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Interesting article... for Tuesday's Trading - 7/7/09
http://www.trivisonno.com/tuesdays-trading-7709
The H&S is For Real
Jason Goepfert at SentimenTrader.com (not free) just did a statistical study of head-and-shoulders patterns. Jason is often critical of technical analysis, and only believes in things he can back-test. But his work showed that the H&S lives up to its hype, and is a very reliable pattern.
The SPX needs to rally on strong volume very quickly. If it falls back below the neckline of the H&S, odds are very good that it will eventually hit the downside target.
USO Woes
On Monday, USO printed a bar on its daily chart that is completely below its lower Bollinger Band. Now that’s some bearish sentiment! Here’s me suggesting that the top might be in for oil back on June 15th. How about that? Iran erupted and oil didn’t rally, so I was using “the dog that didn’t bark” method of calling tops.
Monster Rally
Monday’s huge two-point SPX rally actually came on less volume than Thursday, if you can believe that. The days before three-day weekends usually have minuscule volume, so you might say that Monday’s volume was sub-minuscule. For example, SPY’s volume dropped from 212 million on Thursday to 174.5 million on Monday. That is very weak. So, Monday’s rally may have just been shorts taking profits.
If the market continues to bounce on Tuesday morning, the primary drama will be whether or not the Q’s, IWM, and XME can close Monday morning’s down-gaps.
 
hessian said:
Interesting article... for Tuesday's Trading - 7/7/09
Click to expand...

Don is looking for SPX 906 to be the lower high on this rally and expects to reinitiate some short positions at that level. Given the volume we've been seeing, that seems a reasonable target for another reversal.

I have another 1 and 5 day buying signal that I'm ignoring right now, however. Those signals suggest higher prices than SPX 906, but I'm not as trusting of this signal with that head and shoulders pattern we're seeing. Problem is, everyone sees the same H&S on most charts. :rolleyes:

I also know bearishness is rampant and that it's a contrarian indicator at these levels, but it's for good reason. Very few trust this market any more. I'm not going to say we can't push to another new high this month, but it's looking less likely every day. I think we have more work on the downside before we can have another sustained, meaningful rally.
 
Look for a short term low (probably today, tomorrow the latest) followed by a 20 point SPX reversal. Yesterday's low of the day will probably be tested today. If we reverse there (SPX 886) then Don's target of 906 is good.

That's what I'm anticipating.
 
I agree with you that we will likely go up for a little. I bought a couple SPY calls earlier today but just got stopped out for a loss. :(:mad:
I am now wondering whether we will first go down to the 200 sma on SPY/$SPX before we will go up.

http://stockcharts.com/h-sc/ui
 
sorry for the bad link - i had trouble earlier today posting a stockcharts link in another group. It was SPY with the 200 sma ($88) and also the 10 sma (90.86) and 50 sma (91.20).

If I go long again it will only be if we hit the 200 sma, then I am using the 10 sma as my target. Have not decided yet what I will do. May be kind of risky???
 
mdszj said:
sorry for the bad link - i had trouble earlier today posting a stockcharts link in another group. It was SPY with the 200 sma ($88) and also the 10 sma (90.86) and 50 sma (91.20).

If I go long again it will only be if we hit the 200 sma, then I am using the 10 sma as my target. Have not decided yet what I will do. May be kind of risky???
Click to expand...

I bought TNA today at 24.74, but we've had a head fake this afternoon. Not surprised by that, but we're still declining. Maybe we rally out the gate tomorrow? This anticipated rally was not without significant risk, and it may still materialize, but playing these ST plays with TSP is really tough.
 
The more I look at the 10-day, 60-min chart, the more I think we entered long too early. Looks to me like TNA needs to go down to ~ 23.40 and SPY needs to go down to ~ 87.90. For both our sakes I hope I am wrong.
 
mdszj said:
The more I look at the 10-day, 60-min chart, the more I think we entered long too early. Looks to me like TNA needs to go down to ~ 23.40 and SPY needs to go down to ~ 87.90. For both our sakes I hope I am wrong.
Click to expand...

It was not unexpected that today might be a down day, but it was more negative than perhaps thought. Still a very good chance we bounce tomorrow with follow thought into Thursday. After that, who knows. SS sell signal is looking better all the time, but it sure is taking a while to play out. With 4 weeks to go till August, I didn't want to burn my IFTs in the event we see significant selling this month, followed by a SS buy signal. That would be a much, much better play than a ST, high-risk move so early in the month.

Now that SPX has settled around 881, that 20 point rally moves down to 901. That's a conservative position as we could see higher prices, but for now we need to let the market tell us what it wants to do.

Of course, if we don't rally tomorrow, the game may have changed.
 
Looks like the markets going to run today and should carry over into tomorrow. Yesterday was probably the day to buy for a ST TSP move. Expect more than 20 points on SPX. Good luck to those invested.
 
mdszj said:
hey ch

I hope you have better luck than me - I just got stopped out of my SSO @:confused:#:($:mad:%!!
Click to expand...

It wasn't long after my last comment that we turned decidedly lower. Not good, but we still might make a ST low and reverse course. Letting it play out some more before pulling the plug on my TNA position. It's just eating my previous winnings for the moment. Capital is still okay.
 
Couple more things...today is weird wolly Wednesday, so volatility should be expected; second, yesterday we had another seven sentinels sell signal.

Gotta respect my IT sell.
 
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