continued
Re: T.A. of the market- The big picture
The previous post discussed the trendlines showing on SPX and OEX charts, and began discussing MAs.
2. 13 DMA
On 9/14 both indices jumped over the 13 days SMA (indicating that the crash phase was over), and closed above the 13 DMA since. On 9/21
we traded under the 13 DMA but closed over it in a classic hammer day.
The 13 dma itself, that was at SPX 1027 on Friday will most likely rise today, and a close under 1029 today or under 1032 on Tuesday will be a close under the 13 DMA and will indicate a possible change in ST trend.
PART THREE - ELLIOTTE WAVES
The read of EW got all mixed up.
The recent up move since 9/1 has already made 4 new local highs.
That could be interpreted as two legs of correction, each having two legs- abc of a, then b then abc of c, but many other interpretations could be applied with no telling which is better until hindsight will bring a clearer view.
The distinct two downside actions from the top could be also interpreted as actually three down moves (Donald's three stair steps), and that would mean the end of the big 1 down was on 9/1.
I have to stick with what I see as two waves down.
That could mean that the whole downward move is behind us (we have completed an abc correction down) or that we still have another drop to new lows ahead (we will complete the big 1 down of the bear market).
This paragraph, although vague in itself, is IMO important for the complete TA of the market, and I'll refer to it in my conclusions.
PART FOUR - PATTERN RECOGNITION
1. Comparison to 10/97
The trading on 9/1 looked very much like 10/28/97. Both came after a very big decline in the previous day, both started sharply down and turned quickly to show a big gain. Both closed near but not at the daily high, and both showed record volume.
The next four trading days show almost identical pattern-
Both on 9/2/98 and on 10/29/97 the market was up but closed slightly down, then two little down days in 9/98 compared to one medium down day and one medium up day in 10/97, then another big rise.
The difference is that in October that big rise already pierced through the 13 DMA and now it took another up swing and 4 more trading days to rise over it.
Here ends the comparison, as the market was on a ST slightly down trend till mid November, while now it remained on the same slightly up trend from the low.
2. Fractalic comparison
The pattern showing since the break of the OEX 520 (which IMO is the most important line) resembles the intraday pattern the market made on that day and the next after the break (8/28).
After the first sharp drop on 8/27 that clearly broke the 520 support (the OEX closed 515.9, high 536.8, low 512.74), the market continued a bit lower on the next day, and started zig zagging with a slightly up bias. This continued for the most of the day (daily high 520.44), and broke down from the day's trading range in the last hour, and closed at 507.67, near the daily lows. On the next day it took the plunge.
Streching the same chain of events over a larger scale shows the same pattern- the decisive break of the 520 support (8/27, 8/28 and 8/31), then an upward tilted zig zag move that so far produced a high of 516.64 (still under the broken 520).
To be continued
ATG |
