The standard H&S pattern is rapidly becoming a dinosaur, especially in the more popular indices. One can argue that certain patterns exhibit their own "evolution", and that this particular creature's "right shoulder" is becoming increasingly vestigial. More often than not these days, a perfectly formed H&S is just a prelude to a rapid upside move. JMO.
Bounce coming?
- Thread starter ARogueTrader
- Start date
The standard H&S pattern is rapidly becoming a dinosaur, especially in the more popular indices. One can argue that certain patterns exhibit their own "evolution", and that this particular creature's "right shoulder" is becoming increasingly vestigial. More often than not these days, a perfectly formed H&S is just a prelude to a rapid upside move. JMO.
Yes, that's true, simply due to the fact that so many people are looking for it, the right shoulder rarely gets a chance to form. One interesting approach that I've seen used successfully in finding double tops/bottoms/h&s in price action that makes them look almost perfect even though they look almost non-existent in the chart is plotting an indicator that shows price's distance from a moving average. This shows price patterns like h&s that instead of forming with a horizontal neck end up using a moving average for a neck, it will show up on the indicator as a text-book H&S even though in the price action the right shoulder may be higher than the head or some other anomoly of this sort. Patterns found in this way seemed to be just as reliable as far as outcome in the price action is concerned.
I don't know about you. But I've fully committed to a rally to new highS. Not a bounce, that is a wrong word to use in the current situation. Here is a perfect entry point for those who hasn't taken advantage of the bull market in the past 8 months. The benefit is extraordinary 100% up room to go. It is up to you. It is your decision. If you make the right choice, see you in a year when President Bush is reelected or kicked out of the White House. Then sell at that time regardless. Good luck.
Nice chart Rogue. Filling that gap in the high 80's might be nice support. However as you can see, the correlation between the dollar's performance and U.S. equity prices is negligible. Yes the $ was strengthening during the stock markets rise in the late 90's but the dollar remained strong all through the ugliness of 2001. And in the 1980's the $ and stocks had a tremendous negative correlation. Little bit of a different story with gold. Usually a gold rally accompanies lower bonds and lower stocks. Yet this time around gold, stocks, and bonds have trended up virtually simultaneously. IMO equities are more relieved that it's not a 1932 depression out there than worried about stagflation ala' 1972.
While I don't the market looks conclusive one way or the other technically, I do think it's ominous that good news is consistently becoming a bear item in stocks and a bull item in bonds. 7% GDP..smack em. First decent payroll number of the year..hit 'em some more. Renewed expectations from the largest cap. out there GE and it's a buck off it's feeble swing low. I agree with db, the A/D looks sickly and even if this POS goes higher on some thin late in the year dress it up run up, it does it without me.
Maybe a correction is in the offing, maybe not.
A/D line usually tops out 4-6 months prior to major market tops.
The entire NYSE A/D line and the NYSE equities only A/D line made new highs in November.
Russell 2000 and SP 400 (mid cap) are still slightly above their 50 dma, and the SP 600(small cap) is above its 50 dma.
I don't place index bets at inflection points, until the direction has some greater clarity. But if you put a squirt gun to my head, I'd go long.
A/D line usually tops out 4-6 months prior to major market tops.
The entire NYSE A/D line and the NYSE equities only A/D line made new highs in November.
Russell 2000 and SP 400 (mid cap) are still slightly above their 50 dma, and the SP 600(small cap) is above its 50 dma.
I don't place index bets at inflection points, until the direction has some greater clarity. But if you put a squirt gun to my head, I'd go long.