SPX rallied nicely off the bullish Gartley completed yesterday.
For anyone not convinced that harmonics work, take a look at where it reversed — .22 from the D point indicated by a Gartley pattern at the .786 Fibonacci level.
Like many, I have been trying to make sense of the structure of the market over the past week. We declined farther and faster than in 2007, and most significantly, without much of a pause at the lower end of the regression channel.
I’ve been undecided as to whether the rebound should adhere to percentage or absolute price moves. The fact that we’ve stayed in a trading range — albeit a 70-pt one — for the past several days has further complicated things. It’s been nice for day-trading, but I’d be more comfortable with a sense of when/how we’ll break out.
I’m leaning toward regarding the past week as the equivalent of the Jan 7-14, 2008, meaning this is our big bounce back, and we shouldn’t expect any more. I’m not certain about this at all, but we are completing an obvious rising wedge and a bearish crab pattern on the day.