Rich Trend Trader's Blog

January 21, 2011

UNOFFICIAL CASH Signal @ EOD on 1/20/11

Filed under: Trend Timing Model — Rich Trend Trader @ 4:57 am

A combination of technical indicators that I have been working on, but have yet to fully implement, indicates that an UNOFFICIAL CASH signal was issued at the end of day on 1/17/11.  The S&P600, S&P400, and S&P500 indices all closed above the upper Bollinger band (20,2) limit on 1/14/11 with the 5-Day RSI values all above 75.  Subsequently, the S&P600 and S&P400 closed below their previous 5-Day low.  The combination of the upper Bollinger band limit, RSI, and at least 2 of the 3 indices closing below their previous 5-Day low increases the risk of at least further drops in the market prior to continued rally or a precursor to a SELL signal.

Looking at a chart of the S&P600 and S&P400 since the low in early July suggests a 5-wave up move with wave 1 around 7/26, wave 3 around 11/5, and wave 5 on 1/17/11.  This would suggest that the market may move back up toward the 1/17/11 peak but should not move above prior to a more significant correction.  Understand, this is pure speculation based upon the look of the chart and several EW blogs indicating a wave 5 up ending somewhere near the 1300 level on the S&P500.

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