Friday, February 8, 2013

Charts 02-08: Wedge still intact!

As long as we don't gap over resistance Monday morning via the /ES futures, we have not yet violated the big bearish wedge that's been in place since 1158.

We've eaten enough time now that I'm questioning whether McHugh's 3/1 phi mate turn will be a top after all.  On the chart, with a 3-week wave 4, it would make a very nice bottom.  For a while now, Dr. McHugh's phi mate turns have marked numerous bottoms, including the last one on 12/31.

In social mood terms, we will probably start worrying about the debt ceiling soon, and the hard numbers under the economy like the upcoming Durables number that will include the ruinous Boeing sales.  So we are set up to work our way downward, just like in late December.

And just like December, Congress can work something out on the eve of the 3/1 sequester.  What I'm proposing here, though, is that the relief rally off that is still constrained by the bearish wedge, that on a second visit to it (assuming we don't blow it up Sunday night), results in a hard reaction off it.

The first important low would be SPX 1330 or so into the May 1st FOMC.

SPX 02-08

I didn't realize that Charlie Manson had made a tribute to the Fed's balance sheet.  A classic.


4 comments:

Permabear Doomster said...

I would hope you are right.

Yet, what about the POMO dollars flooding the market?

What about the world indexes, all of which have 15-20% of open-air?

--
Jan-April is traditionally higher. I just find it difficult to imagine we won't be brushing into the sp'1600s by April/May

*I will note, I do see a 'significant' down wave in May...but the 1300s look real tough to hit.

good wishes for next week!

Carlos Nibot said...

Elliot wave shows taht if wave 1 is 1343 to 1448 Then wave 3 ends at 1566 wave 4 at 1502 and finally wave 5 at 1605.

1605 is the top of the megaphone pattern since the 1990's. Basically the top and bottom of the jaws of death show as a megaphone.

Coinicidence??

Thoughts?

Carlos Nibot said...

If you look at freestockcharts.com and plot the 3day chart for the SPX with Sthocastics(14,7,7) you will see that we are near a top. However we still need a wave 4 and 5... so we should be looking at a high of about 1566. And timewise if you look at the chart you can see that it easily has more room and it could still hit near Mchugh's turn date of 3/1.


Elliot wave shows that if wave 1 is 1343 to 1448 Then wave 3 ends at 1566 wave 4 at 1502 and finally wave 5 at 1605.

1605 is the top of the megaphone pattern since the 1990's. Basically the top and bottom of the jaws of death show as a megaphone.

Coinicidence??

thoughts?

Christian Gustafson said...

Yup, you are correct, sir. If the bearish wedge since 2011 can't contain the tape, then we're left with horizontal resistance and eventually the top of the mega-megaphone.