Above we have an ascending triangle-not to be confused with an ascending wedge. The triangle is bullish, the wedge is bearish. In any case, it's pretty apparent on the SPY 1 min chart. The breakout came on increased volume (I'm not sure what the red spike was about) but this is a perfect- Technical Analysis textbook entry. It goes something like this, "let the market show you by price action-wait for the breakout". Most traders being a bit greedy will get in as soon as the formation is visible. The breakout is where the disciplined TA traders jump in. The stop, according to textbooks, goes right at the apex of the triangle, meaning a move below that you stop out. Well, whether or not this resolves to the upside or down, a bunch of traders who jumped in on the breakout just got taken out for a loss and the market maker on the other side of the trade made the gain.
As for how it plays out from here (the false breakout was a play of it's own), we'll have to wait, watch and see. Currently 3C has moved lower and would be around the $111.10 area on this chart.
Remember to review these charts, they are a wealth of information about how Wall Street works.
9 comments:
News Headline Summary
Fed's Bullard says Fed in position to provide more stimulus if needed
FED SPEAKER
Says:
- economy is unlikely to weaken enough to require more Fed help
- Fed would get most bang from purchases of long-dated treasurys
http://ransquawk.com/headlines/94926
So, basically, no more stimulus (wasn't the market hoping for this), unless things getting really bad (which the FED is an unlikely scenario). You gotta laugh at these bunch of organised criminals.
I think as much as we would like to believe that the market isn't entirely manipulated, it seems we have been seeing the same program over and over. We all know the market isn't healthy and the value as a whole should not be a levels of a year ago when we were starting to see the signs of the stimulas take hold. They say the market is forward looking and trades off that, but for the last 8+ months we have been trading solely on backward looking data and ignoring the forward. At some point that has to change, maybe today who knows. It is a little frustrating to sit by heavy with shorts, knowing that your trade is right, but someone with deeper pockets is keeping the brain dead patient on life support. As I type this we just broke another larger longer time frame wedge to the upside, hopefully it is the last one of the day. I'd like to go home for the weekend knowing I made a buck rather hoping I will make a buck. I'll call this my new normal Friday let out the steam session!!!!
Jack,
Yes, i know what you mean. I think we need a comprehensive 3C update to see where we are with this 'reversal', everyday 3C seems to suggest that it is in a leading downwards indication, but then everyday recently the market has gone higher and higher.
At the moment it doesn't feel like i'm following the 'smart money'. 3C says the 'smart money' has been selling into this 'bounce rally' from the get-go (i.e. when the DOW 'bounced' off right off 10,000, again) and/or laying shorts.
But it feels like instead of selling into the strength of the rally, the 'smart' thing to do would have been to buy into it and hold until it turned decisively.
By physics definition a 'bounce' cannot go higher than the point it was dropped from. It feels like we are fighting the FEDs freshly printed money here, i definitely don't think there is much retail in the market at all. Volume is awful.
As we all know a house of cards cannot stand alone forever and sooner a later an outside force will make it all crumble. Lets hope we see something soon before "hope and change" envirnoment of the administration make a house of cards rise to 14,000 again based on funny money and minipulation.
Honestly, if you were at the FED and you DID have the capability to do something, wouldn't the GDP trend be alarming enough for you to want to get out in front of it, because at the rate it's been declining, we are likely to see a negative number next quarter. I'd think even the thought of that would be cause for aggressive action now. I really think the Fed is bluffing.
Brandt,
But if the FED are bluffing and they do plan on more stimulus, surely that means good news for the market (and up), rather than market down as 3C suggests?
3C suggests the market is going down and precious metals are going down. Surely the only logical reason for both to happen is if there is no more stimulus (i.e. freshly printed money to make it's way into equities)?
The DOW had to go to around 7000 and SPX down to 666, before the FED huge amounts of dollars last time?
I think at this point we just need to take our licking, suck it up for awhile and see where the cards lay. Either it is paid for now or later. Later is just a much bigger mess with more debt. There is little that can be done now, because they spent a trillion dollars in a fashion that didn't accomplish much other than repay favors a buy votes. And look how long that lasted. We are over 200 trillion dollars in debt with unfunded liabilities, not to mention what the states owe. Most long term Dems are bailing out, not rerunning or trying to distance themselves from the administration. I think the FED knows the end is near, but wants to mitigate whatever they can until such time it can't.
I meant bluffing as in they don't have much more at their disposal otherwise they would have deployed it by now
Hi Brandt,
Thanks for the clarity! That makes more sense now! ;-)
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