Note: I updated the charts for NDX and NYSE last night. I’ll post EURUSD, DJIA and RUT later today.
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Another day, another gap opening…
As we discussed late in the session yesterday, SPX was smacking into resistance on the 60-min RSI chart.
The futures are off big on more fears out of the eurozone and euro weakness.
But, I wouldn’t necessarily chase the downside here. For those who shorted on the close yesterday, I’d take profits at around 1550-1551.
UPDATE: 9:45 AM
SPX bounced at 1551.90, good enough for me.
But, keep an eye on the 15-min RSI. This TL should be a good guide. It was slightly broken a few minutes ago, but the bounce off of 1551.90 brought it back in line.
Stops around 1550 ought to do it for a long position here. Thankfully for the bulls, the NAR reports pending home sales at 10:00AM. I can’t remember the last time the world’s most optimistic economists delivered bad news.
UPDATE: 10:05 AM
Pending home sales were off 0.4% from last month (versus Briefing.com’s +2.0% estimate), but up 8.4% from Feb 2012. The slowdown is being blamed on lack of inventory and capital for builders. The market is hanging in there so far, so I guess we’re focusing on the 8.4% number….
UPDATE: 10:25 AM
EURUSD should get at least a bounce here, lending support to a last spurt for SPX. Note it has reached the .886 retracement of the run up from Nov-Feb (1.266 to 1.3710.)
UPDATE: 11:55 AM
The 1551.90 low held nicely, and SPX is off only a little over 3 points at present. We should get a little pullback here, as we’ve reached the .786 retracement from yesterday’s high (small white pattern.)
Just noticed that each of the recent bottoms, when taken as the starting point of a measured move, points to the same place: 1566-1569. A measured move is essentially an A-B-C move where the C wave is the same as the A wave.
In most cases, the B wave is a Fibonacci retracement of the A wave (.382, .500, .618, etc.) In a wildly gyrating market such as we’ve had since Mar 15, the retracements run bigger (.786 and .886.)
UPDATE: 3:30 PM
SPX continues to go our way, could turn positive any minute. Will it finally push through today, or is this another fake out?
continued for members…
SPX continues to look more and more like an ascending triangle. According to Bulkowski, these break upwards 70% of the time — usually around the .618 time Fib. I’ve charted one below in white, with the time Fib in red.
The .618 roughly corresponded with yesterday’s 1563.95 high. Now, we’re closer to the .707. But, it’s all good… If prices are going to break any records today, the red, dashed TL below should remain unbroken.
With Q1 ending Friday, I imagine TPTB will try to avoid an unseemly meltdown that would mar their glossy reports. Still, I have an image in my mind of a quick, intra-day tag of 1576 and very little follow through — unless the 1972 scenario plays out.
I would also be surprised if it happened in an orderly way, right out in the open for everyone to see. I expect it to occur on a gap opening, or a revised close, or something of the sort.
However it plays out, I imagine we’ll get a substantial pause or pullback at the double top.
Tomorrow is a big economic data day, so there’s plenty of catalyst material:
Look for charts on EURUSD, RUT and DJIA later this afternoon.
Comments
5 responses to “Charts I’m Watching: Mar 27, 2013”
Hi PW, a question about Gartley’s- If we consider the low on the 25th to be X and the high yesterday as point A, the downdraft this morning overshot the 61.8% retrace by a little bit. Does that overshoot rule out a Gartley, or is close good enough? (and would that then target the 1548 or so level?)
Very good question. That drop to 1551.90 should have stopped at 1552.99 to be exactly .618 (Gartleys are supposed to be pretty exact.) So, I’d give it better odds as a Bat Pattern — which ultimately retraces to the .886 (1548.24 in this case) if 1551.90 fails. Bat Pattern Point B’s can range all the way up to the .886.
Frankly, there are so many competing patterns here that it’s become a garbled mess. It’s definitely coiling, as we now have a series of 5 successively higher lows to go with the schizophrenic highs. It’s starting to take on the shape of an ascending triangle — which break upwards 70% of the time.
Quick follow up question- according to the bat section of the learn tab above, it says that the AB leg must be shorter than .618, whereas today’s drop was longer. Anything I’m missing here?
No, I was. I meant Crab Pattern but typed Bat Pattern. It’s moot, though, since today’s high exceeded that potential Point A by 12 cents — though on rare occasion, I’ve seen C roughly equal to A.
Thank you!