Kinda tough tonight...The red bullish falling wedge had an upside breakout and then a retest at the end of the day. There is a possibility that the retest is successful and it makes another run for an intermediate high. There is also the possibility that it gaps below and forms a head and shoulders pattern. At which point we have to see how it goes.
Nice pullback today with an ascending wedge that formed near end of day. The trouble with small EOD formations is that if there is some sort of news event those get blown out of the water. Barring anymore government intervention I expect we might gap up and potentially hit the 79.5-80 region before finishing this move down to about 77.4.
Stochs have rolled over on the daily and the MACD is about to roll over.
Friday we collapsed out of the black ascending wedge and found support at the 81.54 area. Still multiple times through out the day that region was pierced, but still remained as support. The two day formation has now taken on the appearance of an inverted saucer. The gradual decrease in the rate in which the market has advanced on Thursday combined with the gradual decline on Friday lends it self to this pattern. Typically this is a longer term pattern though. I would expect a sharp drop once the support is pierced and becomes resistance.
The daily candles have taken on aspects of a tri-star pattern which is a bearish reversal. Stochs have been overbought for quite some time now.
All sorts of rising wedges on all sorts of time frames...from the little black one to the monster blue one. We did make that run up to the orange trend line and are in a stones throw of the 61.2% retrace of the high set in January. So I think a little throw over to 84.12 tomorrow, followed by collapses in each of the ascending wedges.
SPY broke through the rising wedge from yesterdays chart (blue line), bounced off a fib(23.6%) from the 3/6 low to todays high. We could make another run to the orange upper trend line before collapsing through the lower red trend line of another rising wedge. Today's eod reversal has sent stochs on all time levels to extremely overbought. Waiting for below 76 to release puts and buy calls.
Financials look like they may have a small run in them before they fail the wedge. I don't normally track this...but I need a chart to link to for daneric :-P
Currently Looking for a retrace to exit out of portions of my short position. We are oversold on all time frames below 1 day. We are still overbought on the daily. A bearish rising wedge formed with declining volume. I expect a little bit of a bounce/consolidation tomorrow before any continued down pressure. I currently have a retrace down to the 38% area...As this is a wave 2 we could easily go to the 62% area (73.28).
On the dailies we are still a bit oversold on the Stochs as well as MCO. $CPC is sitting at 0.76. At this point I don't know if the FED/Treasury will be able to do too much more. They are printing trillions. The inflation effect on equities might scew forecasts if it starts jumping quickly.
Here is a count from GBT and Rob46 over at StockTock.com. This alternate count shows that we are in wave 4. But this one has an extremely high target (around 91.1 for a 38% retrace). My thoughts are that it will be hard to distinguish this count from a primary wave 2 count for quite some time. I don't see anything wrong with this count and it looks fairly natural. KUDOS to GBT and Rob46 for sharing this with us...wished they would have shared it sooner :-P
So with somemore investigation I found the above divergences. Something strange is going on here. The market rallied like mad...but the fear did not go down noticeably?
The green represents possible paths if we are in Primary wave 2 up. The red represents possible paths if we are in Primary wave 1 and are headed to test the last low or bust through it. Also its possible we bounce around this area a bit before we choose a direction.
I accumulated more SRS calls today. Lets hope we don't have "Definitely down Tomorrow...Version 3.0".
Its just a bear flag. Volume has been tapering and the Daily stochs are HUGELY overbought. The MCO is also peaking out. In fact this wave 4 doesn't look much different than the other wave 4's we have had right before they turned. The target for the bear flag formation is sub 600.| SECTOR WEIGHTINGS (%) |
| Sector | QQQQ | ||
| Software | 16.31 | ||
| Industrial Materials | 2.15 | ||
| Energy | 0 | ||
| Utilities | 0 | ||
| Hardware | 34.05 | ||
| Media | 5.95 | ||
| Telecommunication | 0.68 | ||
| Healthcare | 20.27 | ||
| Consumer Services | 9.69 | ||
| Business Services | 10.6 | ||
| Financial Services | 0 | ||
| Consumer Goods | 0.29 |
Above is a close up of the rising wedge as well as a count for this leg of the correction. The green area was my initial target and the red area would have been the theoretically perfect target according to the channel in the larger view below. Could it be a double top? Maybe...but C might extend to the 77.3 red area. Will it get much higher than that...EXTREMELY doubtful.
Above is a bit of a close up of the end of the day. Looks like we formed an ascending wedge that will probably break down tomorrow.
Its a really messy chart tonight. I think tomorrow we will have a bit of a retrace as today was way overextended. Nice rally that resulted in an all time high TICK of 1603. Whenever the TICK is that high there is usually a pull back in the near future. From the chart above, we see that there are all sorts of rising wedges (bearish). So what are the targets for the retrace? I marked them with the green dots. The 38.2 (70.5) and the 50 (69.9ish) are the most likely targets. I even have some time targets :-P Mainly because we need a retest of the large falling wedge (noted in a previous blog entry) that is denoted by the blue line. The third choice is about 70.14 which is where the bottom of this bull channel crosses the same blue line.
We had a nice Bull flag form today. I expect that we will rally tomorrow. The 60 day 60 minute chart shows that we are in a large bullish descending wedge. Volume is increasing in the wedge, which isn't a great sign if you are bullish. Wedges with descending volume have a higher likelihood of their pattern playing out.
What bothers me today is the ISEE hit a 52 week high (220). Basically 2.2 calls were purchased for every put on the International Stock Exchange. This means sentiment is EXTREMELY bullish. The problem is that its a contrarian indicator.
The above chart was adapted from the work by Daneric over at StockTock.com. He did it on the $SPX, I simply redrew it for SPY. The ending on thursday was a little confusing to me, which I noted in the blog posted. I had mentioned to a buddy that it might be an ending diagonal but I didn't really see it until Daneric's post Friday night. Sure enough it looks like wave 5 of 3 is finishing with an "ending diagonal" formation. This is where the waves over ap and look corrective in nature.
While it hit my target area, but the count was very fuzzy in that area. Part of it looks like it might be an ending diagonal. So with the unclear count, it is possible that the 5 wave structure that makes up this 5 of 3 is not yet complete and we could extend further south. Timewise any move should be over tomorrow and we should get some sort of reversal. If we do not, its possible the count is far off and we could extend even deeper into the 6's on Monday.
You can see we had a nice bearish rising wedge today with head fake to the upside before collapsing. Wave 4 retraced the perfect amount up to the 38.2% fibonacci level before beginning wave 5 down. Wave 1 was about 4 points (78.35-74.2) and wave 3 as marked was about 6 points (75.58 - 69.6). With wave 4 ending at 72.84, gives us a target range from 66.84 - 68.84 as the end for wave 5 (in red), which also ends the blue wave 3.
After the completion of blue wave 3, I expect a sharp rise and then choppiness till we hit the wave 4 target around 75.5-76 before the final collapse of blue wave 5 down. I expect the blue wave 5 to be a 5 wave structure in itself with a target in the low 600's.
Still no sign of turning around above.
Still no sign of turning up on this indicator...but I suspect it will turn up before the final wave 5 intermediate bottom.
