Market Outlook

Quote from newwurldmn:

You draw two lines that touch a few of the points on the chart but ignore vast areas. From that you extrapolate the fact that there will be large swings in sentiment. How do you get this perpetual bearish view is the megaphone patern reflects a market prone to large swings in sentiment.

This type of hypocrisy is what makes a lot of people laugh at you. If there is a good rationale, there will be a lot less laughing.
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I looked up a megaphone pattern to see what it's supposed to do. First hit on Google ( http://www.trending123.com/patterns/reverse_symmetrical_triangle.html ) says this:


A Megaphone Top is a relatively rare formation and is also known as a Broadening Top. Its shape is opposite to that of a Symmetrical Triangle. The pattern develops after a strong advance in a stock price and can last several weeks or even a few months.
A Megaphone Top is formed because the stock makes a series of higher highs and lower lows. The Megaphone Top usually consists of three ascending peaks and two descending troughs. The signal that the pattern is complete occurs when prices fall below the lower low.
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I don't see lower lows there, just higher highs. Even this guy's drawings don't match what he says.
 
Quote from trefoil:

I looked up a megaphone pattern to see what it's supposed to do. First hit on Google ( http://www.trending123.com/patterns/reverse_symmetrical_triangle.html ) says this:



I don't see lower lows there, just higher highs. Even this guy's drawings don't match what he says. [/B]
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I do take some credence in megaphones but not as a decision to go long or short. I posted a thread back in 10-2011 about megaphones taking shape and possibly predicting a downturn to 1005 in $SPX.

http://www.elitetrader.com/vb/showt...0&perpage=6&highlight=megaphones&pagenumber=1

However it has been my experience that they help guide as a way to manage risk because of their ominous appearance. I think they should be thought of as "dark stormy clouds"...they could mean a bad thundershower, or a full out Hurricane is coming OR,...they could just pass right on by with dark cloudy skys before the sun comes out. I use megaphones to remind me to keep tight stops and be ready to reverse position. It has also been my experience that true ominous megaphones were always followed up with bearish weekly MACD signals. Like the fall back in 7-2008 when there was a megaphone from 1-2008 to 7-2008. Megaphones in the presence of weekly BULLISH MACD signals usually mean the "dark clouds" are passing by and the sun is coming out. Currently we have Bullish MACD signals,...

Like everything in TA...it works well UNTIL it doesn't.
 
Quote from N54_Fan:

I do take some credence in megaphones but not as a decision to go long or short. I posted a thread back in 10-2011 about megaphones taking shape and possibly predicting a downturn to 1005 in $SPX.

http://www.elitetrader.com/vb/showt...0&perpage=6&highlight=megaphones&pagenumber=1

However it has been my experience that they help guide as a way to manage risk because of their ominous appearance. I think they should be thought of as "dark stormy clouds"...they could mean a bad thundershower, or a full out Hurricane is coming OR,...they could just pass right on by with dark cloudy skys before the sun comes out. I use megaphones to remind me to keep tight stops and be ready to reverse position. It has also been my experience that true ominous megaphones were always followed up with bearish weekly MACD signals. Like the fall back in 7-2008 when there was a megaphone from 1-2008 to 7-2008. Megaphones in the presence of weekly BULLISH MACD signals usually mean the "dark clouds" are passing by and the sun is coming out. Currently we have Bullish MACD signals,...

Like everything in TA...it works well UNTIL it doesn't.
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N54_fan:
Interesting insight. What's your take on the chart posted above? Is it sensical or garbage? What does it tell you?
 
Quote from newwurldmn:

N54_fan:
Interesting insight. What's your take on the chart posted above? Is it sensical or garbage? What does it tell you?
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Look at the chart going back to 1995. One could just as easilly argue that its completing the second shoulder of a head and shoulders pattern. In other words, it could go quite a bit higher still.
 
Quote from bhardy307:

Look at the chart going back to 1995. One could just as easilly argue that its completing the second shoulder of a head and shoulders pattern. In other words, it could go quite a bit higher still.
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That would be over many years. More of an investing call...
 
Well shoot, if we're gonna do investing timeframes, on the Dow there's a very nice megaphone pattern that actually fits the definition. Make of it what you will (source is the Privateer's Weekly Dow Chart):



357h91x.jpg
 
Quote from newwurldmn:

N54_fan:
Interesting insight. What's your take on the chart posted above? Is it sensical or garbage? What does it tell you?
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Here is my take on the current price pattern and Megaophones. I think the market wants to go higher despite the garbage spewed by the Unicylce. See the MACD on the chart. If the MACD curls lower and gives a sell signal and approaches the 0 line I will be MUCH more bearish again and would expect to see a testing of the megaphone support ALL THE WAY DOWN ~1000 on $SPX. For now that is just a possibility...think Dark Clouds. We have no Thundershowers...YET.

Around the beginning of Dec 2011 we put in a Bullish Divergence on the weekly MACD and this indicated to me to go long and no longer be Bearish this market despite the Large Megaphones and all the bad news out of Euro Region. See my prior thread about this.
http://www.elitetrader.com/vb/showthread.php?s=&threadid=232242&highlight=Grizzly+Bear+turned+Bull

http://stockcharts.com/h-sc/ui?s=$SPX&p=W&st=2007/11/01&en=(today)&id=p37826603163&a=255940387
 
Quote from trefoil:

Well shoot, if we're gonna do investing timeframes, on the Dow there's a very nice megaphone pattern that actually fits the definition. Make of it what you will (source is the Privateer's Weekly Dow Chart):



357h91x.jpg
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I see this as well and you could even make out a long term multi year down trend. But we just have to watch for when this MIGHT come to be true. As we know there are many uptrends within bigger downtrends. You just have to choose which trends you are going to make money on. I choose to follow weekly and daily trends and NOT monthly trends.
 
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