What Makes a Top, Part Two (by Leaf West)

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LA_06 As I am sitting here on Wednesday pre-Fed I decided to look at the daily SPY chart and what I saw made me dust off my Jan 20th blog …. enjoy, you Leaf_West haters!

Back on Jan 20th I posted a blog that compared the topping action to the then current conditions of the SPY (see Jan 20th blog). What started my thinking on Jan 20th was the possible "shot across the bow" that often are evident at the start of a topping process.

After the first shot across the bow in April, the market grinded higher … I pointed this out and posted the following chart:

SPY_Jan20, 2011_Topping_03
Notice how the market found its footing the day after the April 16th shot across the bow, and then grinded over a period of 5 days to work its way back outside the bearish engulfing candle and the previous high.

Note how the market poked above and then closed back below the previous high. What happened the next day after this failed break-out?

SPY_Jan20, 2011_Topping_04
Not much really!!LOL

So what has happened since the shot across the bow that happened on Jan 19th, 2011?

SPY_Jan 26, 2011_Make a Top
The market doesn't always repeat but it often rhymes!!

Cheers … Leaf_West

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