Category Archives: Patterns

Back in Crazytown

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That was an amazing move yesterday and the double bottom target at 2060 on SPX was hit just before the close. That was rather faster than I had expected, and ES even made a new all time high overnight. ES made it back to over 70 handles over the 45 day pivot (1997.08) again overnight and so was back in Crazytown, where ES has spent much of the last few weeks. I’m expecting that ES may spend much of the rest of December there as well.

What are the odds of retracement today? Well I have a rising channel from the 1992 SPX low and as and when that breaks, most likely today, then I’ll be looking for some retracement. SPX 1min chart: (more…)

Breakaway Santa

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SPX closed back over the 5 DMA yesterday and unless a war starts in the next few minutes, looks likely to gap up hard at the open today. Bulls need a green day today to confirm a likely retrace low and after that SPX should be off to the races for the rest of December. If this is a true breakaway gap then the opening gap today will not fill. Daily middle band resistance is at 2045. SPX daily 5DMA chart:

141218 SPX Daily 5DMA Breaks

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Inflection Point Here

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That was a wild day yesterday, and the daily candle looked impressively bearish, but in truth the shorter term pattern setup still looks bullish here, though if yesterday’s lows are broken then that may change quickly. Until then though there is a falling channel from the high, and within that is a falling wedge from 2055 that broke up yesterday morning and retested broken resistance at the close. We may well see this bounce strongly at this retest and then trigger a double top target in the 2060 area with a break over yesterday’s high.

If we see a break below that falling wedge support this morning however, then the lower targets in the 1950s that I was looking at yesterday will open up. SPX 60min chart:

141216-I2 SPX 60min Falling Channel and Double Bottom

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The Black Sheep

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Someone in comments pointed out BABA, so I checked it out. Yeah, it’s acting awfully weird. {Insert allusion to Jack Ma’s face here}. For a triple-digit stock, it’s stuck, day after day, in a tiny price range. Word on the street that options on BABA are one of the hottest things going. Lots of smoke; not much fire.
1216-baba

Just The Stats Ma’am

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Those who cannot remember the past are doomed to repeat it
– George Sanatanaya in The Life of Reason 1905

I’m hoping some of you guys took the ES trade I laid out at the bottom of my post yesterday. I only took it half size as I had to be out for the first ninety minutes but shortly after my return I cashed up a very nice +32 from shorting 2012 on an order I left on when I went out, and went long at 1979 shortly afterwards. If you took the trade I would mention in passing that I have a donate button on the right hand side of my blog, and I’m currently putting together some funds for having a professional makeover on the blog, and am hoping to do that from donated funds to avoid changing my blog from being a cheap hobby into being an expensive hobby. :-)

That long trade is the one I want to talk about this morning, as I have been getting quite a few comments that the main top is in and that the current decline may well run away. Anything can happen, but I’ll explain at least why historically that would be very surprising. (more…)

A Lesson in Managing Grinding Moves

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The last time I posted (Nov 29th), I shared the VXV:VIX ratio and suggested that the S&P500 was likely to continue it’s grinding uptrend unless something changed.  I also shared HYG as a potential short which I unfortunately missed, but turned out much better than I expected.

As it turns out, the grinding call was the right course of action as the daily 20MA held the following Monday and ground its way back up to the highs again.  This past week, price appeared to be doing the same until Tuesday, December 9th which broke the 20MA and delivered a lower low on the hourly charts.  Despite the very bullish looking candle, the depth of the decline put me on guard for further selling. (more…)

A Modest Proposal for Today on ES

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This is a fast and short post as I have to go out soon and won’t be back until a couple of hours after the open.

Obviously my falling channel broke down on Friday and the 2019 support area was broken with very high conviction, with SPX close to a test of the 50 DMA at the close. Both SPX and ES hit the 3 SD (standard deviation) daily lower band at the lows (the normal bands are 2 SD bands), and I’ve been compiling stats for those at the weekend. I’m not all the way through that as there is a lot of data to crunch through, but I have a good feel for the historical probabilities for today from that.

First though I would note that the SPX low on Friday was at 2002.33, just above the November low at 2001.01. SPX has only broken the November low in December in nine years since 1970, mostly in bear markets, and hasn’t managed it at all in the last ten years, so that is strong support until it is broken in trading hours. If that support holds then we won’t see more than a test of the SPX low today before the Xmas rally begins. (more…)