UPDATE: 11:30 PM
What a difference the Oct 27 spike made…
Note how perfectly the yellow fan line off the Mar 09 bottom intersected with the fan line off the Oct 07 high — all at the apex of a big, fat rising wedge.
Then October 27 came along, providing a slightly different trajectory for the rising wedge and, as a result, causing the fan line from 2007 to miss. The new fan line from Mar 09 carries pushes the rising wedge apex up and out in time. It’s made a difference of 35 points and two weeks.
UPDATE: 5:00 PM
Gold continuing to show weakness after breaking the RSI trend line. The critical tests will be breaking out of the little purple channel and then taking out Fan Line 3.
If those should both occur, we could see a dramatic drop to complete the Crab pattern at the 1.618 extension of 1203.
UPDATE: 2:30 PM
Keeping a close eye on NDX, which should reverse course at 2571 – 2575, the confluence of three Butterfly patterns — one going back to 2007 and the others three and six months old.
The NDX’s rise is all AAPL today. Like SPX, the leadership is becoming more narrow and volume smaller by the day.
The 2nd biggest component, MSFT (intra-day high = 30.8) faces a flaccid future. It completed a big Bat (purple) at 30.53. It’s also running into a Butterfly completion (yellow) at 31.54 and a second, small Butterfly completion (red) at 30.84.
Two weeks ago, a Butterfly stopped INTC cold. It’s currently clinging from a crumbling cliff, right at the 1.618 extension of 26.93.
Note that it was clobbered at the more common (for Butterflies) 1.272 extension at 25.27, only to recover and climb up to the 1.618. Crabs sometimes go higher, reaching extensions of 2, 2.618, 3. 3.618, etc. But, Butterflies are stuck with 1.272 and 1.618. Bad news for INTC and NDX.
UPDATE: 1:00 PM
VIX, which has been carving out a massive falling wedge for months, showed signs of breaking out today.
The rate of change just turned positive and is threatening to break another TL on the daily chart.
A few of the go-go stocks are lending credence to the fact that this rally is simply overdone…
|SBUX RW – out of room|
|CMG RW, Massive Divergence|
|AAPL Crab going for 200?|
|GOOG Negative Divergence|
|WFM RW, Crab and Neg Divergence|
Then, there’s COMP itself.
And, perhaps my favorite chart, the RUT. It sports a touch of the fan line from Mar 09 (dashed), a completed Crab (yellow), a completed Bat (purple), a completed rising wedge (dashed lines) and a tag of the May 2 trend line — all on negative divergence and falling volume.
This is about as bearish as you can get and, as a broad based index, is much less susceptible to overly narrow advances and manipulation than SPX, COMP or DJIA.