Random Thoughts: The Third Dip Cometh!

By Todd Harrison  MAY 24, 2013 12:05 PM

The bulls and bears battle in historic fashion.

 


Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.

It's been 113 years since the Dow Jones Industrial Average (INDEXDJX:.DJI) has gone this long without a three-day decline, according to the sharply dressed and highly cerebral Jeff Cooper.

113 years is nothing to sneeze at; we can do a lot in 113 years, if we ever had that opportunity. That streak, however, will come to an end today IF the DJIA finishes to the downside, following the slippage of the last two days.

Here and now, S&P (INDEXSP:.INX) 1634 is the level to watch; not only was that yesterday's low, but it will provide "gap fillage" from the hot-popper two Tuesdays ago. Broadening the aperture a bit, the false breakout above the trend-channel will bring us back to playing, playing in the band, with support at S&P 1600.

I may be wrong — or, I have been wrong as of late — but we spoke about S&P 1600 as a first step to a potential move to S&P 1500 yesterday. That may or may not happen — time will tell, and my crystal ball is in the shop — which is why we take our trading journey one stair-step at a time in an effort to manage risk (rather than chase reward) and employ discipline over conviction as we together find our way.   

S&P 1634 and S&P 1600 are levels on the downside while S&P 1655 (yesterday’s high) will violate the emerging pattern of “lower highs” (a sign of distribution), if and when, the other way. Both charts can be found below.






R.P.

Twitter: @todd_harrison

No positions in stocks mentioned.

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.

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