The green falling wedge, oversold conditions and positive divergence (note that the MACD line is weak and bleak wanting to see a test of the 1275 lows in the future) created the launch pad for the early June lift-off. The green count shows a peak with the recent top at 1475 in mid-September. Then an a-b-c move to potentially set up wave 1 moving forward where the bullish band plans on playing on moving forward into 2013. The red numbers are an alternate showing the recent 1475 as the wave 3 top, then the low from days ago at 1426-ish as the bottom of wave 4, and now the Elliot wave will finish up with the current small wave 5 that finishes in the 1475-1485 area.
Price is now making a triple top. A triple top is basically similar to the H&S pattern top. Price is trying to punch up thru the same level but keeps getting rejected, each time this adds another bag of rocks to the SPX sack. The tops are distinct which is a textbook formation, volume was stronger for the first peak which would be expected. Usually the pattern is best served if it occurs over several months, this triple top is barely two months. Also, many technicians will tell you that triple tops, or triple bottoms, do not exist. In other words, like the chart above, once price moves up for a triple top it will tend to keep on going. The emphasis is placed on the double top occurring and since it failed with reversal returning up for a triple top, price wants to more higher. Thus, over the next few days we will know the outcome, the price action forward is very important. Keystone does not subscribe to the 'there is no such thing as a triple top (or bottom)' philosophy but has seen plenty of times this occur. Likewise, the triple top, which is actually a top, occurs plenty of times as well. Gann said that the quadruple tops (4 price peaks) are virtually guaranteed to cause a price move higher. A triple top, head and shoulders pattern, is plain to see in 2011 for the SPX that caused the August 2011 waterfall crash. Lots of drama ahead for the next few days. Note the strong negative divergence now in place that hints that this triple top should fail and lead to lower prices. This 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.
Thanks, KS. Do you (or anyone else) have a target for the next drop other than 1440? It's shaping up to be an interesting day. The Utes reversed, bulls playing defense right now.
ReplyDeleteCharlie, the markets appear to be a crap shoot currently. This sideways channel and triple top will have to resove and it is bracketed by the 1440-1465. 1465.77 is the closing high this year. 1425-1426 was the bounce point this week so that is a key level where a price decision will be made. The 20-day MA is 1447 and the 50-day 1433.
ReplyDeleteThe 60-minute chart is key with the 200 EMA, so that level is 1442. This is interesting since this 1442 is likely more important than the 1440 strong support, if 1442 fails price will likely fall thru 1440. Overall, it appears that the low 1400's should be explored over the near term. Breaking up thru 1465.77, UTIL above 485.67 and especially SOX over 386 all pave the way higher, the SOX 386 would say SPX 1500.
The SPX is printing 1460 now which places a hitch in the 8 MA on the 30-mintue chart. Watch for the 8 and 34 MA cross potentially today which would place the bears in charge, otherwise, with the 8 above the 34, the bulls will continue to rule.