Charts I’m Watching: February 23, 2012


SPX just completed a little inverse H&S; pattern that points toward 1372 — the same level as the inverse H&S; and just above the May 1370.58 high.  I don’t know whether we’ll exceed 1370 or not, but it’s a watershed mark for investors — especially those who care about Elliott Wave theory.

This morning’s attempt at a sell off had no juice behind it, and the bottom of the rising wedge held once again.  Hitting 1372 would take us back to the upper bound of the rising wedge.  And, the beat goes on…

VIX is off 1 pt as of this writing, taking prices as far south on the falling wedge as possible with re-entry.  On the other hand, there’s a TL on the RSI that supports the idea of a bounce.  And, divergence is positive on both the daily and the hourly charts.

SBUX trying to rally, but the 60 min channel is holding so far. 

The problem is the daily RSI TL, which looks like it’s not ready to break just yet.

I’m closing the rest of my position for a slight loss and will try to reenter on the back test around 49.


Re XRT, off the cuff I think the magic number is 64.44.  There are overlapping Crab patterns that both point to the same price at their 1.618 extensions, and the rising wedge has plenty of room to accommodate it.  The RSI and MACD would argue for a turn here, so maybe we see a dip along the way (59.96 @ 1.272?) to set up some negative divergence for the final push.


Charts I’m Watching: February 23, 2012 — 7 Comments

  1. Just a ridiculous run in the likes or ORLY, AZO, PCLN, etc.  Probably all comes together prior to a peak in crude oil.  Looks like a target of 43.50 or so on USO? 

  2. IGWS there's no guarantee, but we just broke a TL connecting the June '07 high and July 11 high.   If we get a big whoosh in the overall market, I can't see a 10% increase in retail.  An SPX top in the 1370-1380 range, for instance, would probably mean a $60 top for XRT at the 1.272 — not protocol for a crab, but likely.

  3. Urghh..a really annoying day. Yeah, most of all, the down moves are just so very weak. Until we get a dow intra day move of -175pts…any up cycle will merely negate EVERY single fall we get.

    VIX again getting dangerously close to setting a new low. Clearly the lunatic bulls will get hysterical if VIX 15s…since that does obviously open up even the 13s or lower – which would certainly equate to Sp'1400+.

    Sick nasty market, it won't last forever, but it certainly is again trying to nuke every bear out there.

    …maybe its just a sign of capitulation and we'll start to trend lower, although the mood at sp'1300 felt just as bad as it does here. 

    As for EW theory.

    I been saying all along, if the May 2011 high is violated across multiple indexes, then the chart maniacs (myself included) will have to throw out EVERYTHING since last summer.

    Then a million questions arise, 'what the hell was all that action from last May to October, and then what about the move back up?'

    I myself, following the NYSE big index, that is still way below the summer 2011 high. Arguably, as an index, it outranks even the SP'. The dow index is a joke of course, too few stocks, and very easily manipulated.

    Maybe the EW people should focus on the bigger indexes more. I know Daneric often mentions the Wilshire'5000. Added a chart of that, its real close to breaking the summer high. Hmm….

    Tomorrow..could be pivotal…but then..I seem to say that everyday.

    Good wishes Pebble!