pebblewriter

Tag: bat

  • Update on Gold: Sep 17, 2012

    Gold nailed our September 6 forecast last week [see: Sep 6 Update on Gold], fulfilling both the Bat Pattern and Butterfly Pattern objectives in the exact time frame we expected — the confluence of the ECB, GCC and FOMC decisions.  Here’s the chart posted on the 6th:

    Since reaching the .886/1.618, prices have stalled out and are due for a pullback.  (Note, I’ve adjusted the red pattern’s Point X.)

    The minimum retracement I expect is to the purple channel line at 1746.  It also marks the yellow channel line that’s several years in the making.   If things get rolling, we could easily test the 1700 levels.

    Good luck to all.

  • Update on Gold: Sep 6, 2012

    Gold continues to rise on expectations of quantitative easing — whether from the ECB or the Fed.  In our last update [see: August 22 Update on Gold] prices had reached our August 15 target of 1655 and had broken out of the descending triangle we’d identified.

    Our target at the time was 1762, which is starting to look a little less far-fetched.  But, we’ve reached a level where we can expect a significant speed bump.

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  • Lemmings and Us

    ORIGINAL POST:  9:30AM

    The dollar and the euro each overshot our short-term targets just a tad, but are resuming the path we mapped out for them last week.

    The EURUSD came very close to a key .886 Fib level, prompting many to wonder “was that it?”  I wasn’t so sure, myself.  The resultant sell-off was pretty convincing, taking out the previous low.  It reversed as we expected it would overnight, and appears to be taking a run at 1.2588.  If it can break that level, it would complete a measured move to the .886 at 1.2617.

    The dollar, meanwhile, bounced hard off the channel midline as expected, and has resumed its decline towards the 1.272/.5000 at 80.83 – 80.88.

    Each of them is at a smaller degree .786 or so, meaning they’re due for a pause here.  And, if they can’t seal the deal with a higher high (euro) or lower low (DX), then the party’s over sooner rather than later.

    But, I’m still operating under the assumption that we’ll get one last push in this corrective wave before things come undone at Jackson Hole.  I have yet to see any serious trial balloons regarding an imminent QE announcement.  While not necessary, I would expect the very political Fed to do so, especially given the diatribe coming out of Tampa this week.

    If DX and EURUSD are only in a corrective wave, can SPX break out to new highs as we wondered last week?

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  • Update on Gold: August 22, 2012

    UPDATE:  August 22, 2012

    Today, gold reached the 1655 target from our August 15 forecast — closing at 1656.20.  Note that this represents a probable breach of the descending triangle upper bound as well as a tag of the Fibonacci .886 level of 1655.70 for a proper Bat Pattern completion.

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  • NDX Update: Aug 12, 2012

    It’s been a while since our last look at the big picture in NDX.  I’ve focused more on broader indices such as SPX, RUT and NYA.   And, NDX has been subject to excesses, thanks to the impact its largest component — AAPL — has on its performance.

    But, over the past several months, it’s been one of the more predictable indices.  In our Apr 1 forecast, I wrote that its small rising wedge had run out of steam and it was due to reverse and test the lower bound of its larger wedge.

    In the May 1 update, I put a number (2438) on the downside target, revising it on May 8 2446 to reflect the just-completed H&S pattern.  Sure enough, on June 4 it bottomed at 2443.92 to tag the lower bound of the big wedge.

    Since then, NDX has reached the Fibonacci .786 of one pattern and the .886 of another.  Is this another important turning point?

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  • The Waiting Game: July 31, 2012

    ORIGINAL POST:  11:30 AM

    SPX might be tracing out either a flag or pennant pattern on the 15-min chart.  While either could portend higher prices (2/3 of the time), a flag would mean lower prices first — probably down into the mid 1370s.

     

    At first blush, the market seems to be respecting the last high of 1380.39 on July 19.  I suppose it makes for a more positive wave structure.

    But, I suspect the bigger worry for bulls is the Fib .786 at 1381.50 (in yellow).  This retracement from the 1576 to 666 plunge (Oct 2007 – Mar 2009) was only recently exceeded again, and a real, live bull market shouldn’t have any difficulty retaking and defending it.  Here’s the big picture, again:

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  • Bat Patterns

    Bat Patterns are one of the more common harmonic patterns.  They are similar to Gartley Patterns, except that the AB retracement can be anywhere less than the Fibonacci .618 of the XA leg and the AD leg completes at the .886.

    Because the AB leg can be anything < .618, we have to be a little careful as we approach the .618.  A reversal at .600, for instance, could be a Bat or a Gartley that came up a little short.  So for those that are close enough to go either way, we’re cautious around the .786 (the Gartley completion) too.

    Likewise, a presumed Bat pattern that is approaching the .786 on its CD leg can throw us a curve and put in a bigger reversal there than at the .618.  If this happens, there’s a pretty good chance we need to move the Point B to the .786 and prepare for a Butterfly Pattern extension to the .1.272 or 1.618.

    Likewise, a Bat Pattern that completes at the .886 could evolve into a Crab Pattern — which features a Point B anywhere up to the .886.   The pattern above, for instance, could be just the XA and AB legs, with an ultimate completion at the 1.618 of 892.12.  Bottom line, either play a minor reversal at the .886 or have a pretty clear idea of the medium and longer-term potential.

    In the chart above, for instance, there’s a trend line that should provide support near the last session’s low.  So, there’s a decent chance that the existing reversal is all we’ll see.  As always, stops are recommended just beyond the expected target just in case the pattern fails — as it does about 30% of the time.

  • Update on VIX: July 17, 2012

    Regular readers are well-acquainted with one of the tools we frequently use in forecasting VIX: the channels on its daily RSI chart.  On April 18, with VIX at 18.70, RSI channels helped me forecast a high of 27.13 [see: VIX at a Crossroads.]  VIX reached its yearly high of 27.73 on June 4.

    Being able to accurately forecast VIX enabled us to capture most of the downside from 1422 to 1266, and most of the upside since.  On June 2 [see: Channeling VIX] I reiterated VIX’s impending high and called for a reversal to 16.84.

    An ideal .618 retracement of the difference between A and D indicates a downside of 16.84, realistic if stock market takes off again.

    Earlier today, in addition to reaching this target we spelled out six weeks ago, we had an important development that strongly supports our latest equity forecast.

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  • Charts I’m Watching: July 6, 2012

    ORIGINAL POST:  9:15 AM

    The ugly NFP has been called “not ugly enough” to bring on more QE immediately.  Let’s look at how the current 10-pt ES loss might shake out on the opening.

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  • Update on RUT: July 5, 2012

    RUT is again nearing its previous highs of 856 (July ’07) and 868 (May 2011.)  It’s already exceeded the .886 of each of those, and is rapidly approaching the .886 retracement of its most recent dip from 848 to 730 (March 27 – June 4, 2012).

    As charted back on June 15 [see: Forecasts, Darts and Ouija Boards] we completed an Inverse H&S pattern that reversed the traditional H&S completed on May 8.

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