Posts Tagged ‘Head and Shoulders’

Remembering Broadcom

Hi All – we’re going to be posting exciting articles on charting and technical analysis here with Dave Fry’s nightly updates.  Please check this section frequently and let us know what you think!  - Ilene  

Remembering Broadcom

Courtesy of Tim Knight at Slope of Hope

I’m hearing a lot of folks toss a phrase around attributed to Joe Granville: "If it’s obvious, it’s obviously wrong!"

Ummm, I’m not sure how many of you have data on Mr. Granville’s performance, but Mark Hulbert noted that The Granville Market Letter "is at the bottom of the Hulbert Financial Digest’s rankings for performance over the past 25 years – having produced average losses of more than 20 percent per year on an annualized basis." So I wouldn’t go tattooing everything he says on your forehead or anything.

The "obvious" thing these days is the head and shoulders pattern on the S&P. I admit, this thing has been exasperating. Before the market opened on Monday, it seemed ready to fulfill its destiny, but then Ms. Whitney decided to show up.

0714-spx

The above is the /ES, which incorporates the after-hours surge credited to INTC’s earnings release. We’re at a dangerous zone here. A cross above 928.25 on the /ES would put the final nail in the coffin on this pattern. But until then, I urge you remember a lesson from BRCM in 2000.

At the time, this stock also had a similarly exciting pattern.

0714-brcm1

Yet it wouldn’t seem to break 130 as it "should" have. One day it even went beneath 130 and then climbed right back up again. You can imagine how the bears were going insane with this stock as its freakish second right shoulder was formed.

0714-brcm2

The point I want to make is that sometimes these topping patterns take longer to play out than we would like. You have to just be patient sometimes. My point is better made with BRCM, though. I’ve tinted in the (now tiny) pattern which presaged what was to come.

0714-brcm3

Anyway, I had fallen back in love with the market, but the first couple of days of this week have turned me cold in a big, big hurry. It’ll be interesting to see how tomorrow stacks up when it’s finally over. As of this moment, it certainly looks like another slam-dunk for the bulls.


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Head and Shoulders and Divergences on Daily SP500

Head and Shoulders and Divergences on Daily SP500

Courtesy of Corey Rosenbloom at Afraid to Trade

It’s being broadly circulated around the analysis circles, but there appears to be a distinct Head and Shoulders forming on the daily chart of the S&P 500.  I’m picking up volume and momentum divergences as well, hinting that lower prices are yet to come but let’s take a look at these structures and what they might mean for traders.

Head and Shoulders $SPX

With today’s 3% free-fall (Trend Day Down) in the broader stock market, it appears now that the dominant technical pattern is the developing Head and Shoulders on the S&P 500.

It’s not guaranteed, of course, but according to classical technical analysis patterns, we would expect the next move in price to be a ‘magnet trade’ down to test key support about the 885 level in the index.

This support is strongly established as the February highs along with the May lows.  This level also forms the “Neckline” of the expected reversal pattern.

A break (and clean close) below 880 could trigger a flood of short-sell orders (and stop-losses from buyers) which could create a ’self-fulfilling prophecy’ as traders and investors push price lower.

The classic measuring move is the distance from the Head to the Neckline (about 75 points) which is subtracted from the neckline at 885 to give us a target from 800 to 810 for the next level of possible pattern support.

Take a look at Volume, which has been steadily trailing lower as price has creeped its way higher.  That serves as a non-confirmation of higher prices and hints at an impending reversal.

Finally, look at the 3/10 Momentum Oscillator – as price has been inching higher, the 3/10 Oscillator has been making lower highs along with price, and has even set-up the dreaded “Three Push” reversal pattern (a triple negative momentum divergence, which you see if you look closely).

As a caveat, there’s no guarantee price has to break these levels, and one astute reader (Michael) even noted in the comments of the prior post, because the Head and Shoulders pattern is so obvious, it might be ‘faded’ or fail to materialize because so many people are watching it.  No one said trading had to be easy!

Until we see something different, this is the current price structure of the S&P 500 as we head into…
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Zero Hedge

Bitcoin Nears $11,500 - Almost Double The 'Mystery Dip-Buyer' Lows

Courtesy of ZeroHedge. View original post here.

Bitcoin is now up 15% in February - after January's worst month since Dec 2013 - and up 94% from the lows in early February when we first reported a mystery dip-buyer bought $400 million of crypto...

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Phil's Favorites

How Amazon could lose its health-care bid while drug distributor stocks win

 

How Amazon could lose its health-care bid while drug distributor stocks win

Courtesy of Vitaliy Katsenelson, Contrarian Edge

Amazon.com has been one of the most innovative and disruptive companies of this century, with incredible success in areas that lie outside of what has been historically perceived as its core business (book selling).

Thus every announcement or speculation that Amazon will enter into a particular industry sends stocks of that industry into a tailspin. Investors sell first and ask questions later. When Amazon announced its purchase of Whole Foods, grocery stores declined as much as 30%. Even Tesco separated by an ocean from Whole Foods, was down on that news.

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ValueWalk

Warren Buffett's Advice for Small Business 2018

By joniferdingcong. Originally published at ValueWalk.

The Master Investor gives top tips for budding entrepreneurs, startups, and small businesses.

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Digital Currencies

As Bitcoin Nears $11,000, Here's A History Of Its Biggest Ups And Downs

Courtesy of ZeroHedge. View original post here.

The cryptocurrency rebound off Feb 5th's bloodbath lows (below $6,000 for Bitcoin) has been impressive, as a 'mysterious' massive buyer 'bought the dip' and momentum took care of the rest.

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Insider Scoop

Walmart, Target Are Susquehanna's Top Picks Ahead Of Retail Earnings Season

Courtesy of Benzinga.

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Biotech

What is 'right to try,' and could it help?

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

 

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In this March 18, 2011 photo, Cassidy Hempel waved at hospital staff as she was being treated for a rare disorder. Her mother Chris, left, fought to gain permission for an experimental drug. AP Photo/Marcio Jose Sanchez

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Mapping The Market

The tricks propagandists use to beat science

Via Jean-Luc

How propagandist beat science – they did it for the tobacco industry and now it's in favor of the energy companies:

The tricks propagandists use to beat science

The original tobacco strategy involved several lines of attack. One of these was to fund research that supported the industry and then publish only the results that fit the required narrative. “For instance, in 1954 the TIRC distributed a pamphlet entitled ‘A Scientific Perspective on the Cigarette Controversy’ to nearly 200,000 doctors, journalists, and policy-makers, in which they emphasized favorable research and questioned results supporting the contrary view,” say Weatherall and co, who call this approach biased production.

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Members' Corner

An Interview with David Brin

Our guest David Brin is an astrophysicist, technology consultant, and best-selling author who speaks, writes, and advises on a range of topics including national defense, creativity, and space exploration. He is also a well-known and influential futurist (one of four “World's Best Futurists,” according to The Urban Developer), and it is his ideas on the future, specifically the future of civilization, that I hope to learn about here.   

Ilene: David, you base many of your predictions of the future on a theory of historica...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

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Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.

CLICK ON CHART TO ENLARGE

EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

If EWZ b...



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All About Trends

Mid-Day Update

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