SPX, POT, USO And GS

This Barbarian got through The Gate crossing SPX 919.727, which is where the top of the Symmetrical Triangle came in yesterday, so that puts a target of SPX 971.57 IN PLAY.

Math:

930.78 - High of the pattern
878.94 - Low of the pattern

930.78 - 878.94 = 51.84 points of upside from the 919.727 point of the breakout

919.73 + 51.84 points = Target: 971.57 IN PLAY

On May 15 in the "POT: Triple Breakout" thread, John Law said...

"what are the chances of POT making it to $121 (38% retrace) or $143(50% retrace)...both would be gap fills also?

looks like the target for the black wedge is around $121 also?"

I haven't any way of calculating what the chances were, but when we've got multiple pattern breakouts, and/or "nested" pattern breakouts, we've seen many, many times that the chances of at least some of the targets getting MADE are pretty decent.

The second of the pattern targets (the Symmetrical Triangle, in black), 121.29, got MADE in yesteday's trading. The high of the session was 121.358, less than seven cents above the target before POT reversed and closed down $4.00 from that high.

As often as I've said that we can't expect exactitude from Ms. Market, I'm beginning to rethink that. LOL.

In terms of Price and Time, the Symmetrical Triangle (in black) formed over 47 days and the target got MADE in 20 days, 42.5% of the time that it took the pattern to form. That seems about right for a multiple pattern breakout, which "off the cuff" (observation) seem to get MADE in 61.8% of the time that it took the pattern to form, or less. Just an observation.

Hope that you made some $$$ on this one if you were swing trading it, John!

Shorting the USO last Wednesday on the Doji Star Hangman at the top of The Bearish Rising Wedge (in purple), or on Thursday at the top of the Channel (in black) in anticipation of a downside reversal at those resistance levels with a stop above the high of the session certainly can be justified, but we can see here the problems that we can run into shorting stocks that are making new highs if we DON'T put the trade on a short leash with a stop.

A short position at Wednesday's close currently is under water by 8%, and the USO is two days into an upside technical breakout of The Channel. Now-w-w, what are we gonna do? UGH.

Let's try not to remain in a trade that clearly has gone against us. Regardless of what the USO does from here, many trades like this one can turn into big losses. The thesis for shorting at Rising Wedge and Channel Resistance was blown. The trade has gone wrong. Get outta there!



In what seemed to be an Instant Replay of Friday moring, GS had a "Gap And Crap" Reversal opening. It printed a new high for the move, then reversed and went into the red. But unlike Friday morning, it stayed in the red for a bit, but formed this Bullish Falling Wedge (pattern in white), rather than the three bearish patterns that it formed on Friday. When GS came off 143.87 (horizontal red line), headed back toward UNCH, I got long at 144.44 near the technical breakout, and used that "last low" (143.87) of the pattern as my stop.

GS broke out and rallied to the high at Data Point #3, 145.15 exactly (horizontal blue line). It pulled back from there, and as we've seen so often, the Bullish Falling Wedge "morphed" (changed) into the Ascending Triangle (pattern in blue). GS broke out of that, which put an upside target of 146.99 IN PLAY.

Math:

145.15 - The identical highs of the pattern
143.31 - The low of the pattern

145.15 - 143.31 = 1.84 points of upside on a breakout

145.15 + 1.84 points = Target: 146.99 IN PLAY

Although the Ascending Triangle pattern broke out, there was minor resistance at 145.35, and at the time of the breakout, the SPX was challenging its January 6 high of 943. I decided to make a safety play, defending against a false breakout, and sell half my position just below the 145.35 minor resistance, and sell the other half near the morning high of 146.01, in case that turned out to be a Double Topped there. GS still is trading in a Bearish Rising Wedge basis the daily chart,and its had back-to-back "Gap And Crap" Reversal openings, so I didn't want to hold out for the Ascending Triangle target.

As it turned out, the Ascending Triangle target of 146.99 did get MADE. The high on the session was just above that, at 147.35, where GS Double Topped at 147.35 - 147.34 before turning down.

When GS closed in the red, cheers went up for our buddy, Kevin, who sold GS calls ;)



The slope of trendline #1-#3 of the Rising Wedge is 0.41427, so we "move the chains" higher by that amount each session. The trendline will come in today, June 2, at 148.556, and tomorrow, June 3, at 148.970, just below Vem's 50% retracement level (149.06) of the Bear Market decline.

Gain: $1,175. Not a lot of money, but it's nice to get rewarded for trying to FOLLOW Ms. Market, despite the fact that I didn't like the trade because of the Rising Wedge in the daily chart, and the back-to-back "Gap And Crap" Reversal openings.