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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Phil's Favorites

Is Facebook today's Compuserve? How Libra could hasten its demise

 

Is Facebook today's Compuserve? How Libra could hasten its demise

Will Libra be Facebook’s downfall? (Shutterstock)

Courtesy of Marc-David L. Seidel, University of British Columbia

When Mark Zuckerberg was five years old in 1989, two dominant players in telecommunications made a big announcement.

Compuserve (the first major commercial online service provider) and MCI Mail (one of the first commercial e-mail service providers) introduced commercial e-mail relays to the public internet. These relays connected their centralized networks to the public, outside of their direct con...



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Zero Hedge

Yuan, Stocks Erase Mnuchin Ramp

Courtesy of ZeroHedge. View original post here.

The overnight ramp in yuan and US equity futures - on the back of Mnuchin's comments - has been entirely erased as the algos were taught that tenses matter...

...a deal that WAS 90% done is different from a deal that IS 90% done... ...



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Kimble Charting Solutions

Metals Bulls Praying This Indicator Does Not Peak Here!

Courtesy of Chris Kimble.

Gold has been strong of late as the US Dollar has been weak. This combo has driven the Gold/Dollar ratio to a key price zone and momentum level, that looks to be important to metals bulls.

This chart looks at the Gold/Dollar ratio over the past 6-years. The long-term trend is down, while the trend over the past 3-years is pretty much flat (sideways trading range).

The rally of late has the ratio testing the 2018 highs as well as its 38% Fibonacci retracement l...



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Insider Scoop

Analysts Say Homebuilder Environment Still Looks Good For Lennar

Courtesy of Benzinga.

Lennar Corporation (NYSE: LEN) stock remains attractive in the long term, sell-side analysts said Wednesday after investors sent the share price on a post-earnings roller-coaster ride.

The homebuilder had a strong ...



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ValueWalk

Beyond Meat vs Impossible Burger: Comparing The Vegan Meat Burgers

 

Beyond Meat vs Impossible Burger: Comparing The Vegan Meat Burgers

Courtesy of Vikas Shukla, ValueWalk

Pexels / Pixabay

The trend of vegan food has been gathering momentum in the last few years as people become more health conscious. They have also begun to realize the environmental impact of raising meat for human consumption. According to PETA, it takes an estimated 1...



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Chart School

Formula for when the Great Stock Market Rally ends

Courtesy of Read the Ticker.

When valuations for the boring water company or the boring electric company is trading like your Facebook, Apple, Amazon or Netflix or Google (ie FANG) you know something is wrong.

This is when a seriously over valued market is screaming at you.

Of course the reader must understand in a world where money printing goes super nuts (Zimbabwe style) the stock market may go hyper inflationary and picking a time frame for a top is never a good idea, but we are not there yet. There is no Ben Bernanke helicopter money to the masses yet (ie MMT). 

To see when water company's (and such like) are nearing the crazy FANG like valuations a review of the Dow Jones Utility Index channel shows us how history can repeat. The c...

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Digital Currencies

Cryptocurrencies are finally going mainstream - the battle is on to bring them under global control

 

Cryptocurrencies are finally going mainstream – the battle is on to bring them under global control

The high seas are getting lower. dianemeise

Courtesy of Iwa Salami, University of East London

The 21st-century revolutionaries who have dominated cryptocurrencies are having to move over. Mainstream financial institutions are adopting these assets and the blockchain technology that enables them, in what ...



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Biotech

Consumer genetic testing customers stretch their DNA data further with third-party interpretation websites

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

 

Consumer genetic testing customers stretch their DNA data further with third-party interpretation websites

If you’ve got the raw data, why not mine it for more info? Sergey Nivens/Shutterstock.com

Courtesy of Sarah Catherine Nelson, University of Washington

Back in 2016, Helen (a pseudonym) took three different direct-to-consumer (DTC) genetic tests: AncestryDNA, 23andMe and FamilyTreeDNA. She saw genetic testing as a way...



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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



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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

Free eBook - "My Top Strategies for 2017"

 

 

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Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

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About Phil:

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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