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Thursday, June 16, 2011

Intra-day: Jun 16, 2011

UPDATE 12:35 PDT

The Gartley busted as the VIX took off for the moon.  Busted Gartley's often become butterflies, which is exactly what happened here.  The .786/.786/1.272 pattern completed at 24.23.  The .618 reversal target is around 19.12.  Any extension, not uncommon in butterflies, could take VIX much lower.

The 1.272 extension, for instance, would take it down below 15 -- extremely bullish for stocks.    This is a large and well-formed pattern, dating back to Mar 18.  So, I take it very seriously.



ORIGINAL POST:

A bearish Gartley pattern just completed on the VIX since 3/21.  Should take it back around 17, bullish for stocks.

Note: I revised the B point to 20.03 on May 23.  Missed it in all the excitement this morning.

6 comments:

  1. This comment has been removed by the author.

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  2. Pebble, check out MarketAnthropology. His analog is Aug 2007. He is looking for a quick bounce only to 1305 then a big selloff. What do you think? Why did this analog not work for you. Many thanks

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  3. This is the fundamental problem I'm facing with this topping pattern. It's very small compared to 2007 and, especially 2000. So far, it's 4 months, with about a 100-point range. 2000 was 21 months with a 300-point range. 2007 was 11 months with a 200-point range.

    MarketAnthro doesn't specify, but if he considers this Aug 7, then he must believe we have a ways to go in the pattern.

    I don't disagree with that, just don't see a compelling reason to believe it yet. In my opinion, we've completed the big M pattern and are on our way back to the midline, the equivalent of 11/28/07 or so.

    If my understanding of the scaling is correct, then each day in today's market is worth about 2 1/2 in 2007. And, each point today is worth about 2 back then.

    The key point will be when we reach the midline around June 23. If we cruise right past it and establish a new high, then the pattern is clearly expanding and lengthening. If we reverse there and establish a new low as happened in 2007, then the party is over.

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  4. Either way, we have a 50 point playable bounce to 1320. If I don't feel strongly one way or the other by then, I plan on waiting for the market to show us the way.

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  5. So is the VIX Gartley busted?

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