I see this rally rolling over. The thick red channel is the "master up trend" that has been in place for the last 8 months. The dark pink channel was formed over the prior two reaction highs (two months of price action). The light pink channel is forming now with the completion of the current reaction high. Note how the trend's slope dPrice/dTime is decreasing. We are rolling.
Now look at the dollar index and tell me what you see happening:
I see a similar phenom - obviously in reverse of the ES. Note the rolling of the bottom trend lines. The only difference is that the dollar index is actually wedging. Meaning the reaction highs are not breaking the top trend lines yet. At some point, the dollar and S&P will decouple. I spoke about this several weeks ago.
Anyway, this is my second post tonight. If you have not read my prior post, you might want to check it out. I talk about the action today and some of the trading decisions that I made.
11 comments:
Two posts in one night - a double treat!! :)
Thanks, (especially since I'm sitting with a short ES position)
DAVID a fantastic perspective and eye for detail
I have looked at the march to now wedge, over and over , but did not make notice of the last high not making it to the very top, till now. ( as other highs had)
Excellent.
We all noticed it broke under, that was easy.
The $ has no choice but to break form its cage soon , hope its is up , I have read a falling
triage breaks to the up about 70% of the time.
On the hour chart , no matter how you draw the channel from 1030 , we are on the outside under now , and looks like we bounced off trying to get back in. That is a nice indication that wave5 is over.
What a snap in the $ little bit ago.
Wishing us all a clear break of 1102 to under 1030 and make it past Dec 2nd with a huge rally up.
My very best
nice... wondered how long the dollar was going to fall but i see the wedge is going to force a move... enjoyed your play by play post - i'll have to slowly re-read it to fully get your setup nuances - 7w 1l - heck of a ratio - i was 0w 2l today.. let's see what tomorrow brings - my guess is another manufactured big gap up to force the market even higher.. i'm still short..
Thanks guys,
I snapped up some of the ES profits at 110500 (good for 3.25pts across each contract). I would have liked to let them ride further, but I have a gap to cover from Monday.
I still have time to setup the swing trade. Will look again late this evening.
Cheers.
Payline:
Didn't understand when you say "and make it past Dec 2nd with a huge rally up." Can you expand a little? thanks
Bob G , sure take a look at the last 3 "would have been corrections" , they all turned up into a rally on or very near the 2nd of the month,
or for the moon watchers on full moons. on that note, the last 4 tops including Mondays where on New Moons.
Who knows about the moon , but the rise,tops and falls have been in on month lumps.
Payline:
I agree. It is worth noting that the djia is still in the wedge, with a lower support at mar, jul, nov. Seems like the latest rally will end very soon, maybe friday with OEX. The potential pull back could be to djia=10000 and approximatly the 50d ma. From there the bounce that you suggest. But will the oct '07 resistance line hold? If it does the rally could be quite short. One by one sml/rut, comp, and spx have broken the wedge to the downside but were held in check by the very powerful djia. If there is the bounce from ~10000 djia, what will happen at about 10350 djia?? can it be a repeat of the 2004 correction that turned into a sideways movement? Possible because of QE, but djia, spx, sml, rut would have to break the oct '07 resistance line. I still think two things, the patterns in place are significant, but also the bernanke put is also significant. YMZ09 is -21 right now so am hopefull for an early next week pull back. Am short spx but will go cash at djia on the lower support.
Any thoughts?
Bob G , this a stubborn market , weak $ , zero rates , 5t of Gov def spending between the fed at congress,
Ideal situation for stocks.
But all the kings horses and all the kings men couldnt put humpy dumby back together again.
There may be another up down zig zag maybe not, time will let us know
It looks like the ES is making a right turn and the dollar is making a left turn.
There was serious bearish action USO puts yesterday the $40 dollars november strike traded at triple the normal volume.
hi david.. i guess should wait for your post but good to see market reflecting reality for once.. personally expected a sharper drop and surprised to see the turnaround in the afternoon.. didn't like the slow creep up..
Hey Devon,
I am not too concerned about the end of day creeping. I do discuss it more in my most recent post.
Cheers!
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