Replies to post #7097 on ajtj99's Market Pulse

[sylvester80]

Boy! Now that's gap and crap!!. Just checked in and see all markets in red now just as I expected. My wife is going to hear it from me. Today would have paid for 10 vacations. LOL :)

[Math Junkie]

SPX has broken below yesterday's low.

[RCKS]

aj I didn't think 5th waves were 3 wave waves or ABC like?
This price action is looking qiute bearish but I am less of market action here then anytime recently. Appreciate all the TA you share.
I don't know if you still follow Raptor at all but he has us finishing off the 5th wave here and making a top but he has been quite Bearish all summer.
steve

[positiontrader]

AJ,

I would like your thoughts.NDX at a daily low but with Sox not rolling over I think we will have more downside when it does.I am flat looking for the best entry point.I am trying to decide when to go long.The close will be important.

Regards

Marc

[sylvester80]

SPX & DOW now both below yesterday's lows. Talk about blow-off top. I can't believe the action I left on the table today. Ouch! :) NDX down almost 40 points since this AM. The wife is going to hear it =:-()

[ajtj99]

Well, that dump in the end of the day put the SPX with a weekly gravestone doji candle:

http://stockcharts.com/def/servlet/SC.web?c=$SPX,uu[g,a]wacayyay[d19990822,20030822][pb20!b50!b200!c....

Other times we've had this were the end of Jan. 2001 and the end of May 2001.

One difference this time could be the short length of the upper shadow on the stick. Furthermore, the upper shadow did not exceed the prior top of 1015 SPX, and it came after only a 3-week advance. Normally when this is a reversal stick it comes after a strong uptrend, and the upper shadow is a top.

I think the best interpretation of this candle is a test of the 1015 high that failed, resulting in a test of underlying support.

Here's the daily chart:

http://stockcharts.com/def/servlet/SC.web?c=$SPX,uu[g,a]dacayyay[pb20!b50!b200!c13!c20!c50!i!d20,2!a....

The .382 re-trace of the advance from 961 SPX is the shelf at 992. We are in the process of testing that now. Below that is the 50% re-trace level at 986, which is also a shelf.

I think after a test of the 986 level we may get a re-test of today's high.

Another possibility is this is an a-b-c-d-e correction off the June high, with a low at the .618 re-trace level around 980 followed by a surge to new highs.

This is all the bullish interpretation, of course. The bearish alternative is pretty easy to figure out.