Monday, March 4, 2013

Chart 03-04: Last stand for the big bearish wedge

The Big Bearish Wedge is just overhead at 1526.  If we blow it out tomorrow, we could complete the inverse head & shoulders which is obvious on the charts now.  McHugh's Friday phi mate turn was either that spike low, or a possible sell-off starting tomorrow.

March opex is probably a high (1550) or a low (1425 gap fill).  We should know tomorrow which we will get.  Don't forget Services ISM 30 minutes into RTH; if the overnight /ES remains stagnant, this release tomorrow could decide where we go next.

If we rally above 1530, it could work as a "throwover" of the Big Bearish Wedge up until SPX 1551.  Beyond that point, the 3rd wave of the wedge, from 1266 to 1474, becomes the shortest leg, and that's a problem.  Daneric is labelling this scenario a "triple zig-zag", which may be true, but it lacks the useful downside target that the wedge provides: going back to the start at 1158.

SPX 03-04

8 comments:

Sandor said...

Fib reversal levels from recent moves:

1525 - 1500 = 25 points (8/5)*25 = 40
1500 + 40 = *1540*

1530 - 1485 = 45 points (8/5)*45 = 72
1485 + 72 = *1557*

These are targets to look at for a reversal in March. A technical analyst on CNBC Monday said SP could go as high as 1590 this year before crashing(http://video.cnbc.com/gallery/?play=1&video=3000151734).

Christian Gustafson said...

Yup ... and it looks like we are gapping over the wedge this morning. Lovely.

McHugh's "major" phi mate turn was either that spike low Friday, or the 1485 low a couple of days earlier, or ... nothing at all.

Alex Red said...

You were expecting some long-term top around here, but I was reading Robert McHugh at Safe Haven.

http://www.safehaven.com/article/29021/beware-the-ides-of-march

And he says this decline is just 'b' down, there will be another rally later 'c' up which will go even higher than now. (1700-ish he says).

Just wondering if you agree or disagree with McHugh. Since it seems like you think this is the final top.

Christian Gustafson said...

Jeez ... yeah his upper target is for if we get the true megaphone blow-off. It's possible if the tops are every 7 years and they can keep the plates spinning into 2014.

Ides of March I think is really interesting. First, let's see if the 1542 high holds as an IT top for today. Then, draw the TL over from the 1430 top through it, and extend it to March opex.

It's about 1552, which is the 2000 high on the S&P. It also suggests that the move up from 1485 is an ABC -- wave 1 of an ending-diagonal.

I'll chart this tonight, as long as we don't shoot the moon this afternoon.

sooner said...

I"m interested in your final take on McHugh's date. Looks to me like it was nothing this time. Usually it seems you can pin something on them. If it is nothing, then it just points to more breakdown of technical analysis thanks to the Fed.

Permabear Doomster said...

Most of the 'good' analysis is largely pointless, so long as the Fed are doing QE.

There is a simple bid under EVERY single down tick.

Sure we could get a little scare knocking the market a bit lower, but you know it won't last long.

Until QE ends..default trade should be...long.

C.J. said...

Hi Christian,

Don't listen to McHugh, hes kind of an asshat.

At this point, i'd probably cease to try and count this and just wait for the classic sign of a change in trend..

Multiple large intra-day massive reversals.

We have 1 engulfing candle right now, but its an early sign and not a very strong one.

I want to see a 300 point up day on the DOW that melts down and ends down 200 points.

That will be the day to mark on your caladendar that it has begun.

Keep up the good work.

--CJ

Christian Gustafson said...

Good to see you, CJ. Still pluggin' along here, looking for a terminal pattern from this mess.

You are correct re a big intraday reversal. Just. Like. 2007.