Waiting for the inevitable gap n' flush
Now approaching a golden cross on the 30min... look what's happened every time that's happened during this correction. A day where we gap up, followed by several days of red. I'm expecting this week to be no different.... Traders have been eyeing this $257-260 area of resistance for weeks now and we can see from various different channels and trend lines that it's getting set up for a rejection from these levels.
Convergence of resistance lines from the chart:
1) The orange line is the neckline from the larger 2018 H&S pattern
2) The yellow line is the 200DMA on the hourly
3) The red dashed line is the midpoint of the HUGE downward channel for most of 2018
4) 260 is the October low as well as the intersection of the current ascending channel as well as a larger descending channel that makes up all of December. (I consider the days near the holiday lows part of a pattern bust and expect this channel to eventually resolve into an inverse H&S.
5) Every correction of this magnitude in the past 15 yrs (or even less) has resulted in a retest of lows within weeks (at most 2 months)... why should this time be any different?
Fundamental reasons:
1) I don't expect a slow crawl towards this resistance, traders are too skiddish and all have PTs here and will start dumping... it will take some kind of "news" catalyst... speaking of which...
2) We have China trade negotiations right now so the time is right for the crooked financial news media to trot out some optimistic fluff piece to goad poor Joe Retail to buy NFLX despite it going parabolic for the past several days and has nothing to do w/ trade/tariffs.
3) The AAPL earnings revision is a foreboding sign to most traders and it's likely even the bulls don't want to hold through earnings season. Jan 14th is when it starts, I expect dumping to commence this week though.
4) The fact that the boarder market is marching upwards on light volume despite FB/GOOG/AAPL sitting still or in the red should be a signal that a short term top is near.
What I'm looking for:
1) Watching for a death cross on the 15min... That's the sign that this thing is gonna roll over. Both the 50 and 200 still running parallel right now though but this could change quickly.
2) The inevitable pump piece that "jumpstarts" this one day rally that will be the beginning of another leg down. (think trade war truce of early dec)
3) 50+ RSI on the daily... you can't have a solid down move without some optimism first.
4) VIX to fill the gap @ $20.60.
Convergence of resistance lines from the chart:
1) The orange line is the neckline from the larger 2018 H&S pattern
2) The yellow line is the 200DMA on the hourly
3) The red dashed line is the midpoint of the HUGE downward channel for most of 2018
4) 260 is the October low as well as the intersection of the current ascending channel as well as a larger descending channel that makes up all of December. (I consider the days near the holiday lows part of a pattern bust and expect this channel to eventually resolve into an inverse H&S.
5) Every correction of this magnitude in the past 15 yrs (or even less) has resulted in a retest of lows within weeks (at most 2 months)... why should this time be any different?
Fundamental reasons:
1) I don't expect a slow crawl towards this resistance, traders are too skiddish and all have PTs here and will start dumping... it will take some kind of "news" catalyst... speaking of which...
2) We have China trade negotiations right now so the time is right for the crooked financial news media to trot out some optimistic fluff piece to goad poor Joe Retail to buy NFLX despite it going parabolic for the past several days and has nothing to do w/ trade/tariffs.
3) The AAPL earnings revision is a foreboding sign to most traders and it's likely even the bulls don't want to hold through earnings season. Jan 14th is when it starts, I expect dumping to commence this week though.
4) The fact that the boarder market is marching upwards on light volume despite FB/GOOG/AAPL sitting still or in the red should be a signal that a short term top is near.
What I'm looking for:
1) Watching for a death cross on the 15min... That's the sign that this thing is gonna roll over. Both the 50 and 200 still running parallel right now though but this could change quickly.
2) The inevitable pump piece that "jumpstarts" this one day rally that will be the beginning of another leg down. (think trade war truce of early dec)
3) 50+ RSI on the daily... you can't have a solid down move without some optimism first.
4) VIX to fill the gap @ $20.60.
Now tracking to see if it breaks down past the 15min 50DMA, if it doesn't bounce there, a test of the bottom of the current channel is all but assured because that's where the 200DMA is.