FAZ, GS, SPX And POT

From June 16, on the FAZ:

"The most recent high, on June 3, was 4.97, near the 5.06 target that is IN PLAY, so if the FAZ continues higher from here (it's currently at 4.72), that's horiztontal resistance."

4.97 and 5.06 both got MADE. After the 4.97 resistance got taken out (sorry, I put 4.96), the FAZ had a nice rally. On a pullback, "former resistance 'should be' support." It was. Just as the FAZ successfully retested the 4.62 Ascending Triangle breakout, it now has successfully retest former 4.97 resistance. Although there are no pattern targets IN PLAY, that's very nice execution, technically, indicating the buyers were willing to step in to support those two price levels, which now are KEY SUPPORT.



From June 16, on Goldman:

"I look at horizontal support as targets for scaling out of short positions, which would be the lows of the pattern as it progressed higher. Those would be:

140.74 - the June 3 low (the little doji star).
133.92-134.60 - the lows at Blue Data Point #4.
128.06 - the low at the black arrow, which would be the low in Rising Wedge Scenario #1 that we looked at, originally.
113.38 - that would be a return to the origin of the pattern, in Rising Wedge Scenario #2."

140.74 got MADE in yesterday's session.

The SPX continues to try to hang onto the top of the Symmetrical Triangle (in black), which came in yesterday at 911.37. The open and close were either side of it, at 911.89 and 910.71, respectively.

Not only has that trendline been an important battle line in the daily chart, after the morning selloff yesterday, The Bulls built a Bullish Inverse H&S with the neckline right at that 911, and broke out of it.

The breakout put roughly SPX 918.50 IN PLAY, which got MADE. Session high: 918.44

This is a "shoulda had it." We've all got those ;)

On June 15, POT held the lower trendline within about six cents, for a second trendline validation, and we know how those tend to have some significance when the are broken. I checked it a few times on June 16, and POT was trading above the trendline. Yesterday morning, I looked at and saw that it had broken below the trendline rather sigificantly, and that I had missed it. Curses!

Well, okay, maybe I'd get a chance to short it on a retest of the broken trendline.

WRONG!!!

The world suddenly fell out of love with this group, and combined with the technical breakdown of the pattern, the 97.08 target got MADE faster than we can say "fertilizer."

When I saw that POT had put in a low just below the target, and the SPX had stablized and looked like it wanted to rally, I got long just above the target and got out with a quick gain. My plan then was to re-enter long if the morning low of 96.55 got retested.

Later, I saw that POT was headed back to the lows, and I noticed that it had put in "nested" triangles, and had broken down from them. That would have been a nice short entry when those broke, for the ride back to the lows.

I put in an order to buy at 96.59 with a stop down around 96.00, to allow for a minor shakeout if the low got broken, which would preserve part of my earlier gain. Upside target was a retest of the bottoms of the "nested" Symmetrical triangles. I got the shakeout, down to 96.27, then a rally. I decided to put my stop below that shakeout low.

Unfortunately, I got busted by fifteen cents on another minor shakeout, to 96.12, so I called it a day. Too bad, because look at the rally that ensued off the 96.12 low! It ended at the nexus of BOTH lower trendlines of the broken "nested" Symmetrical Triangles, which would have been a beautiful entry short.

Gain: about $350.

We never want to compare a paltry gain like that to the $14,000 that the trade was worth on a short of the technical breakdown at 111.19, to the target of 97.08. We might lose our temper and, momentarily, forget to be grateful.

Curses! Curses! Curses!