Hot knife thru butter …

when I came up w/ the support levels last night I certainly didn’t think we would come down into those levels today. not the least bit BUT we did .. ugh. I watched the levels in between calls as the gap came down into our targeted support zone – actually held for a bit and then pierced the level and closed at the low of the days …

so, we’ll get out our pencil, erase, and come up w/ another level … ultimately, this drill is to define/find key support – look for confirmation that a low is in place and then WAIT for a SELL PATTERN to appear to try and get a short on .. try being the operative word.

below you’ll see the key UPTREND trend line from the all time low back in 1974 and in log scale. in fast moving markets log scale trend lines become key as they really help one capture the emotion and velocity of the moves. note we have not broken a key log trend line so the trend is still up …yes I know that is crazy, but that’s the case, for now. certainly looks as we will test that line in the coming days …

1/note RSI below on a monthly basis – we have broken support that defined support levels for the entire move up from 2009. 2/ we should target the dashed blue or orange RSI support – watch those levels. 3/ note the uptrend line labeled “key trend line” 4/ taking the “biggest” corrections ever we can see that they range from 32,38,59 percent for 87,2000-2002, 2007-2009. we are approaching the 30% decline level and right in/around this area is the .382 retracement from the all time low back in 1974. WE SHOULD FIND SUPPORT IN AROUND HERE ….

note – when using an all time low or high to derive a confluence zone its good to go back in time and use that same point and see if it was important in the past .. it was and therefore, the all time low in 1974 ‘should’ be the node to offer support .. .for now. that’s the second chart.

here’s the chart showing the key node and it’s importance in deriving support and/or BUY levels.