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Sunday, July 12, 2009

Trendlines and Channels


UPDATE, 7PM Sunday: I don't have a "wave 3" down as my primary count. I was just making a comment that a few do have this has a wave 3 down. My comment is that *if* it was a wave 3 down, then it will be hitting its sweet spot soon with a hard down move coming soon. I don't have it as a wave 3 down. So far, I have the move from 931 peak as a 5-3-5 zigzag ending at 869. However the structure is not real clear so it remains to be seen if the market will have more downside and if so, how much more. I would think a backtest of the H&S in the 890's is coming first possibly a touch of 900. Then we'll see what things look like.


A lot of times I just like to chart trendlines and channels just to see whats going on or what not. A potential inverse head & shoulders is in play. Upper target 900 or slightly more. The H&S neckline is in the mid-890's. A backtest move up wouldn't be out of question. How that backtest (if it happens) goes will hold the key to the market.

If the 931 high was some kind of wave 2 peak, and the move off is a wave 3 of some sort, then the market potentially is right at its "third of a third" spot. This move would be a very hard down move coming early this week, likely Monday.

So one way or another the market will clue us further in.

11 comments:

  1. This comment has been removed by the author.

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  2. Dan
    what percentage of chances do you see that we have a very hard move down tomorrow ?

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  3. I'm not expecting any big down tomorrow. look at the VIX 60 mins and you would see H&S pattern is being developed which means SPX going for 2 right shoulder before any big move down.. Again, I'm not Government Sachs so what do i know.

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  4. VIX and SPX were both down on friday.

    8 of the past 10 times that happened the following day was UP.

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  5. Erik,
    At this point I'll take the 2% odds on a down day tomorrow! We'll see.

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  6. I didn't mean to confuse. I don't think necessarily tomorrow is a down day. Just that if this was a wave 3 down (which I don't), then its gonna have to get humping down soon.

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  7. Alex, I see a move up on Monday based on the short term wave structure and technicals.

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  8. Mark,

    You'll be happy to know that your odds are 20% not 2%.

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  9. look at futures
    sharply down....

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  10. This comment has been removed by the author.

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  11. if futures keep up through the night, it could very well affect the current count (i.e. zigzag with wave 'c' up in progress). say we open lower and break below 876, i can only guess that a possible flat or expanded flat would be the next alternative (or a very messy looking wave 3 down...)

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