Sold SDS at 33.60. A few ticks better than if I'd stopped out.
I like to fade nominal breakouts from chart formations if other considerations indicate the opposite. When Edwards and Magee were doing their work the concept of chart breakouts was obscure. Now, millions of investors base their decisions on them and their breakouts are more subject to reversal.
The breakout to 10,225 seemed ideal to this purpose. I miscounted and another wave up ensued which validated the head-and-shoulders breakout. If the rally continues tomorrow as indicated by the breakout then wave 2 will extend into next week, probably selling Tuesday. Of course, if the rally continues overnight then the top of wave B is a few hundred points higher.
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Steve,
ReplyDeleteIs it possible that the ABC was the move up from the lows (A) then the late day sell off yesterday (B) and this is up (C)? Also, today's S&P high hit the 200 DMA which many would see as potential resistance. Back out of the Money for today.
Charles
Steve
ReplyDeleteCould we be forming a right shoulder on the SP to 1130-1140 (would this value complete time and price) and then drop back to the neckline completing a 6 month H&S pattern with a potential drop to 950 or lower by 6/8?
Steve
ReplyDeleteI guess what I wanted to say is technically speaking which indicator is more accurate in trying to see into the future, the 200 day moving average(where we are now ) or comparing to another time in the past, the 1130 range?
Charles,
ReplyDeleteI count wave A complete. If this is correct and the 5th wave of A does not extend, then we should see a pullback. This would provide an opportunity to lighten up. Wave 1 from 4/26 is complete at an important low in an oversold technical condition. When the wave 1 low is broken it will break the back of the bulls. Every bear market has this seminal event. That low is the bull's Maginot line. In order for wave 1 to be "worked off" in wave 2 the DJI must go to at least 10,500. The H&S target is 10,600.
Jack,
ReplyDeleteI use 220-day, but I don't use it for strategy, merely another support-resistance level. I rely on the technical composite of overbought-oversold short-term indicators. This is +27 and is definitely in buy mode. I1 governs trader psychology. However, at critical juncture there are larger forces at work. Big fund managers are committing capital seeing a buying opportunity in a bull market. Biggs, Mobius, etc. are only the vocal ones. When the Feb low is decisively broken they will eat their capital but over the short term they are right.