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Wednesday, April 04, 2012

Another Sell Signal

I guess I'll have to hold on to my remaining 1/3 inverse ETF's dearly as the second sell signal year to date is about to emerge!!  We need tomorrow to close lower or flat and the bear could get their second go ahead.

The SPY chart didn't change much since my midday post. It broke the 4 month uptrend line but held on to the 20 day EMA.    The daily MACD histogram is negative and is trending down.

I took a closer look at the VXX 60 minute chart and saw the Al Brooks reversal pattern!  The steady long down channel identified by the magenta lines were broken convincingly till 18.85.  The broken channel was backtested on 3/30 and made a higher low on 4/2 after retracing 76.4% of the rally at 16.19.   And now we see an up channel forming.   Since the low was a higher low, we can expect just one leg up.  If that's indeed the case, it should be a go for the bears.

Else where, the Dow and the Russell 2000 lost their 20 day MA's.  Finally, a surprise icing on the cake: Buy - Don't Hold issued their sell signal today after the bell !

Now, tomorrow is the last trading day before the Easter long weekend.  Per seasonality, the market tends to get pre-holiday rally.  Tomorrow is the last day of the shortened trading week due to the long Easter weekend.  If the market does not get a rally, which is probable due to the big job number coming out on Good Friday when the market will be closed, then the bear would have the stars lined up for them short term.  It's not May (re: seasonality - sell in May and go away) yet, but I would love any correction, any time, in this relentless bull market!

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