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Jason Haver: Did the Stock Market Just Tip Its Hand?
A clear near-term pattern may have emerged.
Jason Haver    

Lately the market has done its best to convince traders that there are probably easier ways to earn money, such as by selling a kidney or by stealing the "Mona Lisa." Over the last couple of weeks, I haven't done much in the way of near-term projections, because I felt the market was near-term "un-projectable." I have no regrets in that regard -- sometimes the best trades are the ones you don't take, and recognizing in advance when a market should be avoided can be valuable.
 
Today, though, we'll consider the possibility that something recognizable may be emerging from this mess, and we'll examine a potential near-term pattern (and variations thereof). So, without further ado (adieu?), let's get right to the charts.
 
The first chart is the S&P 500 (INDEXSP:.INX), which hints at a potential triangle in formation. This also fits the recent whipsaw nature of the tape -- for comparison, the last triangle we encountered was in March.
 
 
Click to enlarge

Stepping out to the long-term view, we can see that if there's a near-term breakout, then SPX will encounter long-term resistance soon thereafter:
 

Click to enlarge
 
The NYSE Composite (INDEXNYSEGIS:NYA) is in a similar position to SPX (via a slightly different pattern) and has already completed enough rally waves to be complete:
 

Click to enlarge
 
In conclusion, the market still hasn't laid its cards on the table, but it may be tipping its hand just a little bit here. Keep in mind that if this is indeed a triangle, then it would mean that any breakouts will whipsaw in fairly short order, since triangles virtually always form as the penultimate wave. Either way, bears still have a good shot at gaining traction over the intermediate term, so keep in mind that all near-term bullish bets are off below 1859 SPX. Trade safe.

Follow me on Twitter while I try to figure out exactly how to make practical use of it: @PretzelLogic.

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
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No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Jason Haver: Did the Stock Market Just Tip Its Hand?
A clear near-term pattern may have emerged.
Jason Haver    

Lately the market has done its best to convince traders that there are probably easier ways to earn money, such as by selling a kidney or by stealing the "Mona Lisa." Over the last couple of weeks, I haven't done much in the way of near-term projections, because I felt the market was near-term "un-projectable." I have no regrets in that regard -- sometimes the best trades are the ones you don't take, and recognizing in advance when a market should be avoided can be valuable.
 
Today, though, we'll consider the possibility that something recognizable may be emerging from this mess, and we'll examine a potential near-term pattern (and variations thereof). So, without further ado (adieu?), let's get right to the charts.
 
The first chart is the S&P 500 (INDEXSP:.INX), which hints at a potential triangle in formation. This also fits the recent whipsaw nature of the tape -- for comparison, the last triangle we encountered was in March.
 
 
Click to enlarge

Stepping out to the long-term view, we can see that if there's a near-term breakout, then SPX will encounter long-term resistance soon thereafter:
 

Click to enlarge
 
The NYSE Composite (INDEXNYSEGIS:NYA) is in a similar position to SPX (via a slightly different pattern) and has already completed enough rally waves to be complete:
 

Click to enlarge
 
In conclusion, the market still hasn't laid its cards on the table, but it may be tipping its hand just a little bit here. Keep in mind that if this is indeed a triangle, then it would mean that any breakouts will whipsaw in fairly short order, since triangles virtually always form as the penultimate wave. Either way, bears still have a good shot at gaining traction over the intermediate term, so keep in mind that all near-term bullish bets are off below 1859 SPX. Trade safe.

Follow me on Twitter while I try to figure out exactly how to make practical use of it: @PretzelLogic.

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Jason Haver: Did the Stock Market Just Tip Its Hand?
A clear near-term pattern may have emerged.
Jason Haver    

Lately the market has done its best to convince traders that there are probably easier ways to earn money, such as by selling a kidney or by stealing the "Mona Lisa." Over the last couple of weeks, I haven't done much in the way of near-term projections, because I felt the market was near-term "un-projectable." I have no regrets in that regard -- sometimes the best trades are the ones you don't take, and recognizing in advance when a market should be avoided can be valuable.
 
Today, though, we'll consider the possibility that something recognizable may be emerging from this mess, and we'll examine a potential near-term pattern (and variations thereof). So, without further ado (adieu?), let's get right to the charts.
 
The first chart is the S&P 500 (INDEXSP:.INX), which hints at a potential triangle in formation. This also fits the recent whipsaw nature of the tape -- for comparison, the last triangle we encountered was in March.
 
 
Click to enlarge

Stepping out to the long-term view, we can see that if there's a near-term breakout, then SPX will encounter long-term resistance soon thereafter:
 

Click to enlarge
 
The NYSE Composite (INDEXNYSEGIS:NYA) is in a similar position to SPX (via a slightly different pattern) and has already completed enough rally waves to be complete:
 

Click to enlarge
 
In conclusion, the market still hasn't laid its cards on the table, but it may be tipping its hand just a little bit here. Keep in mind that if this is indeed a triangle, then it would mean that any breakouts will whipsaw in fairly short order, since triangles virtually always form as the penultimate wave. Either way, bears still have a good shot at gaining traction over the intermediate term, so keep in mind that all near-term bullish bets are off below 1859 SPX. Trade safe.

Follow me on Twitter while I try to figure out exactly how to make practical use of it: @PretzelLogic.

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
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