Category Archives: Patterns

Bearish Setup – By ConvictScott

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As all of you know I am probably the least bearish trader around. I am a trend following pattern trader. However, to all things a season, and it is the exact time for the bears to finally do some technical damage to the tape.

Why do I say this? Because as pullbacks have gotten shallower and shallower over the last few months volatility (real volatility in price right now, not the market take on implied future volatility in the VIX) has fallen to a historical extreme and then painted an uptick. I posted these two charts on Sunday and I think they are well worth a revisit.

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Candidate Top Take #24

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Greetings from the New Forest (established 1079 AD) in Hampshire, UK. The scenery and weather are lovely, and my internet connection is very slow, so I have been taking some genuine time off to relax rather than following the markets too closely. Things are looking interesting though so I thought I’d take some time today to do two posts, one on equities and the other later on on bonds, precious metals etc.

On equities SPX made a marginal new high last week and has pulled back sharply from that setting up a possible short term double-top. This isn’t the first time this has happened in recent months, so there isn’t much to get excited about as yet, but the overall setup favors at least some more downside this week, so I thought I’d have a look at that today. On the daily chart SPX tested the lower band on Friday and has gone lower this morning. There is double support in the 1956 area at the intersection of the lower band and broken wedge resistance, and primary support is at double-top support at 1952. A conviction break below double-top support would target the 1914 area. SPX daily chart:

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Tantalizingly Tight Trend

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Greetings again from Red Rock, where blogger’s guilt compels me to do another post. (Many popular bloggers do one post a day, tops, and I get jumpy if the latest post is more than a few hours old. That’s just how I roll.)

The Dow Jones Composite (which is the Industrials, Utilities, and Transports, all mushed together) is, as I said in yesterday’s post, “tightening and narrowing”. The fall on Friday took it right down to support. What I want to see – - what I really, really, reallllllllly want to see – is a break of that trendline, because it’ll be the first break of that wedge ever. I would be giddy. And that’s really what all of us want, isn’t it? (more…)

Tightening and Narrowing

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The perma-rally in the stock market is getting thinner and thinner, both in terms of breadth and daily range. Just take a look at the Dow Jones Composite; this wedge is getting ungodly tight. I realize anticipating a break has been like Waiting For Godot, but I continue to hunt down the best individual short positions, stock by stock – - – the domestic ETFs offer, in my opinion, almost no edge right now.

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