01/08/2009

Rally done?

I bought SRS a couple days ago at $50. I took a double position and sold half this morning at $55 to eliminate my stop loss.

So what's going on here then? Well, it looks like SPX should go for another test of its main trendline for the rally at 880 - 885. That would be the third test. The fourth is usually the deal breaker. So we should get a test there, a bounce (with IYR breaking down to $34 to bounce I think) and then a short move to retest that will likely fail. I think that should be by Jan. 20th or so at the latest, maybe a couple days later. Could even be sooner, like the 14th. Or maybe it doesn't happen that way at all!

So, if one wants to short according to this plan, wait for the bounce on SPX and short that rally.

Anything can happen, perhaps I am wrong. I have a whole host of TA techniques I'd like to post, but I need to do it later.

Good luck all! Sorry for being so incommunicado.