings high expectations regarding the measures that the european leaders will take to battle the debt crisis. The MIB like the rest european indices has broken the rising trend line. The top is in or will another impulsive upward wave start soon. Lets wait and see.....

DJI and SPX are consolidating the last days. The market will most probably react to any news that comes across the Atlantic regarding european debt crisis and what France and Germany will decide to do. In my humble opinion even if the markets react positive to any news from the summit, 1280-1300 spx is major resistance. Long positions with strict stops and intraday targets to take profit will be my tactic.

Consolidaton or topping? SPX-DAX-DJI

DJI holds the red upward line and looks like it is going to break upwards the last 2 days of consolidation.

SPX is in the same position with DJI. The resistance area of 1260 works like a magnet for the index. The upward trend shown from the red line still holds in place. Topping takes time but a last upward burst towards 1275 may take place.

DAX has been moving outside the upward trend channel but sideways. Consolidation here too. Breaking 6170 may lead to 6300. Staying out of the markets and on the sidelines ready to fire is my favorite tactic at this period although I see a top forming.

Markets topped...are we correcting or start a new decline?

DAX is clearly outside of the upward channel so at least a correction has started. 5800 is a very probable target.

 EURUSD looks weak and the lower highs and lower lows, together with the inability to move and stay above 1,3550 strenghten the bearish view that the rise was a correction. 1,3250 should hold if we want to see higher the pair.

SPX has most probably topped as we mentioned yesterday. A correction could bring the index to 1225. Our view was to sell even if the market is only to make a correction downwards. This is because there is a chance that the expected decline could be impulsive with targets as low as 1080. Updates to follow as markets are dynamic and so must be our analysis. 

Have a nice day!!!!

S&P and eurusd focus today....

Eurusd still doesn't look impulsive, but there is a possibility we see a double 1-2 waves that will lead much higher. This is invalidated under 1,3260. Preferably I would stay out of the market and wait for the end of the week to see things more clearly.

SPX has major resistance 1262 and I believe it is more possible to see 1240 and lower. Uncertainty over european debt is the main focus specially this week. Futures as seen in the chart open strong with more than 10 point above fair value. This however may give another chance for selling near the friday highs....If the market opens above 1262 that would change our initial target which is below 1240. 






Update 19:27

The market holds right on its resistance....some may say it has been broken....I think it is in a topping process. It may crawl towards 1275-1280 max....but I still see a good downward correction if not an impulsive decline.

At or near a top....

Markets are near or close to their tops. The movement from the lows of Friday the 25th is almost or near its end. SPX,DAX,MIB and CAC charts below show the supports that if broken, we are at least going to see a goood downward correction. I'm not sure yet if this up movement is a new impulsive wave or the last upward correction before a deep decline. Nevertheless If markets break support I will short them even if the decline is a correction. Eurusd does not follow the happiness that surrounds the rest of the markets. That makes me believe that the top is near. Spx futures have broken 1252 resistance and move towards next target of 1264. Extreme bullishness hide weakness, and vice versa. Better safe than sorry...placing stops must be a priority,specially during these volatile times.