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Thursday, June 30, 2011

Mission Impossible

UPDATE:  11:00 PM PDT

Not much to add.  Just looking at chart patterns... and see what looks like:

There'a a bearish Bat pattern setting up on XLF in another .10 or so; VIX horizontal support at current prices, a falling wedge and descending broadening wedge on VIX hourly, bumping the -2 bollinger band on VIX, negative divergence between price action and RSI and histogram on SPX, VIX, RUT, COMP and SPX, overhead resistance from 50 SMA all over the place.  Right shoulders developing on SPX, RUT, etc.  They go back to February and are starting to look fairly well formed.   Good luck, everyone!


ORIGINAL POST:

What seemed laughable two weeks ago actually happened today, as SPX reached 1321.97 intraday -- 3 cents shy of our 1322 target drawn back on June 16 by studying trend lines.  In so doing, it is within spitting distance of its IHS target as well as completing bearish Bat and Crab patterns.  It also reached our statistical target and bumped up against the trendline which should limit the rally to these levels.



VIX also dipped below our target of 16, reaching 15.88.  I currently view any dip below 16 to be a good buying opportunity.  But, keep in mind, the decline not only hasn't been confirmed yet, it hasn't even started. 

It is possible (not necessarily likely) that we'll overshoot in the morning -- possibly as high as 1326-1329.  But, from there, the likely direction is down -- either tomorrow or Monday.  I'm expecting 1285-1300 within the next week or so, followed by a strong bounce back up to the 1315 area by July 15th and a subsequent dive to the low 1200s.

My confidence in this pattern unfolding over the next month is about 75% -- less than I've had over the past several weeks.  I hope to spend more time studying the charts later tonight and will try to clarify things.  But, I'm traveling this week, so might not have the time.  The patterns to which I've referred are discussed in detail in various posts over the past several weeks.

9 comments:

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  2. Great analysis over the last few weeks! I'm just wondering if the Dollar is going to make its final wave 5 low or not.
    Again, great job!

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  3. This blog is a must read for every trader.

    I do think that after a pullback to the 1285-1300 area, the 1370 top will be challenged in the next six weeks.

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  4. Thanks, Tom, it does my ego good to read that kind of stuff. But, I hope you know it's a big, stinking pile ;-> I do my very best to uncover trends, develop models, study the past for relevancy, etc., but neither I, nor any other analyst, has a crystal ball. I'm on a bit of a roll, is all. And I'll probably step in it any day, now. All I can say is I try to have sound reasons for my opinions, and when I don't, I do my best to say so. One of the biggest risks in trading, like life in general, is believing your own BS.

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  5. Tim, /DX looks like it's still stuck in the rising channel off the 5/2 lows (daily.) It has a tiny bit to go, maybe 74.50 or so, before bumping back up. Correlates with my views of equities. But, it'll soon run into the upper boundary of the descending wedge. Not a currency guy, but my opinion is the channel dominates for now, sending us back over 76 -- maybe 76.15 in a week or so. Let's see what equities and the EUR do.

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  6. Re the dollar, I'd also recommend Austin at http://swingtradersedge.blogspot.com/. He's smart and writes a fair amount about currencies. Give him a read.

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  7. Pebble, can you share your email I want to forward you a flows study.

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