Archive for 'Featured Letters'

S&P 2602.33? Once again stepping into the dark waters of mystery…

Posted on Jun 02, 2014 by .

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1028spxr7 copy

 

In October 13 we presented the above chart ( http://www.edwards-magee.com/?p=4463) (link below next chart)  which  made a daring analysis based on the rule of seven.  We didn’t make a big thing out of it, and said, correctly that it was just the application of an old technical analyst’s tool.  As you can see it was written when the market was around 1634 and foresaw targets of  1634, 1955 and 2602 and change.  We have surpassed the first target and are knocking at the door of the second and who knows about the third.

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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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