Thursday, July 30, 2009

SPX Weekly

Several requests have been made for the SPX Weekly chart, which was a regular posting here until about a month ago. It's a simple story, but requires a little explanation.

About 3 weeks ago a data glitch forced me to download new data for all of my charts from eSignal. Everything seemed to be fine, except when I brought up the SPX chart, the just triggered Sell Signal had been replaced by a continuation of the early March Buy Signal. Despite many attempts to return to that original set-up and Sell Signal, my data just wouldn't allow it. Rather then confuse everyone with the new SPX chart, I simply switched to the SPY and DJIA charts, which never deviated from the initial triggers.



Here is the SPX chart with eSignal's new data:


Noteworthy here is that the market has made a new Wave 4 high accompanied by a divergence in the False Bar Stochastic.

But most significant in my view is the following close-up of the above chart, only this time with Fibonacci retracement levels and showing the Wave 4 now knocking on the door of a very normal and expected 32% retracement:

My take away from all of this is that the worse of the bear market is still ahead, waiting only for what is a normal consolidation of the previous massive decline to run its course.



Anonymous said...


After being blown away by reading the book "TREND FOLLOWING" by Covel, I feel convinced a rule-based strategy is the way to go. I'm baffled to have discovered this oasis of things to emulate in a blog.

I was reading one of your older posts "day-trading spiders".

Unless proprietary in nature, I'd love to have you elaborate on your choice of time frames when trading ????
e.g. 120 as main trend indicator.

However, what determines the size of your mid to smaller time frames?
Avoiding chop/noise seems paramount.

I'd love to model after your approach. The only problem I foresee is potentially being chopped up if I don't use software as intelligent as yours. This stuff is obviously beyond using PSAR with MAs.

I wish I could take back $$$$ I invested in financial newsletters over past couple of years and put them in your
donate box !!!!

Anonymous said...

A normal consolidation??!?? Don't you see get it man! The government is NOT going to let the market collapse. They saved the BIG banks because they fell neatly into their agenda. They control these big banks and will use them to make sure the market doesn't collapse. GS with all their wealth and know-how are gonna manipulate the shit out of the market driving it higher all the while reaping huge benefits. Your charts don't...CAN't reflect human intervention.

Allan said...

It's all part of the same bear market, alternating DOWN-UP waves lasting years. Typically, near the end of the UP waves, we get sentiment like that espoused above, "the government won't let the markets collapse." As that view becomes more prevalent, this UP leg will end.

The first 18 months DOWN was Wave 1; the next 6+ months UP is Wave 2; The next segment will be a WAVE THREE DOWN.

Anonymous said...


5 months of the markets' going straight up. Despite terrible jons news, RE news and on and on.

The government HAS ALREADY SAVED US.