Category Archives: Patterns

The Air Is Getting Thin

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SPX broke above the daily middle band yesterday and tested the 100 DMA. More importantly though, the high yesterday was within a couple of points of testing the weekly middle band. Given that today is Friday that may well be formidable resistance today, and while I’d quite like to see a test of yesterday’s high today, I’m very doubtful about seeing a move significantly higher. This is closing resistance, so only the closing price today is important for that. We could see a move somewhat higher intraday. SPX weekly chart:

141024 SPX Weekly Middle Band Test

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Another Educated WAG

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At the point where SPX broke hard through the 50% fib retrace the overall trend shifted from bear to unknown in my mind, and it’s still in unknown territory now. I’m not assuming that this will resolve in either direction until I see some stronger evidence, but I’ll be calling the shorter term likely moves, which at the moment look a decent fit with either bull or bear overall trend.

Looking at the pattern setup at the close yesterday, and the recovery overnight, I have a new educated guess for the direction on SPX over the next few days. I’ll lay that down here and we’ll see how that goes. (more…)

Advantage Bulls

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Yesterday went pretty much as I expected, except for the direction of course, which was up rather than down. There were an impressive list of bullish breaks over the course of the day, starting with the gap back over the 200 DMA, then a break over the 50% fib retracement level at 1920, the daily middle band (closed at 1933), and the day closed at the test of the 61.8% fib retracement level at 1943.

There is one more big resistance level above, and that is the very important 50 DMA at 1967, but in practical terms any sustained break over the 61.8% fib retracement level at 1943 will greatly increase the chances that the retracement low was made at 1820, and on a sustained break over the 50 DMA, there would be a clear target back at a test of the 2020 highs. SPX daily chart: (more…)

1920 SPX Rally Target In Sight

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Last Wednesday night, after some seriously wild action had settled down a bit after hours, I made some educated guesses in my trading room about what ES/SPX might do over the next few days. Some of these I also talked about on twitter then and the next morning, and reviewed the status of all of these on Friday morning. They were as follows from ES 1842-3 at the time:

1. ES was making the second low of a double bottom targeting the 1855 area (topped at 1857)
2. That move should make the second high of a double top (target 1821 area) (bottomed 1815)
3. An (Thursday) AM low would be made on SPX in the 1830-40 ES area (low was 1828)
4. SPX would then break up from an IHS with a target in the 1920 area (to be hit today?)
5. That 1920 area would be reached on Thurs/Fri this (now last) week (rally too slow)
6. SPX would reverse back down hard to hit the 1789 double top target (pending)
7. That double-top target would be hit Tues – Thurs next (now this) week (ambitious)

Janet Yellen wasn’t as much help as I had hoped on Friday morning and while it seems very likely that my 1920 SPX will be hit in trading hours today, this is obvious a solid two days later than I had expected. Does that make the outlook here more bullish? Possibly yes. I’m looking for a test of my 1920 SPX target in trading hours this morning and then I would like to see a very hard rejection from that high. We’ll see whether I get that. (more…)

The Key to Success

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The stock below, KeyCorp, is a good short candidate in its own right, but it’s also representative of the kind of short I’m seeking these days. It has these elements:

+ a clean topping pattern;
+ a firm drop, exhibiting that it’s vulnerable to the general weakness we saw in past weeks;
+ a hearty bounce, pushing it to a more attractive risk/reward level.

As with so many other stocks, this one has a horizontal line anchored on a gap (in this instance, at a dollar value of $12.71) (more…)