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Tuesday, May 24, 2011

OIL: desperate uniform upgrade from GS, JPM, MS to avoid the inevitable OIL code blue. You say Buy, i say Sell with this "transitory" bounce.

$spx gapped up open and moving toward the blue upper trend channel in the first hour of trading, it stopped right at the channel and 38.2% retracement. then, it drifted down toward the red lower trend line.

it's forming a potential bearish descending triangle, the measured price target is around 1280. but the lower red trend line could also be a support for higher price, it would be important to see market reaction if it gets there.
$spx Point and Figure chart shows ... is a critical support. if $spx comes with triple bottoms break down below ..., target is around 1277, which matches with the descending triangle potential.

since market had a big gap down yesterday, $spx is trading around the "black curve". it's important that $spx stays and trading below this "black curve" to change the market characteristic from MT bull to MT bear. this "black curve was the support during the past months. when "black curve becomes resistance, it will also change and relieve the pre-market updated market breadth indicators bottoming concerns.

one concern for short term $spx and $rut is ..., either need to consolidate here to wait for "the curve" to come down, or strong down to pull "the curve" down faster.

$spx potentially is back testing the broken code blue.

about T3 ...

$vix, after completed its red wave 2, shoot up to 20, then sucessfully back tested the green pitch fork and the ... curve, then rise from there.

today GS, JPM, MS all say buy oil and upgrade oil price to $120 or $130. but my view is sell oil with this "transitory" bounce. USO (oil fund) is at the broken green lower pitch fork resistance, also around the black upper trend channel resistance.

$WTIC (OIL) bounced off the all important code blue. i see today's uniform upgrade is a desperation of trying to avoid the inevitable OIL code blue break down.

ST fear factor has relieved some to yesterday's pre-big-gap-down status (ready for another big down?), it's in the neutral zone.

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