Archive for May, 2014

The art and science of top analysis

Posted on May 23, 2014 by .

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0523spx

 

http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=6&dy=0&id=p83257770514&a=266398464

Forget the science part.  There is none at present which is dependable.  Technicians are running around crazily calculating RSIs and MACDs  and computing cycles and “analogues” and  throwing the I Ching and dusting off their crystal balls.  Sound and fury signifying nothing.  There is some interesting work by Paul Desmond at Lowry’s.  (You can see it at edwards-magee.com/ggu/desmond1.pdf and desmond2.pdf and desmond3.pdf.  If you read these you will know as much or more than most analysts.

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Ominous formations in IWM AND QQQ

Posted on May 16, 2014 by .

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0516iwm

 

http://stockcharts.com/h-sc/ui?s=IWM&p=D&yr=1&mn=0&dy=0&id=p42567425598&a=350518198

The most superficial examination of the IWM reveals  details with negative implications.  A two month downtrend is obvious and prices are approaching the horizontal trendline.  This trendline may well be the neckline of a mutant head and shoulders formation.  We have marked the head and shoulders (h-s-s).  Regardless of whether the formation is a head and shoulders or not it is  decidedly negative and worth a short if the horizontal line is taken out decisively.  Adding to the negative case is the breaking of the trendline from July13.  Always a screaming signal to the technician. We would put the stop about 2% above the last wavelet high.

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Whoa…whiplash

Posted on May 15, 2014 by .

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0515spx

 

http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=10&dy=0&id=p44872926553&a=214966864

Barely had the SPX made a record high when contrarians jumped on the vulnerable issue and smacked the hell out of it.  Vulnerable because the high was made on weak volume as may be seen here.  The high appeared to be a breakout, and we remarked at the time that we had no confidence in it and declined to add on to our position which we often do at new highs.  Now contrarians have taken the market down pretty hard.

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