Wednesday, January 26, 2011

A Top Tomorrow?

Did I get your attention again? I don't really have any thing substantial to say about it other than a small observation.

Many are saying the behavior up here is very similar to the Apr 2010 top. I figured I'd take a closer look again as well since my last post on this comparison two weeks ago.

I'm only basing this comparison using the behavior of MACD. Back in April, MACD dipped under it's signal line twice and then peaked before crossing back down. Once it had crossed back down, it failed to cross back right about where the market reversed.

Notice the long red candles that printed the day after MACD peaked (red lines)? By the 7th day after the MACD peaked, the market reversed.

If the market is repeating this pattern again, tomorrow is the 7th day since the latest MACD peak. Based on the last behavior, the market traded in an 8 point range that day.

We'll see if this is the case. I bring this up now because based on my wave count options, we are very close to printing the final fifth wave, which would be consistent with what may be happening here.

Keep in mind though, the are still a few options as to what this top may be. I also point your attention again to the fact that a multi-month trendline support is in play for MACD starting back in May.
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