Charts I’m Watching: January 17, 2012

UPDATE:  12:00 PM

There are a few alternatives for the 1307-1313 target we’ve been watching for a while.   I’ve always thought the trend line coming off the May 2 high would be important if the analogs we’ve been watching gave up the ghost. 

And, I’ve always given a range is because it matters whether you include the shadow or not.   The two relevant candles are May 2 and July 7, so there are four possible combinations shown below.  The current values of each TL:  1303, 1315, 1318 and 1331. 

 Obviously we’ve tagged the lowest, marked in white.  It’s been my preferred target because it crossed the .786 Fib line in December — the time frame in which I last expected Wave 2 to be completed if it extended beyond my original expectations (which it obviously has.)   The combination of the TL and the Fib level formed the basis for my target.

It also comes closest to matching the channel lines that have shaped the past year (shown in yellow).  Actually, a TL off the July 7 high to today’s high almost exactly matches the slope of those channels.

So, is this the TL that matters?  Is Wave 2 finally done?  Note that this morning’s high also matches the TL coming off the 2010 pattern which tags the March and June lows (in purple.)  In past topping patterns, there were usually similar TLs winding their way through and dictating Wave 2 turning points.

More later.


Looking for clues for the turn…  focused on financials this morning.  Citi just completed a nice little Gartley at the .786 Fib on the 60-min chart.

And, XLF testing last weeks high with a small Bat pattern that should peter out at the .886 (ignore the overnight pricing.)

BTW, WFC reports an increase in earnings of $700 million, with a $600 million reserve release!?  Total garbage.   It overshot its Crab just a bit on the headlines, but this loser should crap out once investors dig a little beneath the surface.

It’s very frustrating to see company after company get away with posting results that deliberately misstate reality.   Shame on them and the complicit “regulators” and “analysts,” and shame on the investors who believe the headlines.

Speaking of  duplicity, Goldman is retesting the trend line that’s rebuffed the past several attempts to break out on the upside.  You could make a falling wedge out of this pattern, which would be potentially bullish.  But, the more likely guiding pattern is the steep channel pointing towards the Bat completion at 64.

And, last, this from Experian, which reports an increase in first mortgage default rates from 1.9% to 2.19% since August, even as credit card defaults fell slightly.  Apparently, the anecdotal stories balancing their budgets by not paying their mortgages are true.

I’m pretty sure the Fed’s bailout efforts (buying toxic mortgage debt from the banks otherwise on life support) will do little to reverse this trend.

More later.


Charts I’m Watching: January 17, 2012 — 6 Comments

  1. the last bit of Jupiter energy passing through the Taurus sector that can hold up this market is up to around 29 Feb – 7 Mar 12. After which, nothing positive is in sight from the astro perspective to be able to hold back the repeat of the Aug 9-11's Uranus square Pluto energy due 24 Jun 12.

  2. Talk about divergence. The VIX is up big today and was barely negative when the market was at 1303. Maybe that was the last gasp for air before this market slowly drowns or a fast plunge will be nice. But what do I know?

  3. CM: the charts are saying we're topping here. Look at VIX & the financials. We're clearly running out of last gasps.

    Could be push up higher on light volume as a follow through to another overnight ramp? Sure. 88 put it perfectly when he said it's a big stinky turd. But I'd rather be short than long here. The only question in my mind is whether TPTB can keep playing this game until OPEX Friday.

  4. cm,
    pw doesn't know, obviously. no one does. it's a big stinky turd and everyone has some stuck to their shoe.

  5. with today's 1303, do you think the target is hit for this final thrust, or there is still some bullrun left before the last bear is squeezed out of their short pants?