Thursday, March 29, 2007

Some Intermediate term thoughts

Been busy with other things and could not update my blog since Decmeber. Going forward, i will try to update my blog on a regular basis.

The popular consesus among the wave analysts seem to be that the decline from 2/22 to 3/14 was the wave A and currently we are in wave B. So most are expecting some sort of a selloff to retest the recent bottom, which would qualify as wave C.

One of the most interesting technical aspect here to me is the NYSE MCO. MCO broke below the 2006 May lows. Normally this should result in some kind of a retest of the recent lows to produce some bullish divergence between the price and the MCO, in order to begin a new sustained uptrend. But a closer look at the 5% and the 10% trend shows that the 10% trend of the MCO never broke below the 2006 May lows. The slower 5% could not catch up with the faster 10% creating a wide difference betwen the same, which smacks of panic selling, which is what created that panic low on the MCO. Panic lows sometimes never gets tested, which is the risk of being bearish here. So maybe the low is already in. Even if the retest were to happen, the time consumed by the wave B has been too small to consider it complete.

In the ST though, the risk is to the upside for a retest of SPX 1460. Whether the wave C begins after that or not needs to be seen, based on the quality of advance and the technicals at that juncture. Right now the 120-min price trend is still up and my goal is to ride that until it turns down. The last few days of market action can only be qualified as a choppy sideways correction. Only a strong impulse down here and the break of the important pivot at SPX 1400 would mean that wave C has started. I highy doubt that scenario at this point. I am looking for a move towards SPX 1460 in the next 1-2 weeks.