From August 10 on the SPX:
"By the way, we've discussed a number of times in the past that when a putative H&S Top gets taken out, the points from The Head (956.23) to the neckline (885.50) are IN PLAY on the upside. (the math is at the bottom of the chart). When we took out SPX 956.23, 1026.96 sure didn't seem very likely on this move, but we got to within nine points of that at Friday's SPX 1018. Whew! "
The H&S Top target of 1026.96 finally did get MADE in the last hour of yesterday's trading. The session high of 1027.59 and the close of of 1026.13 were just above and below the target.
Goldman's morph of the H&S Top into a Falling Wedge upside breakout on Thursday presaged Friday's springing of the Descending Triangle Bear Trap in the SPX. On August 19, the SPX closed at 996.46, above the 992.49 - 992.40 bottom of the Descending Triangle. As we discussed in the "Problem Trades" post this week, that close presented The Bears with a problem because the SPX "shouldn't" CLOSE back above that resistance. That was an "Uh-oh."
Thursday, August 20, the SPX presented The Bears with a BIG problem by closing at the top of the Descending Triangle, champing at the bit for an upside breakout. That was an "UH-OH."
Just as Goldman did on Thurday's Gap Up breakout of the Falling Wedge, the SPX gapped up above the top of the Descending Triangle at the open Friday morning, springing the trap on The Bears, many of whom were like deer caught in the headlights, and many of whom held their short position, "hoping" that the SPX would double top at 1018. We all know the saying: "Hope is NOT a strategy," especially when we're caught on the wrong side of a trade, as The Bears were caught on Friday's upside technical breakout. UGH.
The SPX rallied right through 1018 and the 1026.96 H&S Top target, that has been IN PLAY since the July 23 upside takeout of the 956.23 high of the H&S Top pattern, got MADE.
As we discussed a couple of weeks ago, Bulls and Bears alike have been wanting a selloff. Bulls want lower prices to get long. Bears want to stop getting squeezed to death, and to cover at lower prices. "Ms. Market disappointed the greatest number of people possible" at August expiration.
Finally, we discussed the fact that the upper trendline of the putative Broadening Top didn't look reliable for shorting since price had moved above and below it on three occasions. It wasn't.
2 comments:
what's spx next target after reaching 1026?
Good Morning, hello,
For the same reason that we added 70.73 points to the 956.23 high of the H&S Top pattern when it got taken out to the upside (see the math at the bottom of the chart), we add the measured move of the Descending Triangle to the point of the upside breakout, which occurred crossing 1007.20 at the open on Friday.
1018.00 - High of the triangle
992.49 - I always use the more conservative of the two lows, which were 992.49 and 992.40.
1018 - 992.49 = 25.51 points added to the breakout point, 1007.20.
1007.20 + 25.51 = Target: 1032.71 IN PLAY
There's never any guarantee that a target will get MADE. That's just what that particular pattern reversal suggests, and it's IN PLAY unless/until we take out the 992.49 - 992.40 lows of the Descending Triangle.
1085.24 has been IN PLAY since the May 1 technical breakout of the Bullish Inverse H&S. That breakout was successfully retested July 8 and 10 (refer to "Support at neckline of 4½ month Inverse H&S" on the chart) which, in large part, propelled us to the current level in the SPX.
Post a Comment