The top trendline of the putative Broadening Top wasn't reliable. The SPX whipsawed through it three times before the SPX broke below the 992.49 - 992.40 bottom of a Descending Triangle (the pattern in red), which puts SPX 967 IN PLAY.
Nested within the Descending Triangle is a Symmetrical Triangle (pattern in red). The top trendline of that pattern is identical to the descending line of the Descending Triangle. I drew the red line above the white line just to show that it's there, and that it's a separate pattern. The Symmetrical Triangle puts roughly 970 IN PLAY, so the target area for that nested pattern is 967-970.
In the XLB, the top trendline of Thomas Bulkowski's Broadening Top did a better job of containing price. There were two minor intraday penetrations on August 6 and 7. The August 13 violation was less than two cents, prior to Friday's Bearish Engulfing pattern that preceded yesterday's gap down.
In AMZN, the second Bear Flag target of 80.37 finally got MADE yesterday. The low on the session was twelve cents below that, at 80.25. "Take profits, or at least some profits, when targets get MADE."
I got pipped at the post on my second attempt to re-enter AMZN short on Friday's gap down. The session high was below my bid, so I didn't have it for yesterday's 80.37 Bear Flag target, but congratulations to any of you who did. I want to thank Kevin for the $2,200 that I did make playing AMZN last week. I wouldn't have played it if he hadn't called our attention to the possible Bearish Wolfe Wave formation, and I really appreciate it. THANK YOU, KEVIN.
Goldman gapped down to 159.32, below the 159.706 neckline of the putative H&S. The session high was 159.61, just ten cents below the neckline. The breakdown puts a target of 147.50 IN PLAY, as long as Goldman trades below the neckline.
Math:
170.94 - The high of The Head
158.73 - That's where the neckline was when the high was put in
170.94 - 158.73 = 12.21 points of downside from where the neckline broke, at 159.706.
159.706 - 12.21 + Target: 147.50 IN PLAY
Caution For The Bears: Goldman is "the stock that STUBBORNLY refuses to die," so be advised. The good news is that the target is very near a support area, the top of The Channel (in purple), so actual death isn't required in order for the target to get MADE. If Goldman even would be willing to feign a decent illness, that would do quite nicely ;)
I shouldn't post this, lest anyone else be tempted to flirt with Satan by playing options, but I very nearly took a flyer and bought GOOG August 450 puts (.GOPTJ) on Friday. They were up as much as 475% yesterday, in a single session. Mercy!
The reason for my temptation was "the hook," which was the upside Fakeout/Breakout on Thursday, August 13, that resulted in a Bearish Doji Star Hangman, followed by Friday's Hangman, the high of which was just about smack on the top of The Wedge. It looked ready for them to pull the plug, and they did.
Normally, in a good Wolfe Wave, the upside Fakeout/Breakout comes at Wave #5 (Black #5), putting the proverbial everyone "wrong-footed" before a reversal. In this case, though, the Fakeout/Breakout was only ten cents, which wasn't very convincing, and 469.62 still was IN PLAY from the Falling Wedge breakout of July 13.
The August 13 Fakeout/Breakout got to 464.72, still about five points below the target. If it had gotten closer to the 469.62 target, then put in the Bearish Doji Star Hangman, I might have had to "flirt" a little :)
No-o-o-o-o-o.... "Get thee behind me, Satan!" LOL.
If GOOG sells off to anywhere near the target line (Black #6), we've got some downside ahead of us. It's nearing an area of possible support, though, at the gap.
7 comments:
Good Morning Melf,
Concerning GOOG, if the stock rallies back to the bottom of the wedge would you conclude that it will then test the gap at the lower levels ultimately striving for the 417 ish target of black#6? I'm not asking you to predict what it will do simply asking what might logically occur.
Good Morning, Mark,
If GOOG rallies back to the bottom of the wedge (retests of broken support are common, and are to be expected), I would want to see it fail there. An intraday penetration of that trendline might be okay, but I wouldn't want to see it CLOSE above the bottom of the pattern. Stocks sometimes close above a broken pattern for several days, then break down again, but I generally won't hold a stock that does that.
If there is a failed retest of the bottom of the wedge, yes, I would expect the gap to get filled, or at least some portion of it. That would be a good place to take some profits if one wants to hold a short position for a move toward the target line.
All of that is just my opinion, of course.
I thought the same and wanted to see if it coincided with your interpretation. It builds my confidence to be somewhat on target. May I ask something off beat? I don't wish to impose on your time by asking about stocks that you don't follow. Would you perhaps post a list of companies that you are always somewhat current so if I use them for my education, I won't feel that I am too pushy.
Mark,
That's a perfectly reasonable question. I can't say that I follow anything in particular on a regular basis. If there's a pattern forming and I'm looking for it to break out or break down, or obviously if I'm playing something, I focus on that more closely. I can't focus on more than a couple/few stocks at one time because I tend to watch them like a hawk. LOL.
You might go back over the past several months in the archives and just look at the stock titles on the subject line. That probably would give you a good idea of stocks that we've discussed recently.
Sorry that I can't give you a more specific answer.
Melf,
regarding amazon: it rallied up to the 82.70ish (maybe to kill the stops on shorts), then fall below the double bottom (I assume now resistance in the 82.45 to 82.60 range). With the 70's in play due to the triangle below, and a successful test of the double bottom as overhead resistance, i sold some calls at this point.
Melf,
could you comment on goldman, it broke through the neckline with ease this morning... does this break/kill the downside target and portend a retest of the highs?
i see a possible bullish wedge morphing out of the head and shoulders on the hourly chart... am i hallucinating or just paranoid?
Kevin,
You're not hallucinating. You have a good eye. I'm concerned about the morph into a wedge as well, which is what happened to the putative H&S Top in the SPX on July 14, as I'm sure you remember.
I covered half of my short position in Goldman this morning. A strong move like this, back above the neckline, is just what I didn't want to see. The downside target is ON HOLD as long as Goldman continues to trade above the neckline.
So far, the Goldman rally has been just a little more than a gap fill of 160.79. The high on the session thus far is 160.90, just above that, but I don't like the fact that it's holding up so well, above the neckline.
AMZN rallied to within nine cents of filling the 82.78 gap and has fallen back below the Falling Wedge. That looks fine, as long as it isn't morphing into a larger Falling Wedge.
Post a Comment