As we begin the 4th Qtr of 2012 - it is important to keep in mind that we are still 1-timeframing up on a longer-term - monthly basis. No change will occur until this ceases. Lets look at the weekly chart below -
The weekly bar shows balance. Since coming into Balance in June 2012 and making the swing lows at 1248.50, the market has proceeded in text book fashion - the trend changed to upside - the market balanced - and then resumed the trend. Shown above are 4 distinct balance areas. After making an excess high at 1468 - the market has again come into balance. The question now is will the excess hold and the trend reverse or will the market resume the current trend.
Early Friday - we saw the S&Ps gap up but unable to take out the excess high at 1468. Looking at the profile I see several things of note:
- a poor high - an indication that the market was too long. What followed was a slow liquidation at first which gathered speed once we closed the Gap, however we did not get an Outside Day. Poor highs do get repaired. No sign of new money selling - Positive
- double distribution day with a Settle at the prominent POC from Thursday - Negative
- Higher Value - Positive
- Poor Lows from 9/28 and 10/2 - reduce the odds of upside continuation - Negative
Trading question for Monday is - do we open in or out of balance relative to the lower distribution from Friday. If we open in the Lower Distribution and trade lower - first destination is Thursday's low -1448.75 and below that 1444. Resistance is at 1457. Opening in the Upper distribution and trading higher targets the recent excess high at 1468.
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