I don't know about filling the NDX gap at 1810, and SPX at 1442 during this dead cat bounce. Today, I've been lightening up on my Short term long positions. May be decide Friday, tomorrow to close all positions on my long term 401k. I think NDX 1789ish, and 1430ish is going to be big big resistance.
[ chart ]www.ord-oracle.com/dawn/graph030707-1.png[ /chart ]
"Above is the McClellan Oscillator for the NYSE. When the McClellan Oscillator gets below -200 a bounce is likely to materialize for the short term. The Summation index touched the -300 level on the current decline. We have labeled in the past where readings below -300 have produced rallies.
Resistance lies near the 9300 which equates to the 1442 range on the SPX and may be the area where the next top forms. Next week is option expiration week which usually has a bullish bias and the SPX could rally into late next week. The bigger trend is down and we are expecting and intermediate term decline to take the SPX down to near the 1140 range.
Also notice on the chart above as the NYSE made higher highs the Summation index made lower highs and this negative divergence help pick out the top of March 2005 top, September 2005 top, May 2006 top and the February 2007 top. We are short the SPX at 1381.95.
Nasdaq 100 market:
Below is the daily Nasdaq 100, ($NDX) chart. The NDX McClellan Oscillator has hit into an area where short term lows have occurred in the past (check the NDX chart below). Therefore there is a good possibility the NDX may bounce during option expiration week which is next week.
Resistance lies at the gap level that formed near the 1810 range last week. Gaps are like magnets, drawing the market to them. Therefore a possible bounce to the gap level during option expiration week is possible. If the gap at the 1810 range on the NDX is tested on lighter volume then that will create a bearish signal.
If a bearish signal is triggered at the 1810 level on the NDX then that would be a good place to add to short positions. We hold an average short position on the Nasdaq at 2378.59. Our downside target on the Nasdaq is near the 1900 level."
[ chart ]www.ord-oracle.com/dawn/graph030707-2.png[ /chart ]
