Friday, March 22, 2013

Charts 03-21

We're in an ambiguous spot, a triangle that could take us up or down.  If the latter, we would sell down to the SPX 1512 area next week, setting up some sort of resolution or quarantine for the Cyprus situation next weekend.  With the storm passed, we will be free to rally to hopefully final highs on the SPX -- completing the Jaws of Death megaphone pattern since 2000. 

If we head down, I'll be watching the McClellan for oversold signs.

I spent some more time charting what I understand to be McHugh's take on this, and will watch for signals that his scenario is actually playing out.  Remember, he's looking for a torrid rally to silly new highs late in the year.

SPX 03-21


Bicycle said...

Speaking of great books, Chinua Achebe has died.

Christian Gustafson said...

No resolution yet on this one. The green candle into the close on Friday left us right on the upper bound of this triangle. Right on it! What a grinder!

There is an interesting possibility with the larger channel. The midline of the larger channel -- the rally up since 1343 -- intersects the Jaws of Death top trendline right on May 1st, in the upper 1590s.

Fifth waves often end with a sharp reversal in mid-channel. May 1st is an FOMC, which would be a great setup for a surprise announcement and a big gravestone doji.

This current triangle could break either way, either finishing up 5 of 3, or giving us the c of 4 drop to the lower channel wall.