Sunday, June 07, 2009

The way of a trader

The focus here is on the bigger picture, although eventually this post will drill down to some more tradable analysis. For starters, lets look at a time frame I have seldom or ever posted before, a monthly view of the SPX:


During the past 15 years, we see two major up moves and two major down moves. Despite the rally of the past three months, the chart shows prices still mired in the most recent down move. Observe the angles of the four major directional moves, one should stand out, the most recent down move. It is by far the steepest of them all. What do you think this means?



The chart above is again a monthly chart, this time with Fibonacci retracements. Notice how prices have just now reached a 25% retracement level of the entire two year decline and that a typical 38% retracement would come in at about SPX 1015. Also observe how short this current three-month rally has been when compared to an 18 month decline. See how Advanced GET is suggesting that the completion of wave 4 will be between 960 - 1020.

Below is a close-up of the above chart via a weekly chart:


This above chart has a more completed look to the wave 4 advance from early March. The problem is that a confirmation will not occur until the Blue Wave sell level is hit. This level was
842.99 last week and will probably be at a higher level next week. We will know the new reversal level on Monday.

Moving to a daily view of the SPX, here is an interesting perspective courtesy of Market Club:


The MC chart is on a buy with a sell basis the weekly charts under 880. I've added a Parabolic stop/reverse indicator which is suggesting a level of 887.65 will generate a reverse-short signal. So with a weekly Triangle sell at 880 and the daily at 887.65, we have the makings of important support levels that if breached would signal a major change of trend.

Here is a daily view of the SPX, showing a much closer Blue Wave sell level:


The daily chart above has a much closer Blue Wave reversal sell level, 918, only a little over 20 SPX points lower.

Finally, the 120-minute chart, a time frame that seems to be working very well and being in sync with swing trading profitability:


This chart provides the tightest stop-reverse-short level yet, 933.92. Remember that on Friday the SPY intraday charts all flipped short. It is not out of the question to expect the SPX to follow in that direction in the hours and days ahead.

Summary

The Red Wings showed up last night and decimated the laughable Penguins 5-0. The series shifts to Pittsburgh for Game 6 on Tuesday night, with the Red Wings just one victory away from winning their second consecutive Stanley Cup. If the Wings are really intent on winning on home ice, they will once again toy with the boys from Pittsburgh, knowing that they can turn it on at will and shut them down on home ice, if they are so disposed. On the other hand, skating in triumph, raising Lord Stanley's Cup with pride and conquest before 22K defeated Penguin fans, may be too sweet a reward to postpone even one more game.


A



3 comments:

Anonymous said...

Hey Allan'

I can't remember if I originally pick up Raptor Networks here on your blog acouple of years ago. RPTN is moving up on volume last few days, Toby has been suggesting a bullish story. Sometimes strong moves in these last chance speculative stocks signals that a rally may finally be running out of gas. Any thoughts on RPTN? Warm regards from NYC/Joe

Allan said...

Joe, Parabolic is what comes to mind. But why not loo at run that is pre-parabolic? RXAF. It's risen from 0.05 to 0.09 in the past few weeks. I have initial targets of 0.30. The problem (if you can call it a problem) is that when it moves, it will make that move all in one or two days. - Best A

masteroftheuniverse said...

Allan,

Nice blog. I will stop back from time to time for sure.

Jeff