pebblewriter

Tag: Channel

  • When The Music Stops: Jan 31, 2013

     

    Lots more economic data out today.  Unemployment claims jumped 38,000 – much higher than expectations, but personal income also beat (thought to be explained by income shifting by those concerned about higher 2013 tax rates.)

    Real Consumer spending is probably the data set that best settles the conflict — up an anemic 0.2% in December (real) versus 0.6% in November.  So, either everyone did their Christmas shopping early this year, or retail sales fell off a cliff.

    Against this mixed picture, January Chicago PMI came out at 55.6 versus consensus of 50.5 and December’s 50.0 (revised down from 51.6.)  Employment and new orders shot up, but so did inventories (after contracting for several months).  While, deliveries, prices paid and backlogs continued to contract. In short, this looks like a rebound from the November slow down largely blamed on the fiscal cliff.

    Also, not that this is a regional, not national, survey.  It sometimes offers a somewhat, but not always, predictive view of the important national ISM Mfg Index due out tomorrow.  In fact, many of the other regional surveys have shown increasing weakness.  The Chicago vs the national data are compared below.

    The market sold off early following the employment data, but rebounded a bit as investors digest the PMI report.  All eyes are on the important data being released tomorrow:

    Markit Flash PMI (covering about 85% of respondents) released on Jan 24 showed an acceleration of output, new orders and employment, but a deceleration of export orders, backlogs  and purchases.  Output prices barely moved, and inventories actually increased.

    Remember, this is only a survey of purchasing managers.  So, it doesn’t, for instance, differentiate between an expansion based on overly optimistic expectations or one justified by an upturn in demand.  Thus, while it tracks mfg output (as reported by the Fed) in general, respondents’ perceptions are often more optimistic than was ultimately justified by actual outcomes.

    We’ll revisit the data tomorrow, but for now it has the appearance of series of lower highs and lower lows, i.e. a falling channel.

    There’s no telling what the economic data will look like tomorrow, let alone how the market will react.  But, it’s interesting that the last Flash PMI data, which was generally regarded as very positive, was good for an 8-pt rally on the opening (which was quickly negated for a flat close.)

    I’ll also be keeping an eye on construction spending, which has been trending down as shown in the Briefing.com charts below.  Spending on commercial construction has been increasing at a declining rate for some time, and recently began contracting.

    The rate of increase in residential construction also recently turned down, so it’ll be interesting to see if this is a trend in the making.

    The market has been relatively quiet this morning.  After reaching the lower end of our upside target range yesterday, SPX broke through the red trend line and the white channel midlines we discussed, back-testing the white channel as expected.

    Since then, it declined to test the next lower channel bound.  The pattern from here gets very interesting, especially when one considers the RSI channels.

     continued for members… (more…)

  • Charts I’m Watching: Jan 29, 2013

    Currencies are relatively quiet this morning in the midst of a slew of earnings and economic data. The dollar looks like it could hit our downside target of 79.50 – 79.59 from Jan 25 [see: Update on DX] this morning if the yellow channel holds, but note that its midline intersects with the bottom of the white channel (support) just below current levels.

    EURUSD looks like a lock to tag the 1.618 at 1.3490 we’ve been tracking the past few days.

    This e-mini chart caught my eye this morning…

    With the overnight slide of 8 points, the e-minis give the impression of a broken channel and back test.   Now, it might be one of those dips from which we quickly recover as occurred on the 16th.  But, for those playing the intra-day moves, this bears watching.

    This ES channel equates to the small purple channel within the larger white one on SPX.  So, as yesterday, watch the channel midline for signs of something more significant.  It’s currently around 1498.30.

    The 15-min RSI should see a bounce at the red trend line if the trend is to remain on track.

    As we discussed yesterday, there is a great deal of economic data due out this week.  But, all pale in comparison to the FOMC announcements following their two-day meeting getting underway right about now.

    Last we heard, dissension was growing over how and when to throttle back on QE.  The language that alarmed the Dow 20,000 crowd:

    While almost all members thought that the asset purchase program begun in September had been effective and supportive of growth, they also generally saw that the benefits of ongoing purchases were uncertain and that the potential costs could rise as the size of the balance sheet increased. Various members stressed the importance of a continuing assessment of labor market developments and reviews of the program’s efficacy and costs at upcoming FOMC meetings. In considering the outlook for the labor market and the broader economy, a few members expressed the view that ongoing asset purchases would likely be warranted until about the end of 2013, while a few others emphasized the need for considerable policy accommodation but did not state a specific time frame or total for purchases. Several others thought that it would probably be appropriate to slow or to stop purchases well before the end of 2013, citing concerns about financial stability or the size of the balance sheet. One member viewed any additional purchases as unwarranted.

    Needless to say, an increase in hawkish rhetoric could really do a number on this rally.

    Odds are we’ll see another day like yesterday, with market makers shuckin’ and jivin’ to try and convince us a larger move is underway — the better to shake loose some of our hard-earned money.  But, I unless we see a huge miss on economic data or earnings, I don’t expect any fireworks until Bernanke steps up to the microphone (though much of the juicy stuff will have to wait for the minutes to be released.)

    UPDATE:  10:00 AM

    The Conference Board’s Consumer Confidence Index came in well below expectations: 58.6 vs expectations of 65 and Dec 2012’s 66.7.  Most of the rise in pessimism was the result of worsening job market conditions.  Those expecting more jobs in the months ahead dropped from 17.9% to 14.3%. Twenty-seven percent expect fewer jobs — unchanged from last month.  A full 22.9% (up from 19.1%) expect their incomes to decline.

    Briefing.com tracks the data and puts it in a nifty little chart (reflects data through December.)  There are a lot of potential interpretations here, but to me it comes down to “expectations coming back in line with reality.”

    And, though I don’t have the time to construct a chart, I’m pretty sure that expectations — the yellow line — have tagged the top of a descending broadening wedge (megaphone) while present conditions have formed a garden variety falling channel.  Both appear to be at or near their upper bounds, meaning a breakout or a fall is imminent.

    Global Economic Intersection posted an interesting article last month that showed the relationship between consumer confidence and past recessions.  Definitely worth a read for those who pay attention to such things.

     

    So far, the market is pretty much shaking it off, with a dip to the white channel midline the extent of the reaction.  If the midline holds yet again, there’s a good chance we’ll hit our upside target later today or tomorrow.

    continued for members… (more…)

  • Trading with Harmonics

    The first of a two-part article on harmonics trading strategies.

    Part 1.  January 28, 2013

    Harmonics are a great source of information about the market, but they don’t tell you how or when to trade any more than do MACD crosses or breadth indicators.  So, how do you use them?  This discussion of the basic process might serve as a good starting place for beginners.

    I consider harmonics like trade alerts.  That is, every time we approach an important Fib level, I stop and consider whether the market is likely to react or not, then make a trade decision accordingly.

    There are pages for each specific pattern under the Learn>Harmonics tag on the Home Page.  But, they all relate to one another.  Let’s walk through a real world example.

    SPX has fallen from 1576 to 666 and seems to have bottomed (how to know it’s bottomed is the real trick.)  I draw a Fibonacci Retracement grid on the price range (100% for 1576, 0% for 666) and make sure every important level is showing as on the chart below.  For a discussion of Fibonacci levels, click here.

     

    ThinkorSwim makes this very easy with a built-in drawing tool, as do many other platforms.  If your platform doesn’t provide it, you might want to think about changing, or at least opening up a TOS account to facilitate your charting (and, no, they don’t pay me to say that.)  You can read about harmonics and study the charts I post, but there’s no substitute for doing your own charting.

    Back to our example: because we went long at the very bottom, we set our sights on the higher Fib levels.   All harmonic patterns are marked using the letters X, A, B, C and D.The inception point (high) is X, the low is A.  B is the first reversal, C is the next, and D is the completion. The location of the reversals relative to specific Fib levels tells us what kind of pattern we probably have.

    Suppose we’ve watched SPX climb all the way up to 956, where there’s a 9% correction down to 869.  Because this reversal occurred below the .618 Fib level, we might have a Bat Pattern on our hands.  Bat Patterns complete at the .886 (1472) so we’ll make a note of that for future purposes and consider 956 a potential Point B.

    We sail right through the .382 and .500 levels, then experience another 9% correction at just above the .500 (1150 to 1044.)  Again, it’s below .618, so it could be signalling a Bat Pattern.  But, it’s a relatively minor reaction, so we treat it as only a potential Point B.

    Now we’re approaching the .618 at 1228.74 — the most important of the Fib levels.  Because the two prior reversals were pretty tame, we might suspect more from this one. We begin to contemplate a short position, and look for other signs of a reversal.

    Because we’ve been watching closely, we notice a smaller Crab Pattern setting up as we approach the .618 (the purple pattern below.)  It features a Point D at 1215.93 — slightly below our .618 at 1228.74.  So, we feel pretty confident about this being a good trade entry.

    Are there other chart patterns such as a rising wedge, channel, fan line, etc. that also hint at a reversal?  In fact, there’s a nice channel that’s formed over the past 9 months, not to mention a broken RSI channel (in red) just shy of the Crab completion.  And, we’re nearing the 1240 target of the Inverted Head & Shoulders pattern completed at the 2009 bottom.

    These would all be good reasons to consider a short.  Taken together, they make for a pretty compelling argument.  Where, though?  Other traders are watching the same charts we are, so there’s a chance the reversal will come a little early.  We don’t wait to wait too long and miss the top.  But, of course, every point too early is a point of lost profit.

    In the end, timing is a judgement call based on many factors, including liquidity, risk tolerance, the type of instruments we’re trading, other positions in the portfolio, etc. and is worthy of its own article.

    Let’s assume we make the decision to open a short position around 1213 on the April 15 — in case SPX doesn’t make it all the way to 1215 or 1228.  We feel pretty good about our decision when SPX is down to 1186 the following day and 1183 the next.  That’s a 2.5% move in two days — not bad.

    On the third day, however, our plan is looking iffy.  SPX gaps up on the open and hits 1208.  Three days later, it pops above the Crab target of 1215.93 and tags 1217, seemingly in search of the .618 at 1228.74.

    Suddenly, we’re underwater by 15 points or 1.25%.  Is it time to bail?  Again, it depends on the type of investor you are.  Options traders might have closed their puts for large profits already, while swing traders might be happy as long as SPX doesn’t exceed 1230-1235.  Buy and hold types might have used the Fib level as a warning of a potential downturn and hedged or lightened up on their long positions.

    Checking our charts, we can see that neither the price nor the RSI channels have been broken to the upside.  In fact, the little red RSI channel which helped convince us of the downside potential shows the latest push higher came with a lower RSI score (negative divergence) and a pretty pathetic back test.  So, we’re inclined to hang in there.

    It turns out to be a great decision.  The following day, RSI plunges through the midline of the purple channel.  SPX plunges 38 points from its high, stabilizes for four days, then really starts falling apart.  On May 4, SPX reaches the white channel midline, a possible bounce spot.  We’ve already made 4.5% since shorting at 1213 less than 3 weeks ago.  Time to bolt?

    To be continued…

  • The Dow: Time to Double Down?

    Many are watching the Dow Transports’ recent all-time highs, wondering if Dow Theory suggests new highs for the DJIA as well.

    Without wading into the debate over which interpretation of the theory holds water and which are all wet, I think it’s important to recognize that the DJIA is one of those indices not making new all-time highs lately.

    Should the Industrials not break above 14,198.10, this would be considered a Dow Theory non-confirmation, at least on a larger scale.  The last time this happened was in July of 2011, when the Transports made a new high of 5627.85 and the DJIA failed to best its May 2 12,876 high.

    We can argue about cause and effect, but there’s no argument about what happened next.

    Eighteen months later, the DJT has again broken out to new all-time highs.  DJIA has not.  Here’s the current visual, which shows the current degree of divergence is much larger than back then.

    The Industrials, in fact, are a great candidate for a double-top.

    Drilling down, we can see DJIA has nearly completed a Crab Pattern at the Fibonacci 161.8% extension (14,201.84) of the July-October 2011 crash (the white pattern.)

    It intersects nearly perfectly with the previous 2007 high of 14,198.10 at the very point where the purple channel top and white 25% channel line also intersect.  But, it need not even reach that level to be considered a double top (within 1%.)

    And, only a few points away we find a Butterfly Pattern target (small red pattern) at 13,985.65 and a Crab Pattern target (in white) of 13,963.50.

    The last leg up in the move since October 2011 has been 1424 points — roughly 87% of the leg 3 rally between June and September of 2012.  A Fibonacci 88.6% of the leg 3 rally would register at 13,912 — well within the margin of error for any of the harmonic patterns mentioned above, and only 16 points above today’s high.

    And, for those who, like me, love to channel stuff, the DJIA’s daily RSI has its own bearish tale to tell.

    Could DJIA blow through 14,200 confirm the Transports’ all-time high and spoil the bears’ party?  Of course.  There are still plenty of earnings reports to sift through, including AMZN, CAT, FB, YHOO, IP, PFE and F in the next few days.  We could get great Durable Goods numbers Monday, Case-Shiller Home Price Index on Tuesday, or a bullish FOMC outcome on Wednesday.

    But, anyone counting on new all-time highs should remember July 2011 and consider protecting their downside.

  • Update on DX: Jan 25, 2013

    Currency markets have been quiet the past few days, with the dollar showing some indecision as investors try to wrap their minds around a potential new high for equities.

    Since we hit our downside target at the white .786 on the 13th, DX has been non-committal.  My best guess is a repeat of the .786/.886 retrace down to the red zone before DX takes off higher, but this is neither assured nor necessary for our equity forecast to play out as expected.

    continued for members… (more…)

  • New Charts: 10-yr Notes

    First, an important caveat:  I’m not a bond guy.  Never have been, never will be — at least with long bonds under 8%.  I find the idea of sinking even one dollar into a security (on credit watch, mind you) that guarantees less than 2% for 10 years ridiculous.

    But, different strokes and all that.  Plus, bonds can be a good window on equities and currencies, so I don’t mind charting them once in a while.  The 10-yr has obviously been on a tear for several years.  It’s settled back from the 2008-09 spike into the bottom half of a channel that dates back to 2005 (white.)

    The big question is whether the white channel is still in charge, or the less aggressively sloped purple one has taken over.  Making things interesting, there’s a pretty well-formed rising wedge that broke down in August.

    But, the RW is slightly suspect because the July 25 high was slightly exceeded on Nov 16 and Dec 6, meaning there are two higher highs and a higher low in place since the August break (though both highs came on negative divergence relative to the July high.)

    Harmonics have performed pretty well with the 10-yr note.  The chart below shows a big Crab (grey), followed by another Crab (red), a Bat (white) and another Crab (purple.)  Each previous Crab Pattern completion has been followed by a significant retreat, so we should suspect one here with the purple pattern completion.

     

    The only potential hitch is whether the white pattern is still in play.  Bats can and do go on to form Crabs, and the white 1.618 is way up at 138’170 — a 4.5% increase from current levels.

    There is a significant amount of negative divergence on the daily and weekly channels, so I expect prices to fall.  But, obviously, a strong equities sell-off would turn that assumption on its head.

    A return to the top of the red channel, for instance, would take daily RSI to the purple midline.  On negative divergence, that could easily line up with the white 1.618.

    The close-up shows a potential channel since the most recent Crab Pattern reversal and the impact of the white 25% channel line.

    Otherwise, the bottom of the white channel and the middle of the purple channel intersect at the 126-127 area (the purple .886 is 126’267 and the white .886 is 126’285) around the middle of March – about where things were in March 2012.

    Stay tuned.

    *  *  *  *  *  *  *  *  *

    Just got this one in my inbox, an oldie but goodie…

    A successful trader parked his brand new Porsche in front of the office in order to better show it off to his colleagues. As he got out, a delivery truck came along too close to the curb and smashed into the driver’s side.

    The trader immediately grabbed his cell and dialed 9-1-1. Five minutes later a policeman pulled up.  Before he could even ask any questions, the trader started screaming how his car, which he just picked up that day, was completely ruined and would never be the same again.

    After the trader finally finished ranting, the policeman shook his head in disbelief.
    “I can’t believe how materialistic you Wall Street guys are,” he said. “You’re so focused on your possessions you don’t notice anything else.”

    “What the hell are you talking about!?” asked the trader.  The policeman replied, “Didn’t you realize that your left arm is missing from your elbow down? It must have been torn off from when the truck hit you.”

    The trader looked down in absolute horror.  “Holy Shit!” he screamed. “Where’s my Rolex!?”

  • That All Ya’ Got?

    AAPL soars, market soars.  AAPL plunges, market yawns.  Sure, makes sense to me.  One can only guess as to how much effort went into propping up the markets this morning in the wake of the earnings miss.

    Have you ever heard so many laudatory comments about the stock everyone loved to hate only months ago: NFLX?  Gotta love it.

    Regardless, AAPL has gone exploring spelunking lower Fib levels and the rest of the market is up, which presumably means we’re presently on the right side of the market.

    AAPL should firm at 450.85 this morning — the 1.618 of the Crab pattern dating back to Nov 16 at 505.75 (light blue.) Personally, I’m an enthusiastic buyer at these levels (with stops, of course.)  I previously set the large white pattern Point X at 354 on Oct 4, 2011.

    But, moving it to the June 20, 2011 310.50 level (just as legitimate, if not more) means AAPL just tagged the .618 retracement of the 310-705 move.

     

    But, the biggest reason of all to be short-term bullish on AAPL is the purple channel — the bottom of which AAPL just tagged. The stock could certainly fall below it, but this sucker dates back to the year 2000.  I have a hard time believing the channel will fall after what amounts to a minor estimate miss.

    Does the company have problems?  Sure.  I worry about the obvious decline in customer service and a slowing product cycle.  But, it also has the means, the manpower and the motivation to fix what’s ailing the stock price.

    Stay tuned.

    UPDATE: 1:15 PM

    The markets have sold off from their highs, but seem to be finding RSI support.  APPL is, doing the same.  For those who find the bounce idea compelling, here’s another chance.

     

    UPDATE:  1:50 PM

    Watching to make sure the price channel and RSI channel both hold on SPX…

  • Race to the Bottom: Jan 22, 2013

    Lots of big earnings announcements today:  JNJ, VZ, DD, TRV, DAL all missed, while GOOG, IBM, TXN, CA and AMD will report after the close.   It’s getting tougher to ignore slowing revenue growth, though the misses were almost universally blamed on Hurricane Sandy.

    But it’s the currencies that are getting most of the attention lately, with the yen making headlines all weekend. The BOJ followed through on expectations, confirming they will continue unlimited QE in 2014 once the current program ends in December.  They also embraced a 2% inflation target though, as many observers have pointed out, they’ve failed to even come close to the current 1% inflation target.

    USDJPY is the pair I watch the closest.   A weakening yen obviously strengthens the dollar index (the yen is 13.6% of DX) but it is easily offset by euro strength (57.6% of DX.)  Nevertheless, the pair’s importance shouldn’t be discounted, as it heavily influences trade.

    The two dominant chart features are the falling channel (purple) since 1998 and the falling wedge (yellow, dashed) since 2001.

    The pair broke out of the falling wedge in January 2012, but recently began reacting with the channel midline at a price level just beyond our target range of 87-89.  If you believe the BOJ, the pair will blow through this resistance and continue up to 95 without a hiccup.

    In fact, the daily RSI over the past six months suggests today’s little 1.2% correction might be all we get.

    But, if we back out just a bit, we can see this isn’t necessarily the case.

    continued for members… (more…)

  • Should We “Like” Facebook?

    The last time I posted about FB was October 24 [see: CIW Oct 24, 2012], when I happened to hear Donald Trump repeatedly mention the stock as he was being interviewed about something else all together.

    BTW, interesting chart on Facebook.  I knew something was up when I heard Donald Trump touting the stock on the radio.

    He…still managed to mention the large position he’d been buying about 5-6 times.  More likely he was going for the ol’ pump and dump.

    It’s hard to escape the power of channels.

    The channel in question had been stretched to the limit by the gap up from 19.5 to that day’s 24.5 high and looked like this:

    The channel de-friended FB, smacking it back down to below 19 within the next two weeks.  But, since then, the amazingly positive stock market to the moon has taken hold, trumping that falling channel.   The stock has retraced about half the losses since its 45 high (the white Fib levels below.)

    Unfortunately, it’s also traced out a Rising Wedge — not to mention a Bat Pattern from its June highs (the purple Fibs above.)  As such, it is likely to weaken considerably here — with a drop to at least the bottom of the rising wedge — currently at 27.75 or so.

    Judging from the charts, though, I’d say FB is a good candidate for a breakdown of its Rising Wedge.  Often, this results in a new channel that features a lower bound parallel to the upper bound of the wedge.

    The mid-line of the proposed channel is at 27 (a 10% drop from current prices), and the bottom is way down at 22.75.  The good news is that the channel is obviously rising, so these potential targets are also on the rise.

    The bad news, however, is that the charts indicate the trend may well have changed and the downturn could be more significant than just 10%.  4-hr MACD just crossed over yesterday (60-min is already negative.)

    And, the rising daily RSI channel is probably yielding to a falling channel — signalling a trend change to go with the obvious negative divergence.  Though, we won’t know for sure until RSI reaches the bottom of the white channel.

    Bottom line, the road ahead should be very bumpy.

    Stay tuned.

  • AAPL: Flirting with Disaster

    Not since the summer of 1666, as young Zack Newton sat pondering gravity, has so much attention been paid to a falling apple.

    Should we care about AAPL’s deteriorating powers of levitation?  The $200/share drop since its September highs, especially on the heels of a new dividend and share buyback program, has been unnerving.  But, if you invest based on fundamentals, it’s a solid company selling at 11 times earnings and a 62% 5-year CAGR — which happens to be on sale.

    If you pay attention to chart patterns, however, AAPL is flirting with disaster.  It’s a mere point or two from completing a Head & Shoulders pattern that targets the low 300’s. [To read about how H&S patterns work, click HERE.]

    Even if you don’t give a darn about chart patterns, know that many other investors do.  The four tags of the white trend line (the neckline) in the past month are ample proof.  So are the many previously completed patterns that weighed on AAPL.

    In January 2008, AAPL completed a H&S pattern that saw share prices drop from 200 to 115 in a few short weeks.

    Buyers at 115 were rewarded with a rebound to 190, then punished by a plunge to 78 as the rebound completed a right shoulder in a much larger H&S pattern.

    Not every pattern plays out, of course.  Consider the pattern below — a well-formed pattern that targeted much lower prices.

    Instead of a big drop off, AAPL found channel support before much damage was done.  Prices rebounded to new highs where they formed a new pattern (in white) which did play out.

    Like any other chart pattern, H&S patterns don’t occur in a vacuum.  Channels and harmonics often influence the ultimate outcome.

    The channel that saved the day in 1995 is still with us, though it most recently offered resistance to higher prices instead of a floor.  It’s the white channel in the chart below.

    The much smaller, steeply rising purple channel, on the other hand, has kept prices rising — putting AAPL back on track after two significant sell-offs.  It’s currently around 445 — within a few points of the Crab Pattern 1.618 extension of the failed mid-November rally.

    If the current H&S pattern plays out and AAPL drops below the purple channel support, there’s another, less bullish channel that could come into play — seen in yellow below.

    The next lower channel line is in the vicinity of the purple line referenced above: 430 or so.  But, if gravity takes hold, mid-line support doesn’t show up until around 300.  Ouch.

    There are a dozen or more other patterns that could easily influence AAPL’s future (consider, for instance, the grey channel I’ve sketched in — the mid-line of which marked this morning’s lows.)  There are also many fundamental events that could strengthen the price.

    The company’s current share buyback scheme, for instance, is only $10 billion — about the average daily volume at $500/share.  But, with $120 billion in cash on the books and virtually no debt, the company could easily expand it to a more meaningful level.

    If this most widely held stock were to crash, could the rest of the market be far behind?  I think there’s little question it would. Such an outcome would spell disaster for the bullish story line that TPTB have been working so diligently to construct.

    Might they join company insiders in supporting the stock here at 500?  It would be a lot cheaper than another round of QE and, in the end, probably more effective.

    Stay tuned.

    UPDATE:  1:00 PM

    This morning, AAPL reached the downside targets we identified back on November 27 [see: Update on AAPL: Nov 27, 2012.]   My thoughts at the time were that AAPL (then at 590) was about to reverse and retreat to the 500 area where we were likely to get a bounce before breaking down to 472-493, with 486 being the sweet spot.

    Here’s the chart I posted back then, showing 486 as the (Crab Pattern) 1.618 extension of the 570 – 705 rally between July and September.

    AAPL did, in fact, reverse at 594 a few sessions later — forming a now-obvious right shoulder.  It bounced not once but twice at 500ish before completing the Crab Pattern this morning.

    The chart below shows the actual price moves overlaid on that Nov 27 forecast.

    With this morning’s plunge, AAPL also tagged the .618 of the 354 – 705 rally (from the Oct 4, 2011 low) and the 1.272 of the small Butterfly pattern discussed above.  The fact that it did so without a comparable sell-off in the general markets is potentially significant.

    I certainly won’t discount the possibility of a bounce off the 1.272.  But, a close below 500 does significant damage to the upside case.

    continued for members… (more…)