$SPX - Chart Link - We have shown this
potential HS pattern on the Weekly and Longer Term Daily Charts for
a few months now as something to monitor. The nearly 6%
decline this week adds more credence to this view (versus another
new reaction high).
The prevailing downtrend began with a SELL signal last week on
Wednesday (12/29) (after the SPX took back more that 50%) of the
Dec 28th candle. The bears have remained in control since
with NO BREAK in symmetry this week. Respect the trend until
evidence changes. The market is very oversold but we have yet to
see any reversal. Best scenario for a reversal would be a move down
(even a gap down) and strong reversal but one has to also be weary
of a crash (they tend to occur in oversold conditions).
As we've stated ad naseum for many months, the market has not
been in a good risk reward position for LT holders and thus the
reason why we've been focusing on shorter term setups. I've
preached about having an exit strategy in place in ACCORDANCE with
your objectives. The bulls are not completely dead yet but
this week sent a strong message. This chart shows a potential
fractal on a bounce at/near neckline but that's simply one path.
Thus, look for SPX to go down to that neckline area next
week.
Below is a link to a chart last August after the initial decline
and comments on chart. I originally posted this chart following the
strong selloff last August as I envisioned a possible neckline
(relating to a HS topping pattern) forming but in need of a rally
to establish a Right Shoulder. At that time we were looking
for at least a rally to establish right shoulder (or one more
slight reaction high depending upon the extent of the rally)
SPX LT Daily
Posted by steve on 8th of Jan 2016 at 04:38 pm
$SPX - Chart Link - We have shown this potential HS pattern on the Weekly and Longer Term Daily Charts for a few months now as something to monitor. The nearly 6% decline this week adds more credence to this view (versus another new reaction high).
The prevailing downtrend began with a SELL signal last week on Wednesday (12/29) (after the SPX took back more that 50%) of the Dec 28th candle. The bears have remained in control since with NO BREAK in symmetry this week. Respect the trend until evidence changes. The market is very oversold but we have yet to see any reversal. Best scenario for a reversal would be a move down (even a gap down) and strong reversal but one has to also be weary of a crash (they tend to occur in oversold conditions).
As we've stated ad naseum for many months, the market has not been in a good risk reward position for LT holders and thus the reason why we've been focusing on shorter term setups. I've preached about having an exit strategy in place in ACCORDANCE with your objectives. The bulls are not completely dead yet but this week sent a strong message. This chart shows a potential fractal on a bounce at/near neckline but that's simply one path. Thus, look for SPX to go down to that neckline area next week.
Below is a link to a chart last August after the initial decline and comments on chart. I originally posted this chart following the strong selloff last August as I envisioned a possible neckline (relating to a HS topping pattern) forming but in need of a rally to establish a Right Shoulder. At that time we were looking for at least a rally to establish right shoulder (or one more slight reaction high depending upon the extent of the rally)
http://stockcharts.com/h-sc/ui?s=%24SPX&p=D&yr=7&mn=2&dy=0&id=p02693265580&a=290372585&r=1452349792728&cmd=print
Great chart Steve
Posted by whs956 on 8th of Jan 2016 at 07:18 pm
Neckline not very far away. China. Earnings. Rate increases. A lot of drama out there.