Today's strong start to the day got me thinking about the potential for the grandaddy of them all - the head and shoulders top. We're "due" for a bear flag of some magnitude so it's not unreasonable to think today could be the start of a rebound. With that being said, it may still be sold off entirely in the last 2 hours of the day. Bears are growling, after all.
Just as with the Christmas rally that lasted from Dec 20th to the end of the month......all that has to happen to get a rebound is for the bears to stand aside and do nothing. Volume will wane just as it did then, because the subsequent upwards price action was only supported by a fraction of the market. The bears weren't at all convinced but were willing to stand aside for the holiday season and drink egg nog or whatever. The calender year turned over and RAWR they jumped right back into selling mode with a vengeance.
It's just a thought, and a rather far-fetched one at this point in time. Perhaps SPY will just continue to slide into oblivion. But if we do get a rally, be VERY wary as it nears the height of that first shoulder. Remember, survival is the key. Now is most definitely not the time to swing for the fences if you're looking to buy the dip.
Good luck!
Just as with the Christmas rally that lasted from Dec 20th to the end of the month......all that has to happen to get a rebound is for the bears to stand aside and do nothing. Volume will wane just as it did then, because the subsequent upwards price action was only supported by a fraction of the market. The bears weren't at all convinced but were willing to stand aside for the holiday season and drink egg nog or whatever. The calender year turned over and RAWR they jumped right back into selling mode with a vengeance.
It's just a thought, and a rather far-fetched one at this point in time. Perhaps SPY will just continue to slide into oblivion. But if we do get a rally, be VERY wary as it nears the height of that first shoulder. Remember, survival is the key. Now is most definitely not the time to swing for the fences if you're looking to buy the dip.
Good luck!
Comment:
Not only didn't today's strong start carry through, it had one of the worst intraday reversals in recent memory. So dont worry about a H&S pattern being formed if we can't get the right shoulder going. The selloff has carried into afterhours, which is very very rare. QQQ down another 1.3% after 45 mins, and the megacaps are being sold off. This is a sign of panic selling as the spreads afterhours are generally regarded as unacceptable.
Comment:
Well, the smaller head and shoulders pattern is blown, but if you look closely you can see there's a larger head and shoulders pattern, where the head is comprised of the left shoulder and head together, and the left shoulder on the bigger pattern has it's bottom at $426. Either way, at some point we're going to get a spike up. Vertical ascents aren't sustainable, but neither are vertical descents.
Comment:
Got the spike up the very next day, although we have quite a "dislocated" right shoulder! It would appear it's still relatively the same height as the left shoulder, just in the wrong position. It appears to be stalling out as well, and I am re-asserting my conviction that it's going to continue to fall below it's previous low.