Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
What happens To The Global Economy If Oil Collapses Below $40 – Part II - 15th Nov 19
America’s Exceptionalism’s Non-intervention Slide to Conquest, Empire - and Socialism - 15th Nov 19
Five Gold Charts to Contemplate as We Prepare for the New Year - 15th Nov 19
Best Gaming CPU Nov 2019 - Budget, Mid and High End PC System Processors - 15th Nov 19
Lend Money Without A Credit Check — Is That Possible? - 15th Nov 19
Gold and Silver Capitulation Time - 14th Nov 19
The Case for a Silver Price Rally - 14th Nov 19
What Happens To The Global Economy If the Oil Price Collapses Below $40 - 14th Nov 19
7 days of Free FX + Crypto Forecasts -- Join in - 14th Nov 19
How to Use Price Cycles and Profit as a Swing Trader – SPX, Bonds, Gold, Nat Gas - 13th Nov 19
Morrisons Throwing Thousands of Bonus More Points at Big Spend Shoppers - JACKPOT! - 13th Nov 19
What to Do NOW in Case of a Future Banking System Breakdown - 13th Nov 19
Why China is likely to remain the ‘world’s factory’ for some time to come - 13th Nov 19
Gold Price Breaks Down, Waving Good-bye to the 2019 Rally - 12th Nov 19
Fed Can't See the Bubbles Through the Lather - 12th Nov 19
Double 11 Record Sales Signal Strength of Chinese Consumption - 12th Nov 19
Welcome to the Zombie-land Of Oil, Gold and Stocks Investing – Part II - 12th Nov 19
Gold Retest Coming - 12th Nov 19
New Evidence Futures Markets Are Built for Manipulation - 12th Nov 19
Next 5 Year Future Proof Gaming PC Build Spec November 2019 - Ryzen 9 3900x, RTX 2080Ti... - 12th Nov 19
Gold and Silver - The Two Horsemen - 11th Nov 19
Towards a Diverging BRIC Future - 11th Nov 19
Welcome to the Zombie-land Of Stock Market Investing - 11th Nov 19
Illiquidity & Gold And Silver In The End Game - 11th Nov 19
Key Things You Need to Know When Starting a Business - 11th Nov 19
Stock Market Cycles Peaking - 11th Nov 19
Avoid Emotional Investing in Cryptocurrency - 11th Nov 19
Australian Lithium Mines NOT Viable at Current Prices - 10th Nov 19
The 10 Highest Paying Jobs In Oil & Gas - 10th Nov 19
World's Major Gold Miners Target Copper Porphyries - 10th Nov 19
AMAZON NOVEMBER 2019 BARGAIN PRICES - WD My Book 8TB External Drive for £126 - 10th Nov 19
Gold & Silver to Head Dramatically Higher, Mirroring Palladium - 9th Nov 19
How Do YOU Know the Direction of a Market's Larger Trend? - 9th Nov 19
BEST Amazon SMART Scale To Aid Weight Loss for Christmas 2019 - 9th Nov 19
Why Every Investor Should Invest in Water - 8th Nov 19
Wait… Was That a Bullish Silver Reversal? - 8th Nov 19
Gold, Silver and Copper The 3 Metallic Amigos and the Macro Message - 8th Nov 19
Is China locking up Indonesian Nickel? - 8th Nov 19

Market Oracle FREE Newsletter

How To Buy Gold For $3 An Ounce

Stock Markets Testing the 78.6 Fibonacci Level

Stock-Markets / Stock Markets 2010 Mar 04, 2010 - 03:32 PM GMT

By: David_Grandey


Best Financial Markets Analysis ArticleWhat’s Behind Doors 1, 2 and 3?

Here we are testing the 78.6 Fibonacci Level.

You've all heard us say that the OTC Comp leads the market. Well we have an even better leader and that is the Russell 2000 index below.

As you can see the Russell 2000 index has already broken into a new high by a smidge.  That doesn't mean the SPX and OTC Comp will, but it bears watching. You can also see it's overbought. The next day or so a test down to trend channel support which is clearly defined in pink would not surprise me.

It's all about the Bottom PINK LINE. It's all you need to know. It's still intact and still the order of the day. We will not get any decisive break to the downside or the start of a C wave TILL WE BREAK THIS LINE. This is why it's imperative that we continue to monitor this line.

If we are going to put a lasting top in all of this leads us to a few scenarios to be on the lookout for from here. Try to follow along in the chart below.

Scenario 1 as labeled: We come down to trend channel support (blue hash marks) and break it (red hash marks), in which case the SPX and OTC Comp ended up staging a 1st lower high and it's a retest of the February lows for starters. Unless Plunge Protection wants to step in.

Scenario 2: We come down to trend channel support, bounce and retest the highs of today for a double top then roll over to the retest of the February lows.

Scenario 3: We come down to trend channel support, bounce and head for a retest of the January highs (1150) for a double top.

Only time will tell so we want to be on our toes for one of these three scenarios. We will keep monitoring these scenarios in our daily updates.

In the meantime below are some charts of each scenario to give you some past examples.
Scenario 1 is just below -- a 1st lower high

Scenario 2 is that of DRYS below albeit the top channel line isn't drawn but you get the pattern we hope. One could also say it's an Elliot 5-waver with a truncated 5th or what's also commonly called a double top. Then the green trendline break to the downside of course.

A past example of Scenario 3 is shown below. It's basically a full retest of the highs. Here too it has that double top look before it fell apart.

Now that you know what to watch for or watch out for depending upon who you are and who you choose to be you can use it to your advantage. Should any of these scenarios transpire you won't be one who goes Wha? Huh? What Just happened?! should anyone of them come to fruition.

You'll have a heads up and know what you need to do to protect yourself first and foremost and then 2ndly use it to profit from via short sells and inverse ETF exposure.

By David Grandey

To learn more, sign up for our free newsletter and receive our free report -- "How To Outperform 90% Of Wall Street With Just $500 A Week."

David Grandey is the founder of All About Trends, an email newsletter service revealing stocks in ideal set-ups offering potential significant short-term gains. A successful canslim-based stock market investor for the past 10 years, he has worked for Meriwest Credit Union Silicon Valley Bank, helping to establish brand awareness and credibility through feature editorial coverage in leading national and local news media.

© 2010 Copyright  David Grandey- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules