Slope of Hope Blog Posts
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Well, the big day is coming – – Wednesday, April 27th, the one-two punch of the Fed announcement and the first-ever Press Conference. Hold on to your seats!
I will be relieved when the entire spectacle is over. When the day is through, I think one of two possible outcomes is going to be before us:
(1) The oh-so-obvious IHS pattern on the SPY will be in full swing, and we'll be on our way to (groan….) 143 or so, or;
(2) The bulls will get disappointed by something Shalom says (or doesn't say) with respect to QE2/QE3, and the pattern will fail. This is the outcome I'd like, but I'm sure as hell not putting any big positions out there based on it. No matter what, expect some stomach-churning swings both after the announcement and while his lips are moving.
The IHS patterns over the past year have all played out for the bulls. I don't have any reason to believe this one will be any different, but we shall see.
Incidentally, click-activity went up today, and I really appreciate it. Thank you.
We are right at the upper trend line on the ascending triangle, right at position "D" and right at the 1.0 time goal projection on the Fibonacci Time Grid. I think my short term projections over the past week have been spot on.
The $64 million question is what is going to happen after the Fed meeting/press conference. I still believe that there are just too many bullish charts to expect price to roll-over.
The chart above draws in some targets for the move higher … the MOB target drawn via the eSignal software points a target right around the 61.8% triangle pattern projected target ($140.50ish). The 100% Triangle Pattern points to $144.00ish or about 7% from current prices.
The projected/optimum time target according to the MOB target is May13th, which I believe is the next option expiry date …. conspiracy theorists can begin their discussions!!
Note that the daily DMI has crossed over and has confirmed the new trend higher. Optimally we would get an "E" wave push lower tomorrow either in front of the Fed announcement or shortly after. The market may not want to wait for that however … if that is the case, that is a great indication as to the strength of this move.
Don't fight it … get long and enjoy the screaming chimps as shorties are forced to cover here on the bust higher. $135.05 – $135.15 should force the last of the shorts to cover and set-up an intermediate top in that 1st or 2nd week of May. That may be it for a top until late summer/early fall.
My near-term and 6-month pattern and momentum work on Bank of America (BAC) indicate that the price structure has some unfinished business on the downside prior to embarking on a sustainable rally period.
The very negative juxtaposition of the 21, 55, and 200 DMA's is creating significant downward price pressure, which, when coupled with the pattern that BAC has carved out off of its January recovery high at 15.31, projects lower prices into the 11.85/50 area next.
Such as decline will represent a retest of the Nov-Dec 2010 lows in and around 11.00. It will be during a retest that I will be watching closely for a significant upside reversal technical signal that BAC has finished its post-Jan 2011 correction. This should take the form of a multi-month, double-bottom base pattern that will have the potential to propel BAC to 15.00/30 and then 17.00-18.00 thereafter.
Only a sustained climb above 12.85 will begin to neutralize the current negative technical set-up, while a climb above 14.15 is needed to trigger initial upside reversal signals.
Originally published on MPTrader.com.