The Market could be topping

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Sorry folks. My mistake on the S&H charts above, the left has already formed, and we're waiting to see if a right shoulder forms.

Why may the market go higher in the short term, for the right shoulder.
1. The VIX is off its high and there is a gap that needs to be filled.
2. The AGG ( sometimes used to monitor F fund) gapped up today and the gap from the end of May is now filled, plus the 10 yr T is right above 4.50 which will act like resistence ( short term) to keep yields from going much lower. Look for bond investors to start taking some profits, and putting some money back into stocks.
3. Contrarian thought, most of the herd is out of the market now and very
negative. Is the herd ever right?
4. The Dow and NASDAQ are above the 200 ma and holding nicely.
5. Even though the SP500 is right below the 200ma. It has kissed it three times without a big sell off and is now just holding below it with a possible break above it, perhaps tomorrow.


View attachment 1959


http://finance.yahoo.com/q/bc?s=^TNX&t=5y
http://finance.yahoo.com/q/bc?s=^VIX&t=3m&l=on&z=m&q=b&c=
 
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Even as the SP500 and DWCP are working up forming a right shoulder, the Dow is holding at the neckline, even after its upward move. Of course if the Dow breaks through the neckline and continues to climb, then the S&H pattern is deemed a failure.

View attachment 1963

Volume: As the Head and Shoulders pattern unfolds, volume plays an important role in confirmation. Volume can be measured as an indicator (OBV, Chaikin Money Flow) or simply by analyzing volume levels. Ideally, but not always, volume during the advance of the left shoulder should be higher than during the advance of the head. This decrease in volume and the new high of the head, together, serve as a warning sign. The next warning sign comes when volume increases on the decline from the peak of the head. Final confirmation comes when volume further increases during the decline of the right shoulder.

http://stockcharts.com/school/doku...._analysis:chart_patterns:head_and_shoulders_t

http://www.tsptalk.com/mb/showpost.php?p=107666&postcount=1
 
clester said:
It looks like the gap on the vix has now been filled. What do you think Vectorman?
Click to expand...

I think I should have lightened up today, but I will wait for a confirmation to see if this S&H pattern is anything. I waiting to see if the EFA chart is going to fill a gap that we're closing in on. It gapped up today, so we now know that some day we'll have to drop back and fill it. The Dow is stuck up against 13200 ( neckline), coiled like a spring and is about to pop, perhaps down.:(

View attachment 1964

http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=EFA
 
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I wasn't happy with the " perhaps down" comment above. I told myself, " Self why don't you be more positive like 12% and Birchtree about the market". Well, lets just say the Dow is coiled like a spring and is about to melt up from a short squeeze and future rate cut.:laugh:
 
You know it's going to happen - the market is a future discounting mechanism. I can't help thinking about 1995.
 
SP500 chart 2003 to present. After the market has had a great run, there has been opportunities for timers had they used support lines ( or canel lines) as a stop ( exit the market) could have save themselves alot of loss. Nobody can time the market, but if the stock pattern really starts to go outside the norm, this should indicate a yellow flag. Compare the chart below with the charts in the following post. What do they have in common?
The Fed lowering rates will be a big help ( that's my positive thought), but the China problem is still there and its market is screaming into orbit, they've ignored this credit problem ( even though they are sitting on a bunch of US subprime investments).

View attachment 1976
 
SP500 97-98, 98 double bottom test with the fed helping out to advance stocks.
Today stocks are drifting lower, a retest of support to make sure this is the real deal, would be nice. But we also need to be careful of any dead cat bounce.:)

View attachment 1978
 
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