Afraid to Trade Blog - Latest Comments in What Pattern Exactly is the SP500 Forming?

Re: What Pattern Exactly is the SP500 Forming?

jae mason — Thu, 16 Apr 2009 17:16:19 -0000

im finding s+p a bit hard to read.....whereas the dax is a lot easier to understand and when looked at in comparison to s+p it does make the move a little bit easier to read............i ALWAYS compare indexes to each other to get a better understanding of the situation.....you may not be able to see that the s+p is about to turn wheras it can look very obvious on another index

Re: What Pattern Exactly is the SP500 Forming?

Corey Rosenbloom — Thu, 16 Apr 2009 16:07:10 -0000

Neil,

Precisely! If it were so easy, everyone would be doing it!

Re: What Pattern Exactly is the SP500 Forming?

Neil — Thu, 16 Apr 2009 15:13:01 -0000

Corey ....Very informative and intresting post. frankly, last few days have been quite challenging from the TA point of view, but then thats what make TA so intresting.

Cheers

Re: What Pattern Exactly is the SP500 Forming?

Corey Rosenbloom — Thu, 16 Apr 2009 11:36:14 -0000

Sumo,

Thanks for reading!

Andrew,

Thank you for sharing - I'll try to draw in these possibilities or provide some text from Prechter's book in an upcoming post.

I always appreciate your feedback!

Re: What Pattern Exactly is the SP500 Forming?

Corey Rosenbloom — Thu, 16 Apr 2009 11:34:37 -0000

Pankaj,

Exactly, though the market has already broken certain levels of short-term Fibonacci confluence at 805. I would look to the February highs at 875 to be simple resistance which, if broken, could lead to a quick push to the January highs at 940.

I've decided the bulls have forgotten the meaning of the word 'resistance.'

Re: What Pattern Exactly is the SP500 Forming?

Corey Rosenbloom — Thu, 16 Apr 2009 11:13:01 -0000

Anon,

It depends if one quantifies this as a Leading or Ending diagonal. Check out Andrew's comment on here for a background on the pattern.

Diagonals generally are expected to have a similar expectation to a rising wedge - it's bearish and we would expect a break-down once the lower trendline was violated.

Re: What Pattern Exactly is the SP500 Forming?

Corey Rosenbloom — Thu, 16 Apr 2009 11:11:19 -0000

Momo,

You hit my philosophy exactly - patterns are not magic. They 'work' many times because people see them and react to them, placing stops at predictable locations and entering trades at predictable locations. We don't know exactly what's going to happen, but the pattern, along with expectations of investor/trader behavior, help us quantify risk and establish larger targets than our stops, which builds our edge.

Nothing magical - just odds & probabilities.

Re: What Pattern Exactly is the SP500 Forming?

Corey Rosenbloom — Thu, 16 Apr 2009 11:09:13 -0000

Steve,

Could be right - it's been difficult to count the waves in this move up so far - it was counting so easy until we broke the 805 highs. Breaking there triggered a few of my alternate counts.

The pattern will certainly be clear in hindsight but we have to do the best with the data we have now.

Re: What Pattern Exactly is the SP500 Forming?

Corey Rosenbloom — Thu, 16 Apr 2009 11:06:39 -0000

Anon,

You're right on - we see a volume divergence, a 3/10 Momentum Osc. divergence, overhead resistance, etc but the bulls refuse to cede ground. Friday could be a powerful day either way and - if earnings surprise one way or the other big - then we could see a breakout up or down from the wedge.

I have no possible way of predicting earnings, but wouldn't that be nice?!

Re: What Pattern Exactly is the SP500 Forming?

Corey Rosenbloom — Thu, 16 Apr 2009 11:04:13 -0000

Anon,

That's my guess too at the moment but there could be something else going on.

Re: What Pattern Exactly is the SP500 Forming?

Corey Rosenbloom — Thu, 16 Apr 2009 11:03:11 -0000

Jim,

That's one thing I tend to miss - log-scale chart patterns. Good call.

It's just so hard to bet against the bulls at the moment it seems - they're relentless!

Re: What Pattern Exactly is the SP500 Forming?

Corey Rosenbloom — Thu, 16 Apr 2009 11:01:32 -0000

Deez,

It's certainly open to interpretation!

Thank you for reading and for your comment.

Re: What Pattern Exactly is the SP500 Forming?

Andrew Stanton — Thu, 16 Apr 2009 09:38:16 -0000

Leading diagonals are normally seen in waves 1 or A and are the first wave of a larger pattern. The subdivisions of a leading diagonal are 5-3-5-3-5. Ending diagonals are normally seen in waves 5 or C and are the last wave of a larger pattern. The ending diagonal pattern subdivides as 3-3-3-3-3. If this is a zig-zag rally consisting of A-B-(ending diagonal)C then the labels are probably off by one wave since the 1 is most likely part of wave B and the diagonal still needs one more push up for wave 5.

Re: What Pattern Exactly is the SP500 Forming?

sumo — Thu, 16 Apr 2009 08:22:32 -0000

corey,

like your alternatives. good blog.

Re: What Pattern Exactly is the SP500 Forming?

Pankaj — Thu, 16 Apr 2009 06:38:50 -0000

Hi Corey,
As you must be aware already, there are confluence zones at 8064 and 8353. So logically, the 8064 level becomes the point where we should short it, and a few points above 8353, we should place a stop loss. Correct me if I am wrong. Thanks!

Re: What Pattern Exactly is the SP500 Forming?

Anonymous — Thu, 16 Apr 2009 05:51:45 -0000

Hi Corey, how does the Elliot wave diagonal resolve in our case? I don't know EW enough, sorry for my ignorance. thx

Re: What Pattern Exactly is the SP500 Forming?

Momostocktrader — Thu, 16 Apr 2009 03:01:53 -0000

Unfortunately, a problem with trend analysis is that works much better in hindsight than foresight. However, at the same time since there are many technical traders, common belief in certain patterns may create a self-fulfilling prophecy. I think the only thing one can conclude for certain is that one of several patterns will end up the winner, and thanks for pointing these out. I am discovering also that with trading, all you can do is develop your own responses to various scenarios. If you try to predict what you think the market will do and not have the flexibility to let go when wrong, you will get killed.

Re: What Pattern Exactly is the SP500 Forming?

Anonymous — Thu, 16 Apr 2009 02:07:07 -0000

Looking at a 3/10 Oscillator, I see this upward momentum weakening - However, a few months ago had the same weakening in the upward trend and then suddenly to a new high on both 3/10 and price (sorry don't know date off the top of my head). If BAC and C put up believable profits tomorrow and Fri I can see this happening again - thoughts?

Re: What Pattern Exactly is the SP500 Forming?

Ted — Thu, 16 Apr 2009 01:24:48 -0000

it's called a "leading" diagonal

Re: What Pattern Exactly is the SP500 Forming?

SteveInChiStock — Thu, 16 Apr 2009 01:10:39 -0000

Hi Corey - I'm going to go with a 5-3-5 Zigzag. The second half is an ending diagonal. My thought (and we'll see if I'm right on this) is that we're in a large falling wedge/ending diagonal now, and these structures (like the rising wedge) unfold as a series of threes. If we turn in the next few days and make a new low (below 667), this is what happened.

Re: What Pattern Exactly is the SP500 Forming?

Anonymous — Thu, 16 Apr 2009 00:34:37 -0000

feeling scenario of... rounded reversal

Re: What Pattern Exactly is the SP500 Forming?

Jim — Wed, 15 Apr 2009 23:53:39 -0000

Ascending wedge.
Take a look using a log chart.
Also, Monday we closed at channel resistance dating to Nov 4. I am betting that this channel will hold since it's defined by the lows of Nov. & March and the highs of Nov & Jan. Must use a log chart to see this channel. If the top of the channel holds, then we will end this wedge soon, IMHO. Thanks Corey for a great service! I love your site and visit every day.

Re: What Pattern Exactly is the SP500 Forming?

deez — Wed, 15 Apr 2009 23:49:37 -0000

hi corey, i've been thinking lately about the possible patterns the s&p could be forming, and this is a good examination of the possible scenarios. i've been following your blog for a few months, and i just wanted to drop by and say thanks for the quality of your analysis and comments on the markets

Re: What Pattern Exactly is the SP500 Forming?

Corey Rosenbloom — Wed, 15 Apr 2009 23:22:55 -0000

HAHAHAHA

I wish it were that easy. That's what makes trading fun!

Believe me - if I had the exact answer as to what was about to happen (and not just odds and probabilities based on structure) - I wouldn't have blogged it and instead would have done just that - leveraged up on the next move and then gone to the Bahamas.

Re: What Pattern Exactly is the SP500 Forming?

Blue — Wed, 15 Apr 2009 23:07:06 -0000

Rounded reversal. All in on SKF @ 50, hope for 100, pray for 200, retire from trading for the remainder of the year especially if SKF hits $0 : )