Thursday, September 16, 2010

9/16 Daily Commentary

We got the spike. Extended trading ranges are ripe for false breakouts.  Tonight the blogs are alive with the sound of music. 
Cash did not hit the 10,608 where I had my orders.  However, in the final 30 minutes all of the indices went into triangles.  The breakout occurred after cash closing.  The good news is that this points to the end of the spike.  Triangles are end-of-move patterns.  I covered my DJ futures at 10,522.  I got back short at 10,550 with a stop at 10,571.  Why would I fight a new DJI high, especially a DJI closing above a prior intraday high?  Apart from expecting a spike to clear the remaining bears from the field, the SPX provides my answer.  
The SPX and SP futures both held at the 4-day and 3-month trendline off of their highs.  In fact SPX closed beneath the prior hourly high and Monday's and Wednesday's hourly highs as well.  Here is the SP futures trendline, which was hit and slightly exceeded after the cash closing:

So far in futures trading the count is complete for the triangle breakout.  There has been an expanded flat top with a high of 1124.50, equal to the June high. 
The cash equivalents of the above data points are:
June SPX high:    1131.33
DJI short point:   10,615 is cash equivalent of 10,550 DJ futures
It is important for futures to peak and decline overnight in order to bring cash DJI back within range.

A genuine breakout will occur at Dec SP futures exceeding 1126. This will be the futures equivalent of the SPX high in June 1131.33.  This is close by. The high of the session if 1124.50.


  1. Chart: ES
    Daily chart shows a bearish Gartley Pattern with the final overthrow appearing complete. Good luck!

  2. Chart: ES

  3. per my charts the DJI has gapped up to 10,630.

    So do you consider that a breakout and so out of the market?

    Is this thing ever going to turn?

  4. As long as SP futures hold below 1127 overnight this is OK. I expected a spike to clear out the bears the longer this congestion went on. The key is whether or on DJI returns to range by the cash session (in other words the spike occurs only overnight).

  5. Steve
    I'm awaiting the turn like the rest of us. Just an FYI, one of my timing turning points comes on Saturday. I wonder if we have to wait until Tuesday's Fed meeting?

  6. We just broke through the 1126 barrier on ES. Japan's fiddling with their currency is providing the push. This may go on till they get dollar to 90 yen I hear.

  7. Damn close to 1127 now

  8. I hope i dont see an inverted head and shoulders forming on weekly s&p futures :(

  9. Well out-of-hours is surging ahead, Ill hold my shorts and see what happens by US open.

  10. gi61et posted a cyclic chart on Tuesday or Wednesday that showed alternative cycle dates on 9/22 and 9/23. The cycle that includes a 9/23 date has corresponded to market turns in all but 3 dates in the year or so shown on the chart.

    Not sure, but 9/22 and 9/23 might be the dates shabs was referring to also.

    Steve, there is a bear count out there that has Minor II as a single or double zigzag, where we are now just starting the final leg of a [C] or [Y], so that a high over 1129.4 would be required.

    This might explain better why we didn't see a low below 1010 in the past month. Tomorrow will be fascinating.