From comments on Monday's trading in the SPX:
"One of the catalysts for the rally, if not THE catalyst for the rally, was Meredith Whitney's upgrade of Goldman, but she said that her call on the general market was bearish. That kind of call often sparks a rally, as it did yesterday, but resistance (the 893 neckline) "should be" resistance, regardless of any call like Whitney's."
We can see what eventuated after SPX 893 neckline wasn't resistance. Yesterday, the SPX also CLOSED back above the Right Shoulder of the pattern. Wow!
On the floor of The Exchange yesterday morning, Art Cashin said (paraphrasing) that everyone in the world was watching this H&S Top, and mentioned that the SPX had closed back above the neckline. He cautioned about a takeout of the Right Shoulder, which we got, and then a takeout of the high of the Head.
What I haven't heard discussed, is the the fact that the neckline of the four and a half month Bullish Inverse H&S breakout was support on the selloff from SPX 956, as it "should have been." We got a minor intraday violation of that neckline last Wednesday, then Friday's low of the Bullish Doji Star hammer nailed the neckline, and the index bounced off it.
Up, up and away from there.
Also from my comments on Monday's trading:
"... there was very little give back of the rally to SPX 893, which I didn't like at all, so I gave the Ascending Triangle bullish breakout a lot more credence than I had, initially.
When in doubt, get out." I threw in my SDS long position just ahead of the upside breakout of the Symmetrical Triangle (pattern in yellow)."
I would be under water to the tune of $10,000 on that SDS trade if I hadn't thrown it in on Monday. This move in the SPX is another example of why I've said so often that CLOSES back below or back above pattern breakouts and breakdowns can be so dangerous. Monday's close at SPX 901 was convincing, well above the SPX 893 neckline. Tuesday's close at SPX 905 was further still above the neckline.
Yesterday? Wicked on the shorts who refused to cover those TWO closes back above the SPX 893 neckline, and who refused to cover The Channel breakout that occurred just after the open. UGH.
Similar to the Goldman Channel breakout, the SPX also had a channel breakout right out of that gate yesterday morning, crossing SPX 916.29. The short squeeze was on, and remained on all session.
The slope of the top of the channel is -1.736, so that amount is subtracted each session. If I had my druthers, I'd like to see the SPX trade sideways-to-down into the 20-week Hurst cycle low due on July 24 (check me on that date). The top of the channel will come in at SPX 905.876 on July 23, which would be a gap fill of 905.84 left on the chart from Tuesday's close, so something to keep in mind if we're around that level late next week.
From yesterday on Goldman:
"This "could be" a Double Top, at 151.17 and 151.15, but it also arguably is a channel breakout that puts, roughly, 16 points of upside IN PLAY as long as Goldman trades above the channel."
"The Stock That STUBBORNLY Refuses To Die" tacked on 6 of those 16 points in yesterday's trading.
3 comments:
Good morning,
On your GS chart you circled 2 candles in red, would you elaborate on why they were significant to you? Thanks
Good Morning, Mark,
The first red candle was when the 21/34 RSIs were at Bearish Synchronicity. A takeout of the low of that candle is Sell and/or Sell Short from that particular indicator. The stop would a takeout of a high of that candle, either on a print basis or a closing basis, depending on your choice.
The RSI signals always have to be viewed in context of what the entire chart is doing. They seem to work better if there's a repeat signal, or if two or more RSIs in the fibonacci sequence issue a signal at the same time, and/or if there is a pattern involved.
Several days later, there is a candle circled in green, at Purple #2, where you see "34," in green. That was a buy signal after the 34/55 RSIs went into Bullish Synchronicity, then the high of that candle got taken out. Stop: a takeout of the low of that candle, again, on either a print or closing basis, depending on which one you want to use.
At Purple #3, there's an "M," in red. That was a Kiss of Death Sell Signal from the MACD and was good for the selloff to Purple #4.
Finally, the second red candle was when the 8/13 RSIs went into Bearish Synchronicity. That's the fastest of the RSIs and is more of a "quick trade" signal, although it can turn into something more than that. That signal was good for only one day on the short side.
Thanks Melf,
That's going to give me a lot to ponder and digest. Appreciate your help.
Post a Comment