A Hound signal is when a clear setup for one direction ends up going in the other direction. For a H&S, it means that instead of making the measured move, we reverse and go higher, usually above the head, which in this case would mean new highs in SPX. It's hard to accept that and I don't much worry about whether that's even a possibility.
Now, getting back to waht's tradable, a Hound for the apparent SPX H&S would be that we either:
1) Go up from here plain and simple
2) Stall and the neckline, retrace some, but then blast on up from this retracement.
So, I am not saying "If we rally above neck why do you believe it to be such a hound signal?" What I am saying is that we will retrace at the neckline in any case, after going up over by enough that the bears will doubt we'll even get a retracement -- in other words, a throwover.
Imo, it is from this retracement that we would get a Hound move if it's not a real H&S. It is how the market would get enough new short fuel to make it happen. To put it another way, it is how the market would get the largest number of people looking the wrong way, just as it did last week when things were right on the edge and we had that mad ramp. |
