Week of 12-4-11

[Richard Carlisle]

We kept raising the bar on this rally because our pullback points quickly met support and took off again. However, INX prices are again at a potential resistance level and we can count five waves up for the current move.

For this reason, we are again looking for a sell off and possibly the beginning of a major down move. If this is not the case, prices should follow the path of the "C" wave we discussed last Friday. We of course would keep tight stops in either direction and be prepared for them to activate on the ES night session.

INX 30 minute bars

Charts created with http://www.Aspenres.com

[Richard Carlisle]

We have the first little pull back and run up as we suggested in our previous post. Tomorrow is another day. Stay tuned!

INX 30 minute bars

Charts created with http://www.Aspenres.com

[Richard Carlisle]

And we're off to the races! Well, prices may continue lower from here but INX must take out 1233 before looking up for us to feel completely comfortable with a new down trend.

Prices above INX 1245 as of this post count only as an "ABC" or fourth wave of an on going advance. Bulls could re-test longs from here but as usual, tight stops are in order in either direction until the pattern resolves.

We are more interested in the INX 1230 and 1260 levels. We are standing aside until we see those prices or some other, yet unknown, developments occur.

INX and ES 30 minute bars

INX 30 minute bars

Charts created with http://www.Aspenres.com

[Richard Carlisle]

INX prices briefly tested our up side parameters then quickly declined on Wednesday's close. The ES futures took out stops above the triple tops in a brief, 20-minute spike, one half hour before the underlying index opened.

The price action in the futures hints of manipulation but of course, we have no proof of such activity so, we just have to get on with our trading and be nimble enough to change our minds as fast as the facts change.

The current pattern is very suggestive of lower prices ahead as we have been describing in earlier posts but we still want to see prices below INX 1233 before we add our next sale. The reason is that, we could still interpret the pattern as an on going fourth wave within the larger up trend.

INX and ES 30 minute bars

Expanded INX 30 minute bars

Charts created with http://www.Aspenres.com

[Richard Carlisle]

Sure enough, INX finished what we could interpret as an "ABC" decline and the end of a "4th" wave of a larger up trend.

We however are again standing aside until the pattern resolves it self above INX 1266 or below INX 1233.

Expanded INX 30 minute bars

Charts created with http://www.Aspenres.com