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
Coronavirus Coming Storm Act Now to Protect Yourselves and Family to Survive COVID-19 Pandemic - 19th Feb 20
Future Silver Prices Will Shock People, and They’ll Kick Themselves for Not Buying Under $20… - 19th Feb 20
What Alexis Kennedy Learned from Launching Cultist Simulator - 19th Feb 20
Stock Market Potential Short-term top - 18th Feb 20
Coronavirus Fourth Turning - No One Gets Out Of Here Alive! - 18th Feb 20
The Stocks Hit Worst From the Coronavirus - 18th Feb 20
Tips on Pest Control: How to Prevent Pests and Rodents - 18th Feb 20
Buying a Custom Built Gaming PC From Overclockers.co.uk - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20
China Under Reporting Coronavirus COVID-19 Infections, Africa and South America Hidden Outbreaks - 12th Feb 20
Will USD X Decline About to Trigger Precious Metals Rally - 12th Feb 20
Copper Market is a Coiled Spring - 12th Feb 20
Dow Theory Stock Market Warning from the Utilities Index - 12th Feb 20
How to Get Virgin Media Engineers to FIX Hub 3.0 Problems and NOT BS Customers - 12th Feb 20
China Under Reporting Coronavirus COVID-19 Infections by 66% Due to Capacity Constraints - 12th Feb 20
Is Coronavirus the Black Swan That Takes Gold To-Da-Moon? - 12th Feb 20
Stock Market 2020 – A Close Look At What To Expect - 12th Feb 20
IBM AI Mega-trend Tech Stocks Investing 2020 - 11th Feb 20
The US Dollar’s Subtle Message for Gold - 11th Feb 20
What All To Do Before Opening A Bank Account For Your Business - 11th Feb 20
How and When to Enter Day Trades & Swing Trade For Maximum Gains - 11th Feb 20
The Great Stock Market Dichotomy - 11th Feb 20
Stock Market Sector Rotation Should Peak Within 60+ Days – Part II - 11th Feb 20
CoronaVirus Pandemic Stocks Bear Market Risk 2020? - Video - 11th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Stock Market Retests H&S Neckline, Perfect Setup for Opening Gap Down

Stock-Markets / Stock Markets 2010 Jul 07, 2010 - 03:26 AM GMT

By: Anthony_Cherniawski

Stock-Markets

Diamond Rated - Best Financial Markets Analysis ArticleU.S. stocks gained, with the Standard & Poor’s 500 Index rising from a 10-month low, amid speculation earnings growth will help equities rebound from their lowest valuations since the bull market began in 2009. (LOL!)

The S&P 500 climbed 0.5 percent to 1,028.06 at 4 p.m. in New York after jumping 2 percent in the first hour of trading. The Dow Jones Industrial Average gained 57.14 points, or 0.6 percent, to 9,743.62 to snap a seven-day losing streak, its longest since the financial crisis in 2008.


Cleveland Fed on GDP - Dreary Outlook

(ZeroHedge) The Cleveland Fed issued a report that looked at the historical relationship between lagged GDP growth and the steepness of the yield curve. They compared the ten-year with the three-month bill yield. They used this information to make a probability estimate for a double did recession. Not surprisingly, they concluded that the probability is only 10%. I would take that bet. If anyone in Cleveland is interested, let me know.

99 Stocks Account For Half Of Day's Trading Volume As Liquidity Concentrates In Ever Fewer Stocks

(ZeroHedge) The attached liquidity analysis by Abel-Noser indicates that the US stock market has now become a concentrated pool in which just the top 99 stocks account for 50.09% of total domestic trading volume. In June, the top 20 stocks accounted for 28.94% of all domestic volume, an increase of 2.2% over May's 26.7% and a record. The HFT algos are increasingly trading less and less stocks in their attempt to corner just the most liquid stocks. Indicatively, the top 978 names represented 90.01% of total domestic volume, while the remaining 17,597 accounted for just 10% of all dollars traded.

VIX tested short-term Support, makes a right shoulder.

-- VIX tested short-term Trend Support at 28.95 as I had speculated last Thursday and completed a right shoulder of an inverted Head & Shoulders pattern. Today is considered the last day of the positive seasonal influences. What follows is what is considered the four worst months of the year in the stock market. The CBOE Put-Call Ratio for equities ($CPCE) rose to .99, as retail investors didn’t like what they saw. The pros became more bearish as $CPCI rose to 1.64 at the end of the day. The 10-day average remains bearish at 1.51. The NYSE Hi-Lo index closed up 3 points today to -41. The Hi-Lo index remains at a low ebb, but could become extreme.

SPY attempted a retest of its Head & Shoulders Neckline.

Action: Sell/Short/Inverse -- Today SPY attempted to retest the H & S Neckline at 104.00. While it temporarily overshot to 104.37, there was too much selling pressure at 104.00. This constituted a 26.26% retracement of the last two weeks’ decline. Tomorrow is a pivot day and SPY (all equities, in fact) have a perfect setup for a gap down at the open tomorrow to kick off its third wave. I recall my trading activity in 2002, where I was surprised by a 3.77% rally on July 5th. It put me off my game for a couple of days as I was trying to figure out where it came from. Probably end-of-quarter retirement plan contributions.

QQQQ is heading for its own neckline.

Action: Sell/Short/Inverse -- QQQQ completed a 27% retracement today as it prepares to challenge its Head & Shoulders neckline at 41.00. It is also the lower trendline of the Broadening Top. A down-sloping neckline has higher probabilities for success and portends a larger decline, according to Thomas Bulkowski’s Encyclopedia of Chart Patterns (p. 290). If the pattern is followed through, the new target for this decline is 31.57. By the way, the average decline once the Broadening Top is violated is also 31.57. The NDX attempted but did not succeed in retracing to its neckline at 1775 today.

XLF made a second retest of its neckline.

Action: Sell/Short/Inverse -- XLF made a 32% retracement as it retested its Head & Shoulders neckline today. The next target is the lower trendline of the Broadening Top formation (in all likelihood) tomorrow.

FXI retraced 52% to hit short-term Trend Support.

Action: Neutral -- FXI retraced 52.65% of its two week decline to its short-term Trend Resistance at 40.28. This is the best retracement of all the ETFs I follow. Yesterday was its Trading Cycle low, so if it can manage to overcome short-term Trend Resistance, it is bullish. Otherwise, I await a breakdown below intermediate-term Trend Support to become bearish. $SSEC closed at 2409.42, nearly 100 points off its low. It also pivoted on Monday, so I remain stuck on the giant triangle that I have been following for some time. It poses a dilemma, since there is nothing but bad news coming out of China.

GLD may be ready for a brief retracement.

Action: Sell/Short/Inverse -- GLD completed an impulse in the daily chart and may be ready for a brief retracement. Current overhead resistance is at 117.40 and 118.86. The 38.2% retracement is at 119.07. I do not have any confidence in a strong retracement, although it could happen. What I do have confidence in is that GLD has now joined equities in what may also be a crash pattern in GLD. I do not envision a retest of the Broadening Wedge trendline at this time. The retest rate of a Broadening Wedge is only 21%.

USO broke below intermediate-term Support.

Action: Sell/Short/Inverse -- USO made a 27.8% retracement of its decline from 36.04, then gave up most of its gains. Although USO is very oversold, it can remain in that condition during the entire duration of its third wave. That is why many trading blogs are still looking for a rally, since they follow overbought/oversold indicators, which currently suggest a reversal. The cycles suggest otherwise. I have drawn in the neckline for a complex, triple-headed Head and Shoulders pattern. Once below 30.93 the minimum downside target is 19.67, while another calculation suggests as low as 17.80.

The reversal pattern in TLT looks ominous.

Action: Sell/Short/Inverse -- Last Thursday I reported a reversal pattern in the hourly TLT chart. Today the reversal pattern appears in the daily chart. This constitutes the best place for taking profits in an ending pattern. Friday’s pivot gave us the initial decline. The follow-on decline may take TLT as low as its intermediateterm Trend Support at 97.77. In addition, I am expecting a Primary Cycle bottom by the end of this week, which implies that all cycle supports may be broken by then. See ZeroHedge article.

UUP is ready to pivot.

Action: Buy/Long -- Tomorrow is a pivot day for UUP as it settled on its 38.2% Fibonacci retracement today. Today’s action may give us a new seasonal cycle, since this one has lasted since November 25, 2009. This has been an unusually long cycle, but the dollar seems to be the only asset left in rally mode. The pivot in UUP implies the beginning of a third wave higher while equities, bonds and commodities go much lower.

Tony

Traders alert:  The Practical Investor is currently offering the daily Inner Circle Newsletter to new subscribers.  Contact us at tpi@thepracticalinvestor.com for a free sample newsletter and subscription information.

Our Investment Advisor Registration is on the Web

We are in the process of updating our website at www.thepracticalinvestor.com to have more information on our services. Log on and click on Advisor Registration to get more details.

If you are a client or wish to become one, please make an appointment to discuss our investment strategies by calling Connie or Tony at (517) 699-1554, ext 10 or 11. Or e-mail us at tpi@thepracticalinvestor.com .

Anthony M. Cherniawski, President and CIO http://www.thepracticalinvestor.com

As a State Registered Investment Advisor, The Practical Investor (TPI) manages private client investment portfolios using a proprietary investment strategy created by Chief Investment Officer Tony Cherniawski. Throughout 2000-01, when many investors felt the pain of double digit market losses, TPI successfully navigated the choppy investment waters, creating a profit for our private investment clients. With a focus on preserving assets and capitalizing on opportunities, TPI clients benefited greatly from the TPI strategies, allowing them to stay on track with their life goals

Disclaimer: The content in this article is written for educational and informational purposes only.  There is no offer or recommendation to buy or sell any security and no information contained here should be interpreted or construed as investment advice. Do you own due diligence as the information in this article is the opinion of Anthony M. Cherniawski and subject to change without notice.

Anthony M. Cherniawski Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Jules
07 Jul 10, 11:36
Gap Down?

What happened to the gap down ?

Stock market rallied from the open !


The Chairman
07 Jul 10, 22:26
Third wave kick off fizzle!

"Tomorrow is a pivot day and SPY (all equities, in fact) have a perfect setup for a gap down at the open tomorrow to kick off its third wave. I recall my trading activity in 2002, where I was surprised by a 3.77% rally on July 5th. It put me off my game for a couple of days as I was trying to figure out where it came from. Probably end-of-quarter retirement plan contributions".

I bet you are wishing you didn't write that after SPY gained 3.15% today.. How's that gap down working out for you?


Post Comment

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

6 Critical Money Making Rules