dead cat bouncing, page-13

phatprophit

last weekend, i posted my weekly chart for the spx which showed huge divergences particularly price in relation to moving averages. i said at the time that the spx was likely to see a decent bounce to about 790 - based on my m.a. grid....and also, it was a nice fit with my turn dates and upcoming quadruple options expiry in the u.s.

last week i also said that it was too soon to expect the "big corrective rally" that everyone was anticipating - i.e. there needs to be another leg down to allow moving averages to move into a position that would support a sustainable rally.

the market has been making a series of repeating patterns - basically a series of panic selloffs, followed by fast recoveries, an extended consolidation and then another collapse down....and the pattern begins again.

bottoms are not made violent rallies.

i'll try to explain what i'm seeing by posting the latest spx weekly chart.

i've added some vertical lines to give you some examples. notice the bunching up of moving averages just before price collapses and then the position of moving averages when the subsequent rally starts. in each instances, the moving averages are still pointing down - acting as resistance.

imo, for there to be any hope of a sustainable rally, the market needs to repeat pattern from january to march 2008 lows - i.e. market needs to consolidate for the next couple of weeks and then a another decline where recent lows are slightly exceeded. this would allow moving averages to move down with price - which would then allow then to work as support rather than resistance. i hope that kind of makes sense.

i could be wrong - but nothing i've seen so far makes me feel that the market is a safe long term bet as yet.