Is it just me or is this choppy sideways action that’s forming a perfect bull flag just a little too obvious? While there should be bears’ stops sitting just above 1798 SPX they’ve had all day to close them up now. What if there’s not hardly any left as they could have switched to bulls and went long assuming the bull flag means a guaranteed breakthrough to 1800 and more?
While I still think we will breakthrough I’m a little concerned about how high they will go up? If there is a lot of bears’ stops overhead then they could easily squeeze them to 1816-1826 area. But if there’s hardly none then we could just barely clear the area and drop back hard the rest of the day.
Let’s also pay attention to the time that Janet Yellen is speaking tomorrow as that could indicate how high we go? The later in the day it is the higher it should go I think as more time equals more bears to squeeze. But, she’s speaking at 10am… which is right near the open. If she says something positive (like what… she’s going to reverse what Bernanke did and put back the $20B he withdrew?), then we could rally to the higher zone all day.
I just don’t see that happening though, which tells me we are going to get a slight pop high when she speaks and then head down the rest of the week with a target zone of 1640-1650 by the end of the month.
So if you are waiting to short just be fast on the trigger as you might not get much more upside and time then early tomorrow morning.
Do you think we’ll pop and drop from something she says? I certainly do! As I discussed in the new video I did yesterday we should make a small wave 4 today (and we are) and then pop up tomorrow for a small wave 5 up and hit the 1803-1808 area to clear out the overhead stops… then we drop!
I thought that we would have saved some of the pop for the Yellen speech on Tuesday but the SP has already done a 57.5% retrace which is what would have expected for the entire pop based on one historical analog. Euro and the Australian dollar have already rallied hard in particular the Aussie (going into its rate meeting last week). A certain component of a certain indicator has also rallied into positive territory but its Nasdaq version surprisingly is still in negative territory.
I looked back at the first decline in October 2007 and the first pop looks quite the same as the current snapback. On October 31st, a certain little component of a certain indicator rallied to the same spot as it currently stands at right now. The market topped that day and dropped 40 SP points the next day. Too many are talking up the double ninen analog which has me worried. I probably can’t get a good feel until Wednesday or Thursday……if we decline into Wed. on some pessimism then maybe the Thursday Yellen speech can induce a dramatic rally. But Tuesday will be 12 years 5 months from a certain little event and then Wed. is the 205th birthday of the 16th president so I would tread cautiously around those dates although the market currently isn’t in precarious condition but it could get there quickly.
The Dow, retail stocks, and emerging markets have underperformed on this rally which is another red flag although I suppose they could play catchup but that would imply the Nadaq probably making new highs.
On Friday we had a very strong rally and while it looks on the charts to be very bullish with a bottom now being put in I don’t think we are done yet on the downside. It’s still too early to tell if we are going to go back down and breakdown through the 1737 low or hold above it with a higher low, but we certainly should be turning back down again.
I’m looking for another 5-10 points more on the upside before we rollover and start the next move down. That’s somewhere between 1803-1808 SPX, which should hit on Monday (or Tuesday if we drop back 5-10 points Monday forming a bull flag into the 11th).
There is a possible “inverted head and shoulders” pattern in the making if we go down and put in a higher low (maybe in the 1760-1770 as shown in this chart: http://stockcharts.com/public/1092905/chartbook/214659881;). But, do note that the market is still in an “intermediate” term bearish mode and about to end the “short term” bullish mode.
While the “long term” mode is still bullish that shouldn’t start until early March. This means we should be heading down the rest of this month and be lower then the 1737 current low. This “implies” that the “right shoulder” might not play out and instead we start down in a nasty wave 3 (or C?) with the up move from the 1737 low being the wave 2 (or B?) up.
So I wouldn’t get too wild about going long in the 1760-1770 area thinking it’s just a pullback before a new rally up much higher starts as that might not be the case. The charts just don’t support it yet. After another new low is put in the weekly charts should bottom out and allow a new rally to start, but I don’t think we are there yet.
But for now let’s just take one day at a time and look for that slightly higher move up of 5-10 points to get short and see how far down it takes us? We (us Bears) could be pleasantly surprised when it continues down past the target zone of the right shoulder and keeps on falling?
Based on today’s strong move up this could easily continue into Tuesday the 11th of next week. While we should pull back slightly on Monday I wouldn’t expect much on the downside that day. Then back up again into Tuesday seems likely.
From there we’ll have to re-evaluate everything to see if Legatus was a bottom (it started on the 6th) or a top (as we are in the middle of it now)? The charts look very bullish on the short term and move upside seems likely early next week. Only some unknown shock could take the market down hard on Monday, and I have no way of seeing what that is?
Is it just me or is this choppy sideways action that’s forming a perfect bull flag just a little too obvious? While there should be bears’ stops sitting just above 1798 SPX they’ve had all day to close them up now. What if there’s not hardly any left as they could have switched to bulls and went long assuming the bull flag means a guaranteed breakthrough to 1800 and more?
While I still think we will breakthrough I’m a little concerned about how high they will go up? If there is a lot of bears’ stops overhead then they could easily squeeze them to 1816-1826 area. But if there’s hardly none then we could just barely clear the area and drop back hard the rest of the day.
Let’s also pay attention to the time that Janet Yellen is speaking tomorrow as that could indicate how high we go? The later in the day it is the higher it should go I think as more time equals more bears to squeeze. But, she’s speaking at 10am… which is right near the open. If she says something positive (like what… she’s going to reverse what Bernanke did and put back the $20B he withdrew?), then we could rally to the higher zone all day.
I just don’t see that happening though, which tells me we are going to get a slight pop high when she speaks and then head down the rest of the week with a target zone of 1640-1650 by the end of the month.
So if you are waiting to short just be fast on the trigger as you might not get much more upside and time then early tomorrow morning.
Janet Yellen (the new Fed Chairman) speaks Tuesday at 10am, and it’s a double eleven day… hmmm? http://federalreserve.gov/whatsnext.htm
Do you think we’ll pop and drop from something she says? I certainly do! As I discussed in the new video I did yesterday we should make a small wave 4 today (and we are) and then pop up tomorrow for a small wave 5 up and hit the 1803-1808 area to clear out the overhead stops… then we drop!
I thought that we would have saved some of the pop for the Yellen speech on Tuesday but the SP has already done a 57.5% retrace which is what would have expected for the entire pop based on one historical analog. Euro and the Australian dollar have already rallied hard in particular the Aussie (going into its rate meeting last week). A certain component of a certain indicator has also rallied into positive territory but its Nasdaq version surprisingly is still in negative territory.
I looked back at the first decline in October 2007 and the first pop looks quite the same as the current snapback. On October 31st, a certain little component of a certain indicator rallied to the same spot as it currently stands at right now. The market topped that day and dropped 40 SP points the next day. Too many are talking up the double ninen analog which has me worried. I probably can’t get a good feel until Wednesday or Thursday……if we decline into Wed. on some pessimism then maybe the Thursday Yellen speech can induce a dramatic rally. But Tuesday will be 12 years 5 months from a certain little event and then Wed. is the 205th birthday of the 16th president so I would tread cautiously around those dates although the market currently isn’t in precarious condition but it could get there quickly.
The Dow, retail stocks, and emerging markets have underperformed on this rally which is another red flag although I suppose they could play catchup but that would imply the Nadaq probably making new highs.
Refresh page for video update…
On Friday we had a very strong rally and while it looks on the charts to be very bullish with a bottom now being put in I don’t think we are done yet on the downside. It’s still too early to tell if we are going to go back down and breakdown through the 1737 low or hold above it with a higher low, but we certainly should be turning back down again.
I’m looking for another 5-10 points more on the upside before we rollover and start the next move down. That’s somewhere between 1803-1808 SPX, which should hit on Monday (or Tuesday if we drop back 5-10 points Monday forming a bull flag into the 11th).
There is a possible “inverted head and shoulders” pattern in the making if we go down and put in a higher low (maybe in the 1760-1770 as shown in this chart: http://stockcharts.com/public/1092905/chartbook/214659881;). But, do note that the market is still in an “intermediate” term bearish mode and about to end the “short term” bullish mode.
While the “long term” mode is still bullish that shouldn’t start until early March. This means we should be heading down the rest of this month and be lower then the 1737 current low. This “implies” that the “right shoulder” might not play out and instead we start down in a nasty wave 3 (or C?) with the up move from the 1737 low being the wave 2 (or B?) up.
So I wouldn’t get too wild about going long in the 1760-1770 area thinking it’s just a pullback before a new rally up much higher starts as that might not be the case. The charts just don’t support it yet. After another new low is put in the weekly charts should bottom out and allow a new rally to start, but I don’t think we are there yet.
But for now let’s just take one day at a time and look for that slightly higher move up of 5-10 points to get short and see how far down it takes us? We (us Bears) could be pleasantly surprised when it continues down past the target zone of the right shoulder and keeps on falling?
Blackberry Weekend update: http://niftychartsandpatterns.blogspot.in/2014/02/blackberry-weekend-update.html
SPY Weekend update: http://niftychartsandpatterns.blogspot.in/2014/02/spy-weekend-update.html
IWM Weekend update: http://niftychartsandpatterns.blogspot.in/2014/02/iwm-weekend-update_8.html
Based on today’s strong move up this could easily continue into Tuesday the 11th of next week. While we should pull back slightly on Monday I wouldn’t expect much on the downside that day. Then back up again into Tuesday seems likely.
From there we’ll have to re-evaluate everything to see if Legatus was a bottom (it started on the 6th) or a top (as we are in the middle of it now)? The charts look very bullish on the short term and move upside seems likely early next week. Only some unknown shock could take the market down hard on Monday, and I have no way of seeing what that is?
The charts look very bullish right now, so shorting is going against the grain.