Week Ending 8/27/10

This will be at least a two part update because it is already late Friday night, so I will only review the S&P 500 aka SPY.

After last weeks close, I hoping with the double DOJI, one on the daily and one on the weekly, that we would get a bounce. That did not happen. We were down again this week but not much at just less than half of 1%. But what the SPY did do is bounce above the $104.58 and hold with better than average volume. This is the only think I can see that is a positive.

If you look at the weekly chart on the left and follow the rules, then Monday at noon we have to pull out of the C-fund and go short the market. If you look at the daily chart on the right you will see a dotted yellow line showing the down trend in development and the Gray box that is now the battle ground for Bears and Bulls. We are at the bottom of the Battle Ground and bouncing off that support of $104.58. The 20 and 50 day ma are both falling and price is below both ma’s. So there really isn’t anything positive to speak about and nothing to make you want to stay in the market.

So this is my line in the sand or final decision point. If next week price falls below the box and settles below the $104.58 support line, I will begin to pull out of the C-fund and wait for a new entry. To me, it looks like the battle box is pretty solid and we are at the bottom, so I will either ride the next wave back to the top of the box or pullout when the Bulls back are completely broken. Something has gotta give next week because a wedge has been drawn on the daily chart. So it is either going to break down or work itself slowly back up to the $113.00 top of the box battle ground.

I will post charts on EFA - European and $DWCPF – Small Cap tomorrow.