Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20
China’s ‘Two Sessions’ herald Rebound of Economy - 22nd May 20
Signs Of Long Term Devaluation US Real Estate - 22nd May 20
Reading the Tea Leaves of Gold’s Upcoming Move - 22nd May 20
Gold, Silver, Mining Stocks Teeter On The Brink Of A Breakout - 21st May 20
Another Bank Bailout Under Cover of a Virus - 21st May 20
Do No Credit Check Loans Online Instant Approval Options Actually Exist? - 21st May 20
An Eye-Opening Perspective: Emerging Markets and Epidemics - 21st May 20
US Housing Market Covid-19 Crisis - 21st May 20
The Coronavirus Just Hit the “Fast-Forward” Button on These Three Industries - 21st May 20
AMD Zen 3 Ryzen 9 4950x Intel Destroying 24 core 48 thread Processor? - 21st May 20
Dow Stock Market Trend Analysis and Forecast - 20th May 20
The Credit Markets Gave Their Nod to the S&P 500 Upswing - 20th May 20
Where to get proper HGH treatment in USA - 20th May 20
Silver Is Ensured A Prosperous 2020 Thanks To The Fed - 20th May 20
It’s Not Only Palladium That You Better Listen To - 20th May 20
DJIA Stock Market Technical Trend Analysis - 19th May 20
US Real Estate Showing Signs Of Covid19 Collateral Damage - 19th May 20
Gold Stocks Fundamental Indicators - 19th May 20
Why This Wave is Usually a Market Downturn's Most Wicked - 19th May 20
Gold Mining Stocks Flip from Losses to 5x Leveraged Gains! - 19th May 20
Silver Price Begins To Accelerate Higher Faster Than Gold - 19th May 20
Gold Will Soar Soon; World Now Faces 'Monetary Armageddon' - 19th May 20
Gold Mining Stocks Fundamentals - 18th May 20
Why the Largest Cyberattack in History Will Happen Within Six Months - 18th May 20
New AMD Ryzen 4900x and 4950x Zen3 4th Gen Processors Clock Speed and Cores Specs - 18th May 20
Learn How to Play the Violin, Kids Activities and Learning During Lockdown - 18th May 20
The Great Economy Reopening Gamble - 17th May 20
Powell Sends a Message With Love for Gold - 17th May 20
An Economic Renaissance Emerges – Stock Market Look Out Below - 17th May 20
Learn more about the UK Casino Self-exclusion - 17th May 20
Will Stocks Lead the Way Lower for Gold Miners? - 15th May 20
Are Small-Cap Stocks (Russell 2k) Headed For A Double Dip? - 15th May 20
Coronavirus Will Wipe Out These Three Industries for Good - 15th May 20
Gold and Silver: As We Go from Deflation to Hyperinflation - 15th May 20
Silver's Massive Undervaluation Relative to Gold Makes It Irresistible - 14th May 20
Bitcoin Halving Passes with no Fanfare, but Smart Money is Accumulating - 14th May 20
Will Job Market from Hell Support Gold? - 14th May 20
The Tragedy Of Missed Covid-19 Opportunities - 14th May 20
Worst Jobs Report In US Economic History - And The Stock Market Continues To Rally - 14th May 20
NASDAQ Sets Up A Massive Head and Shoulders Pattern - 14th May 20
Perceiving Coronavirus as a Disruptive Technology - 13th May 20
Why Financial Trouble Brews on the "Home" Front - 13th May 20
Stock Market ‘Sentiment Event’ Rally Grinds On - 13th May 20
The Fed Now Owns All Markets - 13th May 20
Fruit Trees Gardening to Beat Coronavirus Blues - , Apple, Cherry, Kiwi, Pears, Plums, Grapes, Bananas May 2020 - 13th May 20
Gold Investors Shouldn’t Be Losing Focus - 12th May 20
S&P 500 Bulls Again At Resistance – Now What - 12th May 20
US Fourth Turning Accelerating Towards Debt Climax - 12th May 20
Gold in the year of the Coronavirus Pandemic - 12th May 20
Hi Ho Silver : Away! - 11th May 20
The Great Stock Market Disconnect - 11th May 20
The Big Move In Silver May Be Right Now - 11th May 20
Finding Winners in the Wreckage of the Coronavirus Economic Downturn - 11th May 20
Brave New Corona World – A heated Debate between Steven Pinker and Aldous Huxley - 11th May 20
Coronavirus Catastrophe Stock Market Implications - 10th May 20
US Stock Prices are Ignoring the Economic Meltdown, Wait for it… - 10th May 20
Forecasting Crude Oil: This Method Has Been the Undefeated Champion Since 1998 - 10th May 20
Coronapocalypse and Gold - How High Is Too High for the Yellow Metal? - 10th May 20
The Illusion of Owning Gold - 10th May 20 - Nick_Barisheff
The Financial Crisis Will Continue To Lurk Even If the Lockdown Gets Eased - 10th May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

Stock Market Head and Shoulder’s? Where's Your Money?

Companies / Company Chart Analysis Jun 23, 2010 - 02:39 AM GMT

By: JD_Rosendahl

Companies

Diamond Rated - Best Financial Markets Analysis ArticleThe DOW trades lower today.  I’ve been waiting for the market to at least consolidate, and we’ve seen the beginning of that over that the past two days.  The market failed at the 50 day MA yesterday, and closed below the 200 day MA today.  The DOW closed at its lows for the day right at the 38% retracement level.  Price has failed at a level that qualifies for a right shoulder of a head and shoulders pattern, and caution on the long side is warranted.  See chart below:


There’s still plenty of room and time for the DOW to trade back and forth and push into one more little advance and create a topping pattern for the right shoulder.  I kind of like or favor this to occur.  A close below 10,100ish probably negates that view.

From My Trading Desk:

The Longs:

We’ve been following 5 stocks (CAT, CSX, COH, UNP, UTX).  We’ve traded them long recently, but we haven’t had an open long position on them for a few days.  We still hold the view of waiting to see low risk set ups.  That has turned out to be a smart strategy for low risk trading. 

COH:  The stock has rolled over.  I thought the stock might make a flag or handle pattern from its recent high, and the first 3 days of the decline it looked like we were going to get just that.  Patience paid because the past two days it has fallen sharply.  While it still could push into one more high, it actually looks like a possible short. 

CAT:  The stock failed yesterday at resistance, and looks like it has formed an Evening Star. 

CSX:  Also failed at resistance.  It too has an Evening Star.

UNP:  failed at prior high with an Evening Star.  I’ve label what could be an ABC flat pattern just for show.  I’m by no means trading that, but just wanted highlight a potential Elliott Wave Flat pattern. 

UTX:  Evening Star.

In the long side charts, we need more time to see if these stocks form flags or handles to initiate long trades.  It’s just too early for low risk trading.

We have to be cautious as conservative traders from the long side because we don’t know if the recent stock market weakness is a pull back into wave 2 or B, or a failure into a right shoulder of a potential H&S pattern.  Mr. Market likes to keep participants guessing.  It won’t take long to know.

The Shorts:

We still carry our shorts as I believe the market will soon fail, and the head and shoulders pattern will be real.  You could say, “I have a bearish bias longer term”.  I expect the stock markets to begin discounting negative data (head winds) coming our way by year end or in 2011.  As always though, we focus on the technical analysis for trading.

DAL:  I highlighted a potential H&S pattern several days ago, and the stock has broken down substantially today.  We have a half position short the stock, and are comfortable with that trade.  We also have solid bearish divergences both the MACD and RSI.  AND, we have a 3 Black Crows candlestick pattern.

MCK:  From my last update on our shorts, the stock has pushed into one more minor wave up, and might have complete wave 5 up with an ending diagonal.  We carry a full position short MCK.

SRS:  I opened a 1/3 of a position on SRS today.  The short real estate ETF looks to have formed a double bottom after making what looks like a wave 4 wedge pattern and wave 5 down.  I like the MACD structure and today seemed like a good time to dip our toe into the waters.

COH:  We have bearish divergences forming on the MACD on a very minor new high.  Yes, we took a half position on the short side.  We need more technical damage to the down side to increase that position.  If it closes below the up trend line and the gap in price, we have more significant price damage.

I’ll be the first one to admit, I’m more aggressive on the short or bearish side.  If I’m wrong, we’ll know in the next few days or couple weeks, and as a trader we’ll have to deal with it in some manner.  That’s trading!

Note:  Shorting is not for everyone.  It’s an aggressive trading strategy that just doesn’t fit the risk profiles of most investors.

Lastly, based on the price structure of the market, now is a great time for those who have buy and hold positions on the long side of the market to take some chips off the table to protect your net worth.  You might want to consider exiting all together or averaging out.

It’s not about what actually happens, but focusing on the risk in the market.  The risk is too great to be holding long term positions, and we have to manage risk first.  Even if the market makes another new high, which I doubt highly, I believe the stock market will be significantly lower this time next year.

Hope all is well.

By J.D. Rosendahl

www.roseysoutlook.blogspot.com

J.D. Rosendahl was a former stock broker/investment consultant (currently not licensed) before becoming a Commercial Banker for the past 14 years. He manages his family's wealth, helping them avoid the high tech bubble and the real estate bubble melt downs and preserving wealth.

© 2010 Copyright J.D. Rosendahl - 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 http://www.MarketOracle.co.uk - 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