Gravity = down (still)

Pretty far overextended to the upside..

Friday was a pretty calm day until the last hour or so of trading.  It was at that point that the SPX challenged its resistance level that I discussed on Thursday's post.  The headline on CNBC after the close was something to the effect of "S&P reaches all time high" but on closer inspection I don't think it was a successful move above resistance.  The funny thing about traditional technical analysis is that it is all technique and often depends on how thick your pencil led is.  By that, I mean that resistance and support levels are really more of a tight range than a specific point on a chart.  I don't consider Friday to be a successful move above resistance because the last few candlesticks on the 5 minute chart showed that bears successfully smacked the price down into the resistance range in the last few minutes of trading.

Daily scores:

30,000 ft view of the scores since I started tracking them:

The DJIA daily chart below shows some pretty high oscillator values in the lower graphs:  

The DJIA 4 hr chart below is zoomed in to the "fiscal cliff rally."  I've highlighted (in yellow) the "twisted ribbon" appearance of the Heikin Ashi candles that I sometimes talk about.  I like it because it shows that the upward momentum is drying up.  On moves like this we often see some red candles pretty quickly, which would indicate a change in trend.  A green candle outside of the top yellow line would usually indicate that the next impulse will be to the up side.

 The bottom line is that I am setting up a trade trigger to buy a DIA Put option on Monday IF we move lower.  THIS IS A GAMBLE, not a RumWave sell signal.  There may be another attempt by the market to move higher, but I find it to be the path of more resistance.

TSP:  G fund

401k / IRA :  Low risk assets

Questions or comments?  Email me:  rrumwavetrading@gmail.com 

GOOD LUCK NEXT WEEK!