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
South Korea Coronavirus Outbreak Data Analysis Warning Rate of Infection is Exponential! - 26th Feb 20
Gold Price Long-term Trend Analysis Forecast 2020 - 26th Feb 20
Fake Markets Are on Collision Course with Reality - 26th Feb 20
Microsoft is Crushing the S&P 500, Secret Trait Of Stocks That Soar 1,000%+ - 26th Feb 20
Europe's Best Ski Resorts For The Ultimate Adventure - 26th Feb 20
Samsung Galaxy S20+ vs Galaxy S10+ Which One to Buy? - 26th Feb 20
Gold Is Taking on $1,700 amid Rising Coronavirus Fears - 26th Feb 20
Is This What Falling Through the Floor Looks Like in Stocks? - 26th Feb 20
Gold Minsky Moment Coming - 26th Feb 20
Why Every Student Should Study Economics - 26th Feb 20
Stock Market Correction Over? - 26th Feb 20
US Bond Market Yield Curve Patterns – What To Expect In 2020 - 25th Feb 20
Has Stock Market Waterfall Event Started Or A Buying Opportunity? - 25th Feb 20
Coronavirus IN Sheffield! Royal Hallamshire Hospital treating 2 infected Patients, UK - 25th Feb 20
Dow Short-term Trend Analysis - Coronavirus Trigger a Stocks Bear Market? - 24th Feb 20
Sustained Silver Rally Coming? - 24th Feb 20
Should Investors Worry about Repo Market and Buy Gold? - 24th Feb 20
Are FANG Technology Stocks Setting Up For A Market Crash? - 24th Feb 20
Gold Above $1,600 Amid FOMC Minutes and Coronavirus Impact - 24th Feb 20
CoronaVirus Pandemic Day 76 Trend Forecast Update - Infected 540k, Minus China 1715, Deaths 4920 - 23rd Feb 20 -
Ways to Find Startup Capital - 23rd Feb 20
Stock Market Deviation from Overall Outlook for 2020 - 22nd Feb 20
The Shanghai Composite and Coronavirus: A Revealing Perspective - 22nd Feb 20
Baltic Dry, Copper, Oil, Tech and China Continue Call for Stock Market Crash Soon - 22nd Feb 20
Gold Warning – This is Not a Buying Opportunity - 22nd Feb 20
Is The Technology Sector FANG Stocks Setting Up For A Market Crash? - 22nd Feb 20
Coronavirus China Infection Statistics Analysis, Probability Forecasts 1/2 Million Infected - 21st Feb 20
Is Crude Oil Firmly on the Upswing Now? - 20th Feb 20
What Can Stop the Stocks Bull – Or At Least, Make It Pause? - 20th Feb 20
Trump and Economic News That Drive Gold, Not Just Coronavirus - 20th Feb 20
Coronavirus COVID19 UK Infection Prevention, Boosting Immune Systems, Birmingham, Sheffield - 20th Feb 20
Silver’s Valuable Insights Into the Upcoming PMs Rally - 20th Feb 20
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

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Stock Market Head and Shoulders Pattern: A Time Symmetry Pattern?

Stock-Markets / Stock Markets 2010 Jul 11, 2010 - 03:36 AM GMT

By: JD_Rosendahl

Stock-Markets Diamond Rated - Best Financial Markets Analysis ArticleThe stock market rebounded quite strongly all week and took the bearish tone off the market for now.  Something I wrote about a few days ago was the theory of the Time Symmetry Head and Shoulders Pattern.  See the daily chart of the DOW below.




The Time Symmetry H&S pattern, Bearish Case 1:  In the daily chart above we have bullish divergences on the MACD, with the recent cross up and turning to the upside with price.  That's pointing to a higher market near term.

A more bearish place for the MACD to roll over into a greater price decline is slightly above the zero line.  It's going to take a couple weeks for price to move the MACD into that position, which also fits the time symmetry H&S pattern.

The move higher in this view should be an Elliott Wave Zig Zag.  The first leg up looks impulsive, which leads me to the Zig Zag pattern.

The blue lines represent the time symmetry head and shoulders pattern.  If it turns out to be this view, than we should see a right shoulder forming around the end of July 2010.

I've added a 50% and 62% retracement box as the target for the pattern.  This is my primary bearish view for the time being.

Bearish Case 2:  The alternative count is something I'm sure a lot of you have seen, which is identified in the chart below.



Personally, I don't care for this view all that much.  Yes, it could happen, but this count by Elliott Wave analysts only takes into consideration price without indicators like MACD.  If this is the case though, there is very little time left before we rollover very hard because it's green wave 3 of black 3.

Note:  The bullish view is we've bottomed for the summer and we'll seek out a new high later this year.  Or, the down move from April just expands mostly sideways.

The weekly chart is below.  We see the weekly MACD has a little bearish divergence working off the April top, and has only just reached the zero line.  There's plenty of time and room for the market to bounce into a right shoulder and still allow the weekly MACD to continue lower over time.  Markets don't really sell off hard until the MACD is below zero.  Price has returned to the 50 week MA, and price is really in no man's land for the weekly chart.



If it's the bearish case 2:  The market should fail and roll hard very soon.

The monthly chart is below, and this is the true wild card in the bull bear debate.  A low volume bounce for July supports the bearish case 1 for a right shoulder of the H&S pattern.  Look closely at the monthly MACD, this needs to roll over to support either bearish case, otherwise it could turn higher and support one more new high.



That completes the my view of where we are on the market, the next few days and weeks should add clarity to the market.

IBM:  The stock has been on quite a strong move from the recent bottom, it looks impulsive so far, so even with a little pull back there should be more upside in IBM.  The bigger question has to be will it break out to the upside of its range?  That has implications for the overall stock market.



JNK:  The junk bond market recently broke above resistance.  I still believe the junk bond market is a great indicator of stock market health.  It's bullish above the top black line and there's a little gap in price to cover just above.  It's bearish below the bottom black trend line.



Gold & Silver:

$GOLD:  The price of gold has rolled over just a tad but no serious technical damage has been done yet.  That would require a breach of the trend line.  We do have bearish divergences on both the RSI and MACD.


The weekly chart below shows clear bearish divergences on the MACD with the current peak about to roll over.  A break below the black trend line would support the idea of price moving down to the blue trend line.

The monthly chart of gold below reflects the monthly MACD has yet to roll over, so this is the one chart the allows for further advances, maybe up to $1,300-1,500.  The one thing I get from this chart is the monthly MACD reflects no bearish divergence with the recent spike with price highs.  Even if we get the correction I think we are due, I don't think it's the end of the secular bull market in gold.



If the gold market is ready for a correction and the MACD is going to turn lower, it will take months maybe a couple of years for it to bottom out.  A correction in this view could be both price and time.  My correctional target for now is $700-900.



$Silver:  The weekly chart reflects the silver market looks a lot more tired than gold.  I've labeled what looks like an ABC pattern in silver with price targets from $7-14, yes it's that wide.  The MACD and RSI reflect divergences, and the weekly MACD is about to roll over.

From My Trading Desk:  For more charts on individual stocks, trades, and things we are watching for future trades come to http://roseysoutlook.blogspot.com/

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