Connecting the recent Blog dots - by Stephen M

I have been very interested in the following the posts and the ensuing comments:

* GLD symmetry by Grant
* What Would Turn Me Bullish On Gold by Alex
* Jock’s ensuing perspective on gold’s potential break out possibilities.

Now, a week or so later, where are we? Have these recent developments altered out level of bullish or bearishness on gold as well as the general markets?

Today the weight of the SP500 index falling out of its wedge has turned the VIX back up, causing fear to re-gain a slight grip. What about the short and long term implications for the dollar which broke down from it’s triangle and proceeded to slice through support?

If these new short term trends extend into intermediate and long term courses, does it increase the likely hood of new lows on the SP500? What about the contrarian slant to all of this? It seems like the majority think it is a foregone conclusion that we will put in a higher low, just as it was last week when all of the “experts” were saying with conviction that the SP500 would “at least” continue up to the 200 DMA.

Then there is the FED. Have they orchestrated this? Id love to read some lively discussion regarding all of these seamlessly integrated elements of the market we are in today.

Thank you,

Stephen M.

Double Top Anyone? - by Stephen M

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.

T, the 1,2,3, Top trade by Grant C

I've written about the 1,2,3 Bottom trade, one of my favorite reversal patterns. Now, I thought I would show a 1,2,3 Top trade. Now that the market has had a rally, I'm starting to see a few of these appear. In the case of T--my last week's Spike trade--things stalled out around 27. The Hi #1 happened in late March, note how high the 13-day FI spiked. At that point, we sold off, retracing to 25 (#2) , which undercut at least 4 closes.

Then, like an old one-eyed war horse, T gathered itself for one more run for glory. However, 27 (#3) was the wall again, and T formed the Narrow-Range 4 bar. This is the small inside bar to the right of the long-range stab to 27. It is the narrowest bar of 4 days and indicates a collapse of volatility, which should lead to another long-range bar. In this case, it lead to two declining medium bars. Note the divergence in 13-day FI on the second stab to 27. From there it was easy, sell short at the low of the Narrow-Range bar, take profits at the rising 20 DEMA (red line); treat yourself to a nice bottle of cabernet.