Yet another picture to pay attention to

Ceilings Abound?


(Click to Enlarge)

840
845-846 region 50% retrace
853-854 region 61.8% retrace
856 region 20 Day SMA
878 region 100% retrace


Here we have a chart of the SP with Fibonacci retraces overlay of the move down from the recent high (above 878) and the recent low (around 812.) Most important are the 50% retracement, which we fell just short of on Tuesday, and the 61.8% retracement. The 61.8% retrace is of particular value as it also converges near the 20 day Moving Averagee.

On another totally different note I was planning a whole post on a biotech company I came across about a week ago... HGSI... one that has can neutralize Anthrax Toxin, not just provide a vaccine. HGSI also has other drugs of note. This company has guaranteed revenue from military spending... I have been in and out of this name but figured it would take a flush down in the market before I wanted to pick it up. Yesterday the company was broadcast on CNBC and the stock shot up over 30%... which frustrated me for sure... but it fell back today and I would not be surprised if it continues to pare some gains if the overall market breaks below heavy support at SP 800. Soon, I believe, most likely after one more flush down in the market to test the 750 lows and perhaps a bit lower, we may be set up for a very nice rally in the markets as we have been selling for too long now without a major bear rally. Perhaps it has already started.


However, as I mentioned on the last post, I am attempting to be nimbly short and use rallies as shorting opportunities. We either face a break of 950 on the upside, which would signify that a major rally is already in place and I would have to cover all my shorts, or we break below 800 and stay there for a while to hit or break new lows.From my research this seems the more likely of the two. Regardless, it is clear that the market is much more wishy-washy than it was in early fall and the charts are certainly making a case for bullishness on the horizon. It may a good time to make a buy list of strong stocks for when the time is ripe. HGSI is certainly on that list for me, as long as it moves back down from where it is now. POT is as well, as are many others potentially.......


"The Yellow Rose Street Beat" is for informational purposes only. It does not give investment advice.