Continued profit taking into year end

It appears to me that profit taking continues to influence the markets as is evident in the heat map attached. There is not much profit taking left in the financials after they where ripped apart during the short covering ban, at least not enough to cause prices to drift higher into year end, however those sectors that collapsed, ie. the energy and basic materials sectors are now drifting higher as those folks with substantial profits take them this year, ahead of any potential change in tax policy. The builders and reits however, continue to see selling pressure and in my opinion will not present any near term oppertunities to get short, forcing those that want to catch a ride to chase prices lower.

Once again bumping up against extreme resistance

The /ES managed to push up into extreme resistance triggering another signal to sell short based on daily extreme closing ticks as noted in these charts.

SPY head and shoulders on 30 min. bars

It's starting to look to me like a head and shoulders pattern being traced out on the SPY 30 min. bars, with a confirming OBV skewed to the downside reflecting increased selling on the down legs.

OI on the /ES

notice clearly how open interest expands on selling and fades (closing out poistions) on the rallies. Just another one of those signs that indicates the primary trend is still down.

closing ticks tripped yet another meaningful signal

Going back over the previous 6 instances where $tick data closed over the 1000 band, it lead to an immediate deep down leg in the markets

XLU vs. HYG (high yield bonds)

Through out the Bear market that began in late 07 the utility index XLU and the high yield bond index HYG have tracked each other tick for tick. I'm noticing now that HYG and JNK are both on the verge of testing new lows while the utility index is trying to hold it's ground. I believe that the utilities will be part of that group of stocks that the mutual funds puke up in the scenerio that Atilla talks about and this divergence is suggesting we are right on the cliff's edge.

The 2002 CRB bubble bull

After reading a stand out trader named Atilla's comments about the mutual funds and how they are about to puke up their core holdings I thought about the things that might trigger this and I believe the answer lies in the commondities market. Looking at the CRB index you will find that we have just cracked the .618 fib and are about to capitulate down to and probably beyond where the crb bull market began back in 2002.
Remember that the entire market was build on fluff from 2002 right up into the top. Keep your eye on the CRB index.

RSI and channel line set ups

Looking at the situation another way you'll notice that 2nd/3rd test of upper channel lines are tested while RSI is in the 55 to 60ish range which is as much snap back as one can expect during any rally in a bear trend. We are currently right in the zone now.

pressed against resistance and ready to roll over

As per the chart above, I read the current action as crushed against resistance and ready to roll over and head lower through the night session and into tomorrow.
on the 120" /ES chart RSI has reached each upside limit range as would be expected in a down trend as it traces out a negatively divereged pattern.

Test of the lows on deck

Chart balance and symmetry allows for a situation where we sell off hard and close at the lows followed by a deep gap and crap, hopefully on extreamly heavy volume which could mark the begining of an intermediate bull market. This type of event would look well within the fit and proportion of the current chart picture.