Intra-day: July 14, 2011


The hourly MACD and histogram just went officially bearish.  But we should get a bounce soon, as 1298.61 is just around the corner.  That level is important to bulls still looking at this as a corrective wave for the bull run.


Here’s the H&S; setting up on SPX.


There’s a possible H&S; pattern setting up on the S&P; 500 — seen here on the hourly futures chart. If it completes, it points to 1283 on the downside.

With any decent decline today, we should finally see the SPX histogram turn negative and a bearish STO cross on the daily charts.


The market seems to like what it sees in the JPM earnings report.  Haven’t sorted through it yet, but I wouldn’t put much stock in it, as bank earnings reports are masterpieces of obfuscation lately — particularly with respect to loan loss reserves.

In the meantime, I’m watching what could turn out to be another bearish Bat Pattern evolve.

If the market rebounds strongly over the next few days with a debt ceiling solution, watch for a reversal in the 1342-1348 area (/ES).


Intra-day: July 14, 2011 — 2 Comments

  1. You're right, most of them are reversal patterns. It's a little unorthodox; but, I've found more than a few that work as continuations. Think of it as a failed broadening pattern, if you like (or, an inverted cup w/ handle.) The idea is that you have a broadening pattern with upside breakout potential that gets reined back in. The failure of the RS to maintain the pattern that the LS and H started creates the disappointment that, in turn, leads to selling.

  2. Thanks for today's post. I have always thought of a head and shoulders as a reversal pattern rather than the continuation pattern you have drawn in your chart above. In other words, a H&S; would come at a top, and an inverse H&S; would come at a bottom, but I wouldn't have expected an H&S; stuck in the middle of a decline or consolidation to have predictive value. Am I misinterpreting the pattern?