Mia Kulpa had been advising readers to take profits, as the market had been in an uptrend for the last six weeks, and this January has been the best January since 1997. To wait for an additional 1 to 2 percent profit, which might come, does not make any sense. As related in this column, we could go as high as anywhere from 1525 to 1552 for this minute wave, which is another 2 percent or so from here. But considering the investor complacency as indicated by VIX, it will be a wiser move to take profits and let there be some consolidation at somewhat lower levels. The markets bounced around Wednesday, looking for a clear direction, but failed to gain traction. Blackberry, which had changed its name earlier in the day from RIMM, also disappointed wall street, and gave another reason for the sell off. Looking at the short term charts, there is a strong possibility that the Minor wave 3 has ended at 1510 and we could sell off from here. All depends upon the holding of 1495 in the SPX. If we break that level convincingly, we could quickly trade as low as 1475 area. At that level, we could buy the SPX for a short term bounce, before another wave which should take us down to 1460 area. Short term support is at the 1499 pivot and SPX 1471/75, with resistance at the 1523 and 1552 pivots. Short term momentum setup a negative divergence and declined to slightly oversold. The short term charts remain positive with the swing level now around SPX 1495-1496 area, which is the technical support.
Author Name : Zafar Sheikh