Hanging By a Thread ~ The Risk Averse Alert

Tuesday, February 23, 2010

Hanging By a Thread

Looks like the bounce off early-February bottom (at least the current leg of it) might be over...

SPX 5-min

Noteworthy, though, is the fact support today was found above the point of breakout of "a third wave of a third wave" (whose unfolding corresponded with RSI reaching a maximum during formation of wave c). Today's constructive $SPX-RSI divergence further suggests sellers might take a couple days only slowly feeding shares, bringing indexes more or less to drift.

Of course, this assumes wave c might be completed, and a decline toward the 200-day moving average, minimally, has commenced.

There remains the possibility wave c is not completed. In this case a final advance once again challenging the 50-day moving average appears the likely, best outcome.

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