The top chart was published on 8/8, reflecting a bearish situation for the 500 index… facing Fibonacci resistance at the peak of a rising wedge. At (1) the post suggested to “harvest at resistance or take positions to score on defense.
The “Power of the Pattern” won this battle as the 500 index didn’t find the energy to break resistance at (1) and has fallen roughly 7% in the following two weeks. If you harvested, you protected your investments…For those scoring on defense, a nice two-week gain has taken place.
In the movie “Ground Hog” day, actor Bill Murray found himself repeating the same day over and over again. Speaking of repeating over and over again, the 500, Nasdaq 100 and Russell 2000 find themselves back at the bottom of their trading ranges….AGAIN!
For those that are scoring on defense, bring stops down to protect gains, right now! Why? Potential short-term “inverse H&S” pattern is at hand. I do not feel this will override the larger pattern, but one must respect the bottom of the trading range and short-term oversold conditions.
FYI-I am of the opinion this pattern WILL END! For those scoring on defense, the Russell looks to be the most vulnerable in the above chart. Of course if the Russell breaks support, the other two will as well!
I got stopped out of this trade today. Though I am still overly bearish I thinking that the Bulls may stage a bit of a bounce prior to Labor Day. I’m thinking of seeing if the oversold condition clears, and then will consider re-entry into the trade.
The economic data of the last week has been profoundly bad. Existing home sales, capex new orders and new home sales were all much worse than the lowest estimates. Really incredible.
I don’t think there’s much danger of the indexes moving much higher. Some halfhearted M&A activity isn’t going to cut the mustard.
Im going with the theory that the true neckline on the SnP is at 1065(see weekly candlestick charts). We gapped down thru that yesterday. Aslong as that gap holds the bears are in control…