Coiling

The last time the spread between the 10, 20, 50, 100 and 200-day moving averages was this small (22 points) was on January 3, 2008.  It’s the sort of consolidation that almost always precedes a significant move — whether higher or lower.

2015-08-14 SPX MAs 0600Back in 2008, it obviously occurred in the early days of the crash.  2015-08-14 2008 SMAsBut, the previous instance in 2004 came at the tail end of an 11-month consolidation that eventually broke out, yielding three more years of the bull market.2015-08-14 2004 SMAsCoiling doesn’t tell us which way the market will go when it breaks out/down, just that the consolidation’s days are numbered.

Of course, HFT and algorithms have become so effective at manipulating prices these days that we hardly need an excuse for a breakout.  I’m looking at you, CL.

2015-08-14 CL 60 0635Our targets remain unchanged from yesterday.

2015-08-14 SPX 60 0635

ignore the label on the chart, it’s daily

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