Legacy Funds

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Top may be in, waiting on confirmation

We have a 66% chance that SPX at 1080.15 we hit on Wednesday is the top. I arrive at this percentage in a straightforward manner, as we have 3 possible scenarios:
1. SPX topped at 1080 and is going to break below 1039.
2. SPX topped at 1080 and is going to find support near 1039, bounce to lower highs and then break 1039.
3. SPX made new high of 1080, is going to find support at 1039, and is then headed for higher highs.

So from that we formulate our game plan. We can wait for a break of 1039 which allows us to have a low risk short, with stops slightly above 1039. If 1039 holds we can go long with stops slightly below 1039. Regardless 1039 is key, just like holding $76 support for $USD is important.

spxline

A close below 1039.47 (which was the high on 8/24/09) would signal the top is in and prepare for reversal by either moving to cash or playing the short side. Like I said in earlier post, we don’t need to pick tops other than to wait for market to confirm a top is in.

September 25, 2009 Posted by | Legacy Funds | 8 Comments