Saturday, November 9, 2013

Charts 11-08: Most bearish case possible from this crazy tape

My good friend Matt_Bear suggested that this manic Friday rally was a leg of a triangle.  So even though we have blown a perfectly good key reversal daily candle on the SPX, we still may be setting up for another exhaustion move.

Here's how the triangle here would work:

SPX 11-08 with 4th wave tri

An impulse follows the completion of a symmetrical triangle; I'll propose that it will target 1798, where we will rollover again:

SPX 11-08 6M

You could count these final waves as an ABC from 1560, or as an ending-diagonal that started at 1627, either way -- they both point to 1798.

Which sets up the larger catastrophe, the 2008 tape x about 1.35:

SPX 11-08 5Y

Which looks like this on the really long timeline:


So the first order of business is to finish the rest of this proposed triangle this week.


Christian Gustafson said...

Of course, you could probably also count Thursday's low as the end of green 4, with Friday's bounce being i of the final green 5. It will need to kill some time if the target is 1798 next Wednesday -- only 28 handles away.

Permabear Doomster said...

I know a few are looking at 1780/90 within the near a top.

None of that makes any sense though. Why would it stop?

It remains bizarre that we faced a zombie apocalypse..and the market only dropped to sp'1646.

How can people be more bearish now, than last month?

Only another 4-6 months to wait.

Orhan Onaran said...

Seems it's going to be 1780/1790. We are probably here at the top this week around 1785 in a blow-off - blow-up top. Still looks like a an expanding megaphone topping pattern over the last month on the 60 minute chart. I can see much going wrong in Yellen's testimony, the next govt. stand-off, & these extreme bubble stock prices. There can't be many bears left to cushion the impending collapse? ooo

Orhan Onaran said...

Well, it hit your 1798 (Nice call & charting), a bit early though. Not sure what to make of it?