Monday, February 2, 2015

NYA NYSE Composite Sideways Symmetrical Triangle

The major indexes are printing sideways triangles each one skewing one way or the other. The NYA exhibits the cleanest sideways symmetrical triangle pattern to communicate the concept. Price keeps printing lower highs and lower lows moving sideways in choppy sideways action. If you blink, indexes and individual stocks are making wild moves in minutes and even seconds.

The apex of the triangle occurs at, wait for it, the Ides of March (first half of March) so a major market decision is on tap for February. The sideways triangles sometimes produce false breakouts in one direction only to return inside the triangle and commit the opposite way. These false breakouts occur about one half to two-thirds of the distance of the triangle which is the current time frame. A false breakout occurred in late December to the upside but that should be viewed as inconsequential at this time. The stakes are high since the vertical side of the triangle is 700 points, thus, a breakout above 10800 sends NYA to 11500. A break down from here, now, at 10540 targets 9840.

The last joy for price was in September with price above the 20-day MA above the 50 MA above the 100 above the 150 above the 200 (price was extended requiring a mean reversion). The moving average ribbon is curling over as price moves sideways. The sideways nature of the moving averages reinforces the overall sideways theme. Watch the 150-day MA slope which is a critical indicator in determining if a stock or index is in a cyclical bull or cyclical bear pattern. Of course stocks have enjoyed an upside orgy due to central banker intervention in recent years but note how the 150-day MA is rolling over to the downside an extremely bearish signal.

Keystone posts the NYA chart often displaying the 40-week MA now at 10810 (shown by the red line). This is a Keystone cyclical market signal and since the NYA at 10540 is under the 40-week MA so the stock market is in a cyclical bear market going forward (weeks and months ahead). Watch NYA 10810 closely especially if you are one of the die-hard bulls continuing to cheer the stock market. If bullish, you can celebrate the year ahead if NYA moves above 10810 and your bullish call this year will be correct. However, the longer the NYA stays under 10810 the more negative markets will become and if you remain long you will be losing money week after week.

The CPCE printed at 0.80 so a reasonable expectation would be for stocks to bounce here and perhaps head for the showdown retest of the 40-week MA at 10810 at the top rail of the triangle for an epic market decision. Markets are likely going to commit for weeks and months ahead depending on which side of the triangle price exits from. We will not have to wait long. The stock market is going to make an epic and historic decision during February. Bulls win big above 10810 and a new upside party begins. Bears remain in intermediate and long-term control of the stock market under 10810 and win big under 10540This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added 8:03 PM:  The bulls hold the line and prevent failure at the lower rail of the triangle today. The LOD is 10496 but price recovers to close at 10669 back inside the safety of the sideways triangle. Price remains well below the critical 40-week MA at 10810 but watch this closely in the coming days.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.