Charts I’m Watching: Jun 28, 2013

Note to members:  I posted some good charts on VIX early this morning, so check those out if you get the chance.

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Last, I’ve been giving a lot of thought to how the website will look after the fund launches.  I’ve wrestled with the existing format, as it’s difficult to accommodate swing traders, day traders, and infrequent traders.  I sometimes get too mired in the intra-day trades for swing-traders taste, and the day traders want more, quicker, set-ups throughout the day — not less.  Look for a new post dedicated to membership issues tomorrow morning.

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The futures are down about 5 points this morning, but might have found support at a channel line and .500 Fib after being turned back by a .618 Fib yesterday.  If they bounce back, however, is it just a backtest of the purple channel from last November?

The EURUSD certainly appears to be backtesting a recently broken channel line, and it appears to have more room on the upside.

SPX, having squandered an excellent chance to complete an IH&S that would take it up to backtest its broken purple channel, is fleshing out the grey channel we theorized would take over.  It just bounced on the .25 line – but after slipping through the key TL (red, dashed) from 1994/2002.

I’ll take the opportunity to short on the backtest if it fails to retake it.

UPDATE:  9:55 AM

It did, so I’m playing the short side — probably to 1598/1600 as we discussed yesterday.  Here’s a better look at what could end up being a flag pattern if the bottom of the grey channel holds.

UPDATE:  10:00 AM

Might be a tad early, but I’ll try a long here at 1602.40.

If 1560-1620 is A and 1600 is B, then C would be at 1660.  The .786 Fib of the slide from 1687 to 1560 is 1660.  Coincidence?  I think not.

As we discussed in the members section yesterday afternoon, a flag gets us back to the .786 or .886 Fib just as easily as the two H&S patterns would have — a little more easily actually.

But, first, SPX will have to slog back up through the TL from 1994/2002, bust out of the falling red channel and deal with the bottom of the purple channel — meaning either a brute force assault (a.k.a. ramp job overnight) or a slow choppy slog higher until the channel bottom reaches the .786 — around mid-July.

If you’re a bull, you have to be a little concerned that yesterday’s moon shot came within 8-12 points of the purple channel but couldn’t close the deal.  If you’re a bear, you’re positively giddy — but know how quickly that feeling can pass.  Me?  I’m a Gemini.

UPDATE:  10:44 AM

SPX has reached the red TL from 1994/2002 again.  A little .786 pullback from 1610-1611 to the intersection of the grey channel bottom and red midline (1603ish) would make for a nicer looking flag pattern.  A failure to retake it would be a sign that we’re falling back to 1586-1593 (always use stops!)

UPDATE:  11:15 AM

SPX poked up through the TL easily enough, and just tagged the grey midline at 1615.64 — very close to a .786 retrace of yesterday’s high.

I’ll take a short-term short position here for a pullback: either a retracement back to the red channel top at 1609, the grey channel bottom at 1605-1605… or possibly much more.

If that sounds a little nebulous, it’s because we’re at another one of those lovely turning points.  I’ll explain further in a moment.

Just want to point out there’s a potential little IH&S in the works that, if it plays out, points to 1631 (a shadow of the purple channel bottom.)  Ideal right shoulder would be a backtest of the red TL around 1610.

This makes stops on the short position around 1616 a very good idea.

Okay, big picture stuff…  the rise from 1560 to 1620 was roughly a .618 retracement of the drop from 1654 to 1560 — the red pattern below.  When we get a significant reversal at a .618 point, it opens up the possibility of a Gartley completing at the .786 (1634 in this case), a Bat at the .886 (1643) or a Crab at the 1.618 (1712.)

Each of those possibilities carries very different implications for both price and time, so we’ll examine them in the context of what currencies and VIX are telling us.

continued for members


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