Thursday, November 17, 2011

Update on the box

The selling that started yesterday continued today, with a significant mid-day flush! We've now broken the triangle and the box (the box could be debated here, it's borderline), and we're below the 10, 20 and 100d MAs. Things are not looking good for the bulls, and with such a fast move, we could be headed to the 50d or the 120 level on the SPY in no time at all! If we get a gap down tomorrow (3-day selling), I will look to buy some 3x ETFs for a bounce at least. Keep in mind the selling might not be over, as we still have a nice gap to fill at around 117. And look at the increased selling volume in the last few days.

Also, and this is interesting to note, the QQQs broke down significantly as well today, but the IWM and DIA are still within their consolidation patterns. Importantly, the EUR/USD is bear flagging and looks like death and so we could see more pressure coming from the USD$.

Here's one of my favorite charts that is holding up through all this mess: LNG. The company sounds like it's doing well (but I know nothing about fundamental analysis, so don't take my word for it), and the chart looks great. It is in a bull flag on the daily, and on a weekly timeframe, it is setting up to breakout of that 12$ resistance! With a big volume gap above, it has free air up to 25$. Although it's not a good time to be buying anything long-term right now, if I had to buy something, this might be a good candidate... I think building a long-term position in the 10s, with a stop just at 9.90 would be a ecent strategy here, in my opinion.

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