Friday, August 5, 2011


(Added: Today's bias is negative. The high of the day so far was 1200+18. A symmetric 1200-18 is 1182. I am buying if we get there!)

RSI on most indexes is below 30. A break below 30 usually signifies a continuation of the current direction-- momentum overcomes reversion to the mean. Moreover, many trendlines have been pierced.

Back to momentum, treasuries are also providing a clue that there may be a bit more to go.

Another possibility is another 25-30 point rally followed by one more move lower, say, to 1175. I prefer 1175 to the 1185-1190 targets given by the analysis in the previous post. Below are three intersecting trendlines at 1175; two are basic trendlines, the third comes from an "Andrew's pitchfork".

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