Category: Technical Analysis
Weekly Review: Major indexes closed mixed last week, but the overall market tone was negative despite some indexes managing small gains…
Lets go to the charts.
Reminder of my preferred long-term count:
From the October 2011 lows price is expected to unfold the last Zig Zag (ABC) = wave (Y) up that will establish a major top by completing the wave (X) off the November 2008 low.
The equality extension target for the wave (Y) is at 1678.
In addition, once/if we have the wave (B) in place, we will able to extrapolate the equality extension target for the wave (C) of (Y), which could have an upside potential move of 347.61 points.
Hence, if my scenario is correct, at the April 2 top price has established the wave (A) and now it is involved in carrying out a corrective wave (B) pullback that could also unfold another Zig Zag (ABC) down, but so far there is no certainty regarding the corrective pattern, therefore we cannot rule out a Double ZZ, a Flat or a Triangle.
Without analyzing in full details the EWP, in the weekly time frame, we already know that if price is unfolding a simple ZZ then the trend line off the March 09 low should not be breached in order not to jeopardize this scenario. Therefore the April 2010 peak at 1219.80 has become a major horizontal support.
As I have already mentioned, I am not following the count that calls for an impulsive decline from the April 2 top…
The selloff in the benchmark S&P 500 was a steady downward slope to the second worst close of 2012, a loss for the day of 2.23%, just a few basis points from the 2.46% selloff on June 1st. What’s to blame? Take your pick: A week unemployment claims report, a nasty Philly Fed Business Outlook Survey, slowing worldwide manufacturing growth and rumors of bank rating downgrades.
See on www.businessinsider.com
This chart from Facebook is a textbook example of an Ascending Triangle:
A bullish chart pattern that is easily recognizable by the distinct shape created by two trendlines. In an ascending triangle, one trendline is drawn horizontally at a level that has historically prevented the price from heading higher, while the second trendline connects a series of increasing troughs. Traders enter into long positions when the price of the asset breaks above the top resistance.
Additionally, I look for a shift to support from resistance, which occurs at the two blue squares. It is this combination a shift to support, and breakout potential through the highs that makes a long in the area of the green circle compelling. See the chart below to see how it turned out.
Pharmacyclics Inc (PCYC) which is breaking out nicely after a short-term bull flag. I’m looking for continuation on this incredible run the stock has been on. It’s imprtant to give stocks like this plenty of room to roam, because often times there is a lot of emotions driving the stock, so I’m willing to give a little more wiggle room on the stop itself.
The market is also breaking out nicely today, and tryging to get out of the 5-day trading range it has been stuck in. Upper 1320′s, at least, is where this market needs to close at.
Note: Jumped in this after noon in PCYC at $40.66. Stop is noted on the chart and my target price is roughly $45. I’m giving it 2-3 days to work out.
LONG: Western Refining (WNR) - Notice the inverse head and shoulders that has formed over a period of months, as well as the range bound ceiling it has been impacted by over the same time period as well. Now we are finally getting a “breakout” to it. Stops and entry noted on the chart. Target is opened ended. Long from $20.51.
The shift-line reject combined with the breakout potential of the trade being into a triple top breakout makes this an excellent add-on setup to attempt in any market or on anytime frame.
Buy the swing reverse because of the double bottom startpoint, and the fact that yoy have room from 585.80 to 587.30/ 588.60.
If that trade fails to reach a partial, or reaches it and reverse, then you can either reverse (or SELL if flat) into what is now a triple bottom brkout of the previous swing’s low.
The triple bottom brkout is where everyone who attempted to buy the swing reverse will exit their position giving the brkout some acceleration to the downside.
Register for this Session
The benefits and pitfalls of different technical indicators
Expert: Ian Coleman, Analyst at First4Trading
Moderator: Vicky Ferrer
Start: Tue, Apr 10 2012 11:00 GMT
End: Tue, Apr 10 2012 11:45 GMT
Participants: 2 pre-registered participants
Ian is going to discuss a variety of technical indicators from lagging oscillator’s for forward looking projection tools. We are going to highlight the benefits and pitfalls and how certain tools can enhance your technical forecasts.