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1.28.14 Tuesday
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Long-Term Channel Support ($IWM)
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This rising channel support has been held since November of 2012 so it’s definitely worthy to note because this is pretty much only index with it’s uptrend still in-tact. But the thing about that is we do not have a confirmation of a bounce as of now (9:40am CST). If we do bounce from this level though, technically, we are still in the phase of “higher lows” which means trend can continue (again, if we do bounce from here). This is important because every time this market is about to roll over, Russell finds support (see arrows) and lifts the whole market up and others would follow, subsequently.
So I think it’s a pivotal moment for the bulls and Russell could be the only savior to avoid correction. I personally think correction would be a good thing at this point and would welcome one (I would want to say the market is “extended” but that means absolutely nothing to this market) but again, my opinion/feeling/emotion should be noted as invalid when I am doing an unbiased analysis.
Opposite is also true if we break below this uptrend support, not only we are breaking this long term uptrend support that has been held since November of 2012 (big deal!), but we will be coming down to put in “Equal Lows”. Meaning, the trend is dying and it is following footsteps of other indexes such as S&P 500 and Dow Jones Industrial Average where they have already been breaking down and put in “Equal Lows”. If this is the case, this is a huge warning signal for correctional move to come.
“Equal-Lows” ($SPY)
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S&P500 has already put in “Equal Lows” as of yesterday. This means trend is dying and illuminating warning signal for the equities. As you can see on this chart, we are still in that channel pivot level so this might be the level where bounce could happen to about $181-$182 to create that “Lower High”. And in that process, we might be forming H&S reversal pattern, and if that’s the case, things could get ugly. But like I talked about on Russell analysis, if $IWM decides to lift the whole market up, $SPY could blow through that $182ish resistance to the upside and just keep going higher (and ultimately could make new highs). I personally don’t want to short $SPY until it goes up to create that “Lower High” ($181-$182) and when it turns to come lower.
Currently I am “neutral” in the market until I see $IWM breaks (to the downside) that long term uptrend support and $SPY creates “Lower High”.
