Tuesday, June 1, 2010

Longer term Look and Ideas on S&P

Is this the big one?  Only time will tell but let's take a look at the larger picture technically.  The chart below is the monthly on the S&P mini futures.  The price has apparently found the 50 period moving average as key resistance and we never made it to the 1233 61.8 Fib retracement which I was expecting.

FW's measured market guage the MMG gave a sell signal on the May bar as the CCI seems to be completing a snapback down.  This snapback down is when the White (5 period or short term) CCI achieves pretty good breadth and suddenly closes back to the Blue line which is the longer term CCI study 50 period.

A note about almost all these studies is that they measure some parameter at several speeds or time periods and place the visual indications together on one chart study.  Everything I have ever looked at indicates that everything operates in cycles or waves.  Not just stocks but life itself seems bound by certain limitations on cyclical motion.  Stocks are no different.  The question is simply WHEN will directional changes occur.

My friend FW calls this MAP patterns which is Moving Average Patterns.  What we may see on this chart is the scenario I have drawn in with the dashed red line.  One of the classic MAP failures happens when the price fails to break through the 50, fails, gets a bounce off the 20 (yellow line) and makes another attempt at the 50.  This next attempt at the 50 will be a big deal to me.  Because should it fail the price is likely to at least go back down and test the previous low (662) and there is a good chance that should this occur it will set a new low.  On the other hand should it firmly break out of the bound of the 50 SMA it will go on to test a new high.  This is why this particular time for traders is quite dangerous ..... Anything Can Happen.

Click on Chart to Enlarge  


Below is another and most likely scenario.  I say this because the CCI and MMG have put in fairly low points and though they both may drift down some more, at some point they will likely change direction.  The TEMA which serves to keep me in trades longer has yet to produce a sell signal on the monthly.  So at this time I will have to say this is still a correction not a full blown failure.  So there you have two scenarios.  Right now I like the last and more likely.  As always this is NOT investment advise just the rantings of a guy that plays with charts and numbers.


 

1 comment:

  1. Got that close below the weekly 50 on Friday. This also makes two failed attempts to recapture the daily 200. Potential double bottom still intact though.

    Perfect MAP on the way down in 2008 on the monthly. Will we have another one in 2010 in the opposite direction? As long as we don't close below 1000 (20sma) on a monthly basis then there remains a chance.

    I was watching a video of some guy saying that technical analysis is a bunch of squiggly lines mumbo jumbo and doesn't work. I laughed and thought he obviously hasn't heard of hockey sticks. There are a million ways to play this game and most of those who have found some success seem to think their way is the best. Obviously TA isn't perfect and it can't predict the future but last time I checked neither can anything else. I don't care if you're trading off of tape reading, order flow, fundamentals, chart patterns, or fancy indicators. There is no crystal ball and in the end no matter how you slice it this all comes down to odds and probability, and risk management.

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