Double Top anyone?Where is the market headed and what is the potential degree of the move? Here are the characteristics that need to further materialize to confirm a double top:
*The subsequent decline from the second peak should witness an expansion in volume with acceleration of the descent.
*Completion and confirmation occurs when prices break through support which is the lowest point between the peaks. This also shows an increase in volume.
*The potential price target is determined by the distance from the support break to the peak.
This would complete at approximately 402.
Hi Stephen,
ReplyDeleteMaybe? Looking at the DOW and SPY daily I get the impression that we are just selling off back close to the EMA's. The overbought condition is consolodating building up just yet another spring...Maybe I am wrong- since I think we are due for a couple good weeks of selling soon. I agree with what you are saying- acceleration of descent, breaking support, etc...We will have to wait and see but I am just betting that the bears will be frustrated once again...
Good Trading,
Eric
Hi Stephen,
ReplyDeleteI have been following the S&P weekly, you could definitely be right, but it looks to me that the index is tracing an inverse head and shoulder bottom, which could be completed if we retrace back to 740. Or a double bottom if we retest the march 9th lows of 666. I personally don't think we will fall lower than that, because there is a lot of big money that miss this rally and they will be waiting for the market to hit this levels to put all the chips in.
Cheers!
Hector Herrera
Hello Stephen,
ReplyDeleteI would be more comfortable with a false breakout around 945.
For the moment, I have divergences on the macd and FI only on the daily time frame: main indexes, oil, Canadian miners, USD/CAD and AUD/USD. The weekly trends are intact ... until now. So I expect a pullback into the sweet zone or maybe slightly below. No more.
Have a nice afternoon
Thank you all for commenting. Just as tonight's report from Alex indicated - we are at a critical directional juncture. Will we go up or down? Where is the crystal ball?? Maybe it's made of "gold" instead of crystal.
ReplyDeleteIMO, gold is the precious seer stone that will prognosticate the future direction of this market and right now it's not just ringing the bell but it's sounding an EMERGENCY ALARM TO RUN FOR COVER AND RUN FROM THE DOLLAR.
I question whether the general market can launch a new wave up- given this alarming development as a backdrop or will we see an inverse accelerated decent of the SP500?
BTW the HUI broke above resistance today and has launched from a HUGE inverse Head and Shoulders.
My money's parked in this safe harbor.....and I thik there are some ridiculously BIG YACHTS here as well. Maybe they know something we don't?
GLTA,
Stephen M.
I wouldn't describe this as a double top, since we are in the process of putting in a long-term bottom. This amazing move is more like a "V" bounce from an extreme OS low into resistance. Typically, these moves fail at first resistance where we are now with a declining 200 DSMA--notice how the NAZ is gasping for breath at the declining 200 DSMA. Once the SPX fails, then we should retrace to a Fib level--probably around 750-800. At that point if we are lucky, we'll put in a higher low and start the next leg up. Right now, the SPX is looking precarious.
ReplyDeleteGrant
Almost every chart I look at looks like things are headed down. But Market Edge Daily Commentary, provided by my brokerage, suggests downside will tend to be only two days at a time and tomorrow (May 13) will be up. :-) One theory I have is that what looks like a double top to Stephen is actually a double bottom returning to symmetry. In this theory, the left lower half of the "W" is obscured on charts because of the artificial manipulations introduced to the markets in September, wherein the Feds banned shorting for a time. One gets a clearer picture looking at, for example, charts of the UK indices inclusive of September activity.
ReplyDeleteIs it possible the past two days have been a sort of false downside breakout within an uptrend, caused by the usual Monday depressions plus Options week turmoil. Though I was dismayed how far things fell today (Tuesday, May 12). I suspect the major trading departments recapitalizing at the expense of smaller shareholders. Yanking things up and down, under cover of options week volatility. Some powerful forces may have lucrative options contracts and motivation to suppress stocks this week. What happens when options expire Friday? Auto industry blues may keep things down. Revelation of GM's bankruptcy plans may have broad impact. Plan due by June 1. Charts may not give the fullest picture right now.