Category Archives: Patterns

IHS Update

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Another grinding day up yesterday, and the Dow IHS has also now made target. At this point, of the main US indices, NDX has made and far exceeded the IHS target there, Dow has just made the IHS target and WLSH has made the double bottom target there.

That leaves four of these main index bullish reversal patterns that have not yet made target. The first of those is the IHS on SPX. That came within six points of the IHS target at 1987 yesterday and could make that today if we have another grind up. SPX 60min chart:

140820 SPX 60min IHS

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The 50 DMA Breaks Up

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The daily RSI 5 closed back over the 70 level and my RSI 5 / NYMO buy signal has now made target, now making that 16 of the 18 such signals since the start of 2007 to make that target, with the other two failing just above 60. The 50 DMA broke up with conviction yesterday and both that, now at 1958, and the daily middle band, now at 1952, should now be strong support. The next bollinger band target is in the 2000 area and I am expecting this move up to fail under rising wedge resistance, now in the 2015 area. The pattern setup here is suggesting strongly that on the bigger picture we are making the second high of a double top before a larger retracement coming sometime soon. SPX daily chart:

140819 SPX Daily Trendlines BBs MAs

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A Day In The Life

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There’s not much to add to Friday morning’s post here really, other than we have since had a V retracement and shaken out some weak longs, so I thought I’d do something different this morning and show you what I was doing intraday on Friday, as the pattern setup was a lovely example that I’m planning to use in a book I’m (slowly) putting together.

As I’ve mentioned before, I’m on the team of the Princeton Trader trading room, led by Mike Vacchi, and we primarily trade ES intraday there, though we also trade oil, gold, bonds and a few other things on a smaller scale. I’ve stripped down the chat from Friday’s session as far as I can, though it’s still longer than I was hoping for, and will show it below interspersed with charts I posted intraday to show the evolving setup over the day. (more…)

Never Play Chicken With Trains

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SPX had a strong day yesterday and broke back over broken wedge support and the daily middle band, closing at the 50 DMA. SPX has now made the 1955-8 target area that I gave on Monday morning. The daily RSI 5 closed yesterday at 67.96, close to the 70 target, and likely to make that target in the next couple of days. There is a possible reversal area there but I wouldn’t depend on that. The last four instances of this buy signal all topped out with the RSI 5 over 80. SPX daily chart vs NYMO and RSI 5:

140815 SPX Daily vs NYMO and RSI 5

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Testing Serious Resistance

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The SPX daily RSI 5 closed the day over 60 yesterday so the bears now get a shot at turning this round at strong resistance in the 1948-56 range. History still isn’t encouraging for that, as only two of the last seventeen of these buy signals back to 2007 failed in this area, but it could happen. A reversal here might still just be a retracement however and would not necessarily lead to new lows. SPX daily vs NYMO and RSI 5:

140814 SPX Daily vs RSI 5 and NYMO

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Now We See

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This is going to be my top chart every day until the daily RSI 5 hits 60. Over the seventeen buy signals from this chart back to the start of 2007, fifteen made the signal target at the 70 level on the daily RSI 5 and the two failures both failed above the 60 level. As ever there’s no guarantee that this time won’t be different, but the short side is very low probability historically until the daily RSI 5 hits 60, at which point shorts will be upgraded to just low probability until it hits 70. The RSI 5 high so far on this move is just over 50. SPX daily vs NYMO and RSI 5:

140813 SPX Daily vs RSI 5 and NYMO

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Two Obvious Paths to 1956

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The first thing to say today is that even on the bear rally scenario, the chances that the rally high was made yesterday are small. That’s because of the seventeen similar buy signals from the start of 2007, only two failed to reach the 70 level on the RSI 5, and both of those failed just over 60. The RSI 5 closed at 51.85 area yesterday and I am therefore assuming that SPX will test main resistance at the 50 DMA and the daily middle band sometime in the next three days. Those are both currently at 1956. SPX daily vs NYMO and RSI 5:

140812 SPX Daily vs RSI 5 and NYMO

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