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

Supreme Court Rules Trump Tax Returns Must Be Released To NY Grand Jury

Courtesy of ZeroHedge View original post here.

The Supreme Court on Thursday ruled that a New York Grand Jury can have President Trump's tax records, after Manhattan prosecutor Cy Vance subpoenaed eight years of returns in connection with an investigation into hush money payments made to porn star Stormy Daniels, according to Axios.

The court has yet to rule on whether House Democrats can have access to the records, after the lawmakers issued subpoenas to Deutsche Bank, Capital One, and the president's longtime accounting fi...



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Kimble Charting Solutions

Tech Experiencing A 20-Year Breakout, While Small Caps Are Near 20-Year Lows!

Courtesy of Chris Kimble

Successful investors are often rewarded by owning strength and avoiding weakness.

Could two key sectors be experiencing 20-year strength and weakness extremes at the same time? Yes!

The NDX 100/S&P ratio (left above) is currently experiencing a 20-year breakout at (1).

At the same time, the Russell 2000/S&P ratio is near 20-year lows at (2).

This 2-pack reflects that the place to be at this time continues to be Tech...



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Phil's Favorites

"Just because you're buying stock, doesn't mean you're an investor"

 

“Just because you’re buying stock, doesn’t mean you’re an investor”

Courtesy of 

Josh here – in the mid 1960’s, investors decided that there was a group of fifty growth stocks whose outlook was so bright that it didn’t matter what price you paid for them, as long as you were buying. By the early 70’s, they were learning a critical lesson about starting valuation – McDonalds, Coke and Procter & Gamble did indeed have a very bright future, but that didn’t prevent them from being cut in half. Investors in these names would have ...



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Biotech/COVID-19

5 COVID-19 myths politicians have repeated that just aren't true

 

5 COVID-19 myths politicians have repeated that just aren't true

The purveyors of these myths aren’t doing the country any favors. Brendan Smialowski/AFP/Getty Images

Courtesy of Geoffrey Joyce, University of Southern California

The number of new COVID-19 cases in the U.S. has jumped to around 50,000 a day, and the virus has killed more than 130,000 Americans. Yet, I still hear myths about the infection that has created the worst public health crisis in A...



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ValueWalk

100 Days Since The Roll Back Of Fuel Efficiency Standards

By Anna Peel. Originally published at ValueWalk.

“100 Days Since…” Trump Rolled Back Fuel Efficiency Standards While Public Health, Economic Fallout Accelerated

Q2 2020 hedge fund letters, conferences and more

The Rollback Of Fuel Efficiency Standards

WASHINGTON, D.C. – One hundred days ago today, the Trump administration finalized its rollback of fuel efficiency standards — a s...



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The Technical Traders

Credit/Investments Turned Into End-User Risk Again

Courtesy of Technical Traders

Continuing our research from Part I, into what to expect in Q2 and Q3 of 2020, we’ll start by discussing our Adaptive Dynamic Learning predictive modeling system and our belief that the US stock market is rallied beyond proper expectation levels.  The Adaptive Dynamic Learning (ADL) modeling systems attempts to identify price and technical indicator DNA markers and attempts to map our these...



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Chart School

RTT browsing latest..

Courtesy of Read the Ticker

Please review a collection of WWW browsing results. The information here is delayed by a few months, members get the most recent content.



Date Found: Saturday, 14 March 2020, 05:51:16 PM

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Comment: Crash in perspective - its Bad, and not over!



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Comment: The Blood Bath Has Begun youtu.be/bmC8k1qmM0s



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Lee's Free Thinking

These Charts Show COVID 19 Is Spreading in the US and Will Kill the Economy

 

These Charts Show COVID 19 Is Spreading in the US and Will Kill the Economy

Courtesy of  

The COVID 19 pandemic is, predictably, worsening again in much of the US. Only the Northeast, and to a lesser extent some Midwestern states, have been consistently improving. And that trend could also reverse as those states fully reopen.

The problem in the US seems to be widespread public resistance to recommended practices of social distancing and mask wearing. In countries where these practices have been practi...



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Digital Currencies

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

 

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

App-etising? LDprod

Courtesy of Michael Rogerson, University of Bath and Glenn Parry, University of Surrey

Food supply chains were vulnerable long before the coronavirus pandemic. Recent scandals have ranged from modern slavery ...



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Members' Corner

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

 

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

No matter the details of the plot, conspiracy theories follow common patterns of thought. Ranta Images/iStock/Getty Images Plus

Courtesy of John Cook, George Mason University; Sander van der Linden, University of Cambridge; Stephan Lewandowsky...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Promotions

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Feb. 26, 1pm EST

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Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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