The blue lines show the head and shoulders pattern off the top. The red rising wedge and negative divergence is creating the spank down. The H&S with head at 1509 and neck at 1504.5 targets 1500 which is being tested right now. The 1500 is an important psychological level and also key from today's standpoint as described in this morning's wake-up notes. The pink H&S uses 1500 as the neck line so it would target 1490-1491 should the 1500 fail. If the SPX bounces, it may come up to place a better right shoulder for the pink H&S. Note how price uses the 34 MA as support so that failure is significant.
The MACD line is pointing firmly south so lower lows should occur for the next couple candles or so; that would take the markets into lunch time. If the bears can keep the 8 under the 34 the markets will continue to leak lower. 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.
IMveryH''amateur''O this is a bear trap!
ReplyDeletethis up move's target was the fibo retracement at 1521.30 (123.6%) , not 1504 (what on fibo?... :-? ).
for me this is a bear trap.
only if it strongly continues below 1490 (spx cash, not futures) it would be a valid 4th down wave.
the 3rd up wave didn't finished ... watch out tonight's data on China (manufacturing) ... might be related with copper and oil with direct impact on stocks.
I might be wrong ... down to 1490 and it validates ... my "9 pips'' opinion... (aka my 2 cents :D ) ..
V.
With VIX flat and not wanting to move to 16 and UTIL remaining elevated well above 467.24, you are probably correct, it will be a shallow correction and quick recovery. Have to let things play out for a while today, however, since the markets are not used to seeing negative markets. The 8/34 cross carries clout as well. If the bulls reverse it and the 8 moves above the 34, then the markets are definitely headed higher. Otherwise, lower.
ReplyDelete@ KS:
Deleteyou know what i've observed ? trading is more related to psychology than economics .... it uses macro-data as tools but all is just moving fluid psychology.
Very interesting for me.
V.
Yep V, you will hear about the 'animal spirits'. Bob Shiller, of the Case-Shiller House Price Index fame, wrote a book called 'Animal Spirits'. And you will hear the oft repeated Warren Buffett quote, "Be fearful when others are greedy and be greedy when others are fearful." There are many sayings that highlight the psychological aspect of trading. Keystone uses the CPC put/call that is often posted as a mechanical measurement of the fear versus greed. Ditto the VIX. That is why these two tools are so important, they help gauge psychology, sentiment, and the animal spirits, or lack thereof.
ReplyDelete@ KS:
Deletethank you KS.
not intending to troll around here.. remember our discussion (with Arnie and Shane) one or 2-3 weeks ago? the one on the effects of war on stocks and a possible attack in january-february in the middle east area (syria, iran, israel)?....
guess what?
http://www.presstv.ir/detail/2013/01/31/286551/iran-warns-of-israeli-attack-fallout/
an israeli plane attacked a military syrian spot and the iranians reacted (also the syrians).
one more discussion point:
the second point of discussion was about the effects of a potential spring/summer drought that might put some socio-political pressure on China in the summer of 2013. Considering also the skyscraper index and the fact that China intends to develop in 2013 a buildig highe than Burj Kalifa (the 2008 case) i'm waiting now the may/june 2013 stock crash case :D ....
V.
but you do troll around here, V!
DeleteNice hedge, per your earlier comment!
If it goes up, you are right, or if it goes down below 1490, you are still right per your 9 pips comment!!
"the 3rd up wave didn't finished ... watch out tonight's data on China (manufacturing) ... might be related with copper and oil with direct impact on stocks.
I might be wrong ... down to 1490 and it validates ... my "9 pips'' opinion... "
ok, sorry for trolling, i'll take a break. don't want KS to invite me politely to troll on another blogs.
DeleteV.
p.s. I'm all ''zen'' complete serenity :D :D ....
Ks could you explain what CPs is and why it is important? Also the importance to broad markets of copper and utilities which you often talk about
ReplyDeleteOh and what is a candlestick and why is it important ?
Anon, you should be able to find that information via google. For CPC put/call, type 'CPC' in the search box and you can read previous posts. Basically, fear is rampant at a CPC above 1.20 and that is when there is panic and blood in the streets--the best time to buy. Conversely, when the CPC prints in the 0.7's and lower, that is uber complacency and identifies a market top. You can see the daily number on www.stockcharts.com by typing in '$CPC' into the symbol box to bring up the chart.
DeleteCopper and utes are only important now because Keybot the Quant, Keystone's trading algo, says they are. The algorithm cycles thru the sectors and continually identifies the most important influences on market direction in real-time. Right now, volatility, VIX 16 is important, UTIL 467.26, UTIL 475 will be important next week as well, and JJC 45.85. The bulls are comfortably ahead with all three but watch to see if the bears can move thru any of the numbers listed. Google 'candlestick analysis' for further study. A candle shows the opening price, intraday high, intraday low and the closing price. The shape of the body and shadow that makes up the candlestick are helpful in identifying tops and bottom in stocks and indexes. So you can study and read about doji's, dragonfly's, gravestone doji's, hanging man, hammers and many more.