Charts I’m Watching: March 22, 2012

ORIGINAL POST: We’re finally seeing reactions on the harmonic pattern completions we’ve been watching for what seems like forever [see: Everything’s Coming Up Crabs.]RUT completed a Crab Pattern (in red) within the last leg of a Bat Pattern (purple) off the 2011 highs.  It never has cleared the TL off the May and July highs.  The May 2011 high was a double-top to 2007’s.

COMP completed a tiny Crab within a little Butterfly pattern and tagged a key trend line off the 2007 highs.

I call it a trend line because it’s exactly parallel to the line connecting the 2002 and 2009 lows.  A reversal here would make for four touches — i.e. a channel.  But, COMP could continue bucking its bearish divergence and go up to complete the larger Butterfly pattern (purple) at 3250-3295.

DJIA still hasn’t made a new high since completing a Crab Pattern a stone’s throw away from a Butterfly Pattern (purple) completion at 13,338.64.  We’re still watching for a clean break of the rising wedge in the price chart and the trend line in the RSI chart.


Though, it’s important to note that, at these prices, we came within 28 points of completing a Bat pattern (yellow) at the .886 (13,317) in the weekly chart.  That would make for a logical back test if/when the rising wedge finally breaks.  It might also be the 5th and final wave target if today’s move stays within the wedge itself — which is just as likely.

Coming up….SPX.


Charts I’m Watching: March 22, 2012 — 4 Comments

  1. Hmm, crabs, butterflies and all sorts of things…

    Pros' infinately smarter than me are calling for further rises. Its only March after all, we can easily trundle up some more from here.

    (the point someone else noted to me Thursday, 'bears running out of gas'.

    Maybe its just a slow starting decline, that leads to waterfall – ala July'2011 style, shrugged off the Greek mess, and what is the next real threat?  There is NOTHING right now that would upset the mainstream sheep.

    Only an 'event', or econ-black swan would derail this incessent rally.

    I will do a post over the weekend I think about the world indexes again, the monthly cycles on them are ALL due to snap higher in April.

    I will conclude, and note, these comments -from a permabear doomster no less, may well be a classic sign of capitulation. * I would likely concede bear case is ON, if IWM closes under 80 at any point in the next few weeks.

    Good wishes for Friday.

  2. Thanks for your insights. I do appreciate it. does this move in the same fib time sequence as well. May of last year got down pretty quickly.

  3.  Generally, look for reversal to the .618 of the AD leg of the pattern.  The Crab would target around 730, and the larger Bat would target around 690

  4. Excellent work as usual. I have been following you for sometime and enjoy the crab/butterfly analysis. I don't know much about them but have been trying to learn. So on the RUT if have a target of around 812. What would the breakdown of the crab pattern target to? Just looking to learn. Thanks again for your analysis.