12/15

So like I said before..the charts look ugly. But we still seem to be working on that 2.5 week low.

There are 2 possibilities here -

1. The 2.5 week low is still exerting its influence here and cycles are extending. We were supposed to ideally hit this on Monday but today looks like it is extending. Do we see it today? I think it is possible.

2. We saw the 2.5 week low on Monday and had a quick bounce up from there and its OVER..And now we are declining into the 5 week low. If this is the case, then market will break 4600 and head much lower in coming days.

Both scenarios are equally likely right now and since the charts look like crap right now, I am not very comfortable either long or short.

So whats the trade?

Heres the chart -



So now we are playing around with the 5 week FLD here. And I think it even broke it for some time and then got above it. So its quite dicey here. If it breaks again and stays below, it implies the 5 week top is done and market is down from here with small bounces in between.

On the other hand, the 2.5week low is coming in and if we can make it above the white line/5 day FLD and the next higher one the 10 day FLD, then we can go higher till 4900 or so...Above that we can get to 5050 area. These are all very rough numbers. I want to see if we can make it above yesterdays high first before refining the targets. Yesterdays high was 4840. You can see the importance of this from the above chart.

So again whats the trade?

Maybe best thing here is to stay out and wait for more clarity to emerge. I dont think shorting here is a good idea unless we break 4600 conclusively. And wait to go long above 4840 only. 2nd option is ofcourse to build longs here today and maybe tomorrow as long as we manage to hold 4600. And we get confirmation of bull case above 4840 where we can add more to longs. I am thinking of going with the 2nd option today in panic. Let us see.

Best,
Lee