Tuesday

MAGIK - Fire in the hole 17

Post a Comment February 17, 2009 – 9:41 pm |   | Permalink |  Print This Post |

MAGIK Numbers

Daily and Weekly Dow Jones | FTSE Analysis

By Mr. Magik

18 Feb 2009 | Edition 17

I don’t know about you but I was in the trenches for most of the session, bombs and grenades were ripping flesh everywhere around me. I think I have been hit too but still alive to fight another day. What a day on the Dow, a massive gap down at the open took out even daily S2 and went through daily S3 (7675) which is the final exit for longs. Theinflationist have been calling a flush down in the past few days and finally we got our call.

Dow

The Dow closed at 7553 on Tuesday, so much for the daily charts showing a bullish divergence developing on the advance/decline column. Today was deeply in the Red and we are right at the SPX 789 support, whether it will hold is anybody’s guess.

We are expecting the Dow to trade within a range of 7750 (daily R1) and 7450 (daily S1). Swing is extremely oversold at 1%; if in a downtrend the Dow should break daily S1 otherwise we do expect the market to get back and touch daily pivot 7650. There is no major overlap point today. The Dow is now right on the lower trend line of the trading envelope, we have had 2 consecutive oversold days in a row. I would not encourage shorting at recent lows, either you have been short or stay sideline. Perennial bulls should come out of the trenches and start fighting like a bull; all is for the taking if the bulls charge as one.

Trade plan

Buy at 7450 daily support S1, stop at 7290, target 7750 daily R1.

FTSE

The FTSE index closed at 4034, in an oversold position on Tuesday. The expected trade range is between 4105 (DR1) and 3980 (DS1). The FTSE is now at the important support of 4000. The FTSE declined into the close after the dow opened. The FTSE is finally back to reality compared to Dow, the discrepancy has narrowed substantially. I believe the FTSE should rally off the blocks as the 4000 is seen as a strong support to at least pivot.

Trade plan

Buy as close to 3980 daily support S1, stop at 3940, target 4050 daily R1.

Best to your trade,

Mr.Magik