July 2, 2012

COMP appears to be following a set of channels within a much larger channel we identified months ago.

Whether it has the wherewithal to rise up out of the large red channel remains to be seen.  In the meantime, we’ll focus on the short to medium-term picture.

The white dashed channels are interesting in that the middle one served as the neckline for the recently completed H&S pattern that provided some juicy downside moves.

In a close up, the middle channel line can be seen in a three way intersection with the target of the recently completed Inverse H&S pattern and the .886 of the drop from 3085 to 2726. right around July 9  (this .886, BTW, is also the .786 of the drop from 3134 to 2726, so either retracement is viable.)

There are two ways to get to 3044:  via a channel (red) that puts it somewhere between July 9 and Aug 8, or via a rising wedge (dashed, purple line) that targets July 27 and August 8.   All things considered, the channel looks better formed at the moment, but it doesn’t matter all that much (unless you’re playing the July calls.)

The daily RSI indicates a potential pause as it reaches the channel midline as well as a trend line (red) off its Mar 26 high.  Otherwise, more upside – perhaps rapid – appears to be imminent.