LEONES
Short

E-Mini S&P 500 towards 1500 - Part2

263 13 2
Higher high on Friday the 5th of July 2013             after positive US employment reports. S&P 500             is in a critical point. A trade higher than P4 on monday the 8th of July will imply a resumption of the bullish trend towards the up-sloping median line . A trade lower will probably project the price towards the next support level 1530.00 and this is where another correction could happen.
Bulls
Reply
Two red flags are suggesting major top:

- Too high valuations of stocks fundamentally unjustified (P/E ratios is one example) = Prices are unjustified
- Margin debt levels

It's just that market will continue to go up until it doesn't anymore, momentum players and HFT pushing prices higher regardless of macroeconomic factors. If i am right, prices should react aggressively to resistance and come back lower, confirming distribution channel and players acting in this market, confirming unsustainability of this break of decade wedge. From the technical point of view, although prices have broken trough this wedge, i thing it's just and enormous bull trap, it has historically happened twice and prices experienced correction.

- Another factor in favor of this scenario is the presidential election cycle (which favors peak this summer and correction into fall of 2014), and telling us market won't sustain breakout until 2015/2016. but i am not an expert on that subject so i am not considering anything serious here. Although this is very interesting since it concurs with contraction Fibonacci spiral theory that suggest price correction in 1987, 2000, 2008, 2013, 2015?, 2016? (13-8-5-3-2-1), and 16 being the supposed end end of cyclical bear market in order to begin a new bull market? aligned with this presidential election cycle factor...but that is another story and purely experimental. But since i am speaking about it i prefer to measure cyclical from bottoms and not tops. GLD could be good example if we get major bottom this year. That would be historical rebound of the metal in 2000, 2008 and 2013 making the contracting Fibonacci spiral an even more serious factor to consider in the future from my point of view.

Reply
Antos, which wedge are talking about and how did you define the price corrections in the years you have mentioned
Reply
BEI LEONES
I am sorry, the correct technical term is megaphone pattern. Very rare but reliable patterns. here is the chart attached.
snapshot
Reply
snapshot
Reply
i like your analysis here since it is a more complex scenario that would tend to hurt/frustrate more bulls and bears and cause confusion before the real top occurs. If our next top is a major one then it makes sense that the distribution process will take more time and be more complex than prior ones.
Reply
LEONES PRO MaxxPayme
I agree, Antos could be right. If we test 1700 the price could come down back to the parallel line and start moving in a range.
Reply
Zoom in:
snapshot
Reply
we are in uptrend i would keep thinking bulish as long as 1632 broken and 1580 still hold
Reply
meh.. Looks like a throwback not an uptrend.
Reply
United States
United Kingdom
India
Deutschland
España
France
Việt Nam
Italia
Polska
Brasil
Россия
Türkiye
Indonesia
Malaysia
日本
한국
简体
繁體
Home Stock Screener Forex Signal Finder Cryptocurrency Signal Finder Economic Calendar How It Works Chart Features House Rules Moderators Website & Broker Solutions Widgets Stock Charting Library Priority Support Feature Request Blog & News FAQ Help & Wiki Twitter
Profile Profile Settings Account and Billing Priority Support Ideas Published Followers Following Private Messages Chat Sign Out