S&P500 breaks out of a Triangle Consolidation


9 posts / 0 new
Last post
anikolov
anikolov's picture
Offline
Last seen: 11 months 2 weeks ago
Joined: 12/09/2011 - 05:24
S&P500 breaks out of a Triangle Consolidation

S&P500 has been in a broad sideways consolidation for most of this year. Since the July top this consolidation has unfolded in a Contracting Triangle pattern as shown on the chart below:
http://www.trendrecognition.com/images/stories/2011/indexes2011/sp500_st...

Now, we can't be sure that this Triangle is complete, but the last week's strength suggests this may be the case. If so, the market is likely to rally until the end of the year and early January. In fact, if this pattern is indeed unfolding, the stock market is likely to be firm in the most of Q1 of 2012. I would expect a rally toward 1400. Then, it may be hit by another strong wave of selling. Overall, my view is similar ot what Mike Swanson said today about what he expects for the next few weeks.

I'll appreciate your comments on the Triangle scenario that I've been following for some time.

Alexander

anikolov
anikolov's picture
Offline
Last seen: 11 months 2 weeks ago
Joined: 12/09/2011 - 05:24
So far, so good

The market rallied last Tuesday (the 1st trading day of the year) and then spent the rest of the time trading sideways. Right now, the daily chart is quite constructive but a move abv 1290/1300 is needed to confirm an upside breakout of the Triangle shown on the chart above has occured. In this case, a rally twd 1378 and then to 1400 will be expected. So, staying long can be favored for now.
Chart: http://www.trendrecognition.com/images/stories/2012/indexes2012/sp500_st...

anikolov
anikolov's picture
Offline
Last seen: 11 months 2 weeks ago
Joined: 12/09/2011 - 05:24
$SPX remains in uptrend as

$SPX remains in uptrend as long as abv 1250. So far, the breakout of the Triangle that I’ve been following is not as convincing as one would like to see. But I’ll give another week or so to the market to accelerate higher. Here’s the updated chart:
http://www.trendrecognition.com/images/stories/2012/indexes2012/sp500_st...
Regards,
Alexander

anikolov
anikolov's picture
Offline
Last seen: 11 months 2 weeks ago
Joined: 12/09/2011 - 05:24
dont' fight the trend

The U.S. stock market has continued its rally from the December 2011 low for more than five weeks now. If you take a look at the daily chart of Nasdaq 100 and S&P500, you will see that their charts display strong overbought conditions. But they also display strong uptrends. There are many people that are likely tempted to short the market now because….. it has gone “too much”, or because, it is overbought, or because S&P500 is below a resistance. However, always keep in mind that overbought does not mean the market should decline and a resistance level is only a potential area where the prices may stall, but not something that guarantees a pullback. My philosophy is to go with the flow, i.e. to follow the trend as long as it lasts. And right now the trend for U.S. stock market is higher.

Bottomline is, I don’t like trying to catch a top during a strong uptrend. To do that right now seems like going against the flow – it is always more difficult compared to if you stay with the flow. So, stay with the flow and respect the market trends.

I'll appreciate if the others join this discussion. otherwise the forum will die (this is a forum, not a blog, so it requires discussions to stay alive).
Alexander

dlst2
Offline
Last seen: 2 weeks 5 days ago
Joined: 11/14/2010 - 11:48
Hello Alexander, since I have

Hello Alexander, since I have been a member of WSW (joined Spring '09), there has been a strong reluctance to go with an uptrend, which is why many here sat out the enormous market rally that followed March '09. As you have probably noticed, Mike is considering shorting instead.

Regards,

Dave

anikolov
anikolov's picture
Offline
Last seen: 11 months 2 weeks ago
Joined: 12/09/2011 - 05:24
I know Mike is preparing to go short

But from what I have seen from him, I do not expect him to go short except for a very short-term time frame (couple of weeks). Break below 1305 in S&P500 will likely signal that the entire upmove from the mid-December low is over. In this case, a 3-5 week correction/consolidation may be expected. But my analysis tells me, then we will see another attempt higher. The market is not ready to turn down in the next big phase of the bear market, imho.

Paul Bennion
Offline
Last seen: 5 days 11 hours ago
Joined: 11/15/2010 - 06:01
I sorta agree here. I see

I sorta agree here. I see another pop to the upside w/S&P taking SDS down to the 16 area...a rally up to 19+ w/the S&P selling off and then perhaps a runup in the S&P bigtime taking SDS down into the 10 to 12 area.
Now then if Europe collapses and the Obamamess continues then all bets are off and we will head into a depression with SDS going up to over $100 in 2012.
Since it's an election year with a ton of money out there and US looking better relatively than the rest of the world one must look at the Street and realize it is not rational much of the time...totally driven by money and greed and stocks become an ever increasing wall of worry crap shoot as they climb the wall. Look at the number of years it took for real estate to get into its bubble...w/little truth holding it up...and the same could befall the stock market since it is quite simply a house of cards with the Street as the dealer. Few guessed at the top in the housing market and few will with stocks as well.

kaibo888 (not verified)
Invite to post ... couldn't resist!

Other than an industrial, which it is, it appears that silver is a kind of leading market indicator here. This particular S&P chart is not unlike the patterned chart one can see with silver. I would note that, Mark Arbeter, CTA at S&P, is calling for growth as the S&P chart suggests. I was asked when I expected silver to peak in the near term. (last December on WSW) I have forecast March but we may well bring that forward to mid to late February with the current trend. We projected the first quarter should rally through until March, with silver somewhat as an important indicator in this quarter. Silver led this latest charge and it may well be a leading indicator for this whole quarter.

However, "Projections' are great but there are very few 'absolutes' in this current era of uncertainty in which we live.

If Mike has called for a minor short then all eyes should be on the street. As Paul stated, few forecast the housing market tops, few will forecast stocks topping as well. Sentiment is a leading player here - that's how I fly; weigh up the tech-indicatives and factor in the sentiment.

However, like Jim Willie, I am amazed that so many 'parrot' like analysts and economists hold down top jobs and are literally as blind as 'Blind Bartameus.' I would say many need the Master Physician for a bit of insight - 'sofia' - Gk for wisdom. Look at the 'crazy' reaction the 'street' had to no announcement last September of QE3. I am no economist but the reaction was 'crazed' and any fool should have seen the writing on the wall that what they had announced was 'QE perpetual by stealth.' The 'switch' was just that - it turned the sentiment off into a negative slather of social panic. Just about every man and his dog saw strength in bonds and dollars. Billions I read has flown out of equities and into bonds. What! Unbelievable!

Good on them, I don't see it that way; with the Euro crisis, the current IAEA Iran scandal, the planned abandonment of the world's benchmark 'dollar' in future, one should be calling 'tops' of a major paradigm in 'world' sentiment here. Enter the 'Willie' factor - in my opinion - one of the leading economists in the USA today. What should and possibly will occur is a major shift back into equities and silver and gold will benefit. With so much money sitting on the sidelines, it is an opportunity in the making. Somewhere, sometime, expect some major inflows into carefully selected growth areas and opportunities to capitalize.

Gold reversed and acted like anything but a 'safe haven' in the last quarter of 2011. And that was following calls for 5k gold and 500 dollar silver all year from the 'sheeple' leaders. Then all of a sudden they all dived for cover and ran for dollars. Some are still saying gold is not repositioned as a safe haven, but I called it little over a week or so ago; that when the dollar and gold appeared on the same side of the fence - the upside - that a 'breakout' would happen. Shit happens and it happened as I said. And I might add I am a plebian at this game.

So what was it with all the experts? Why the long faces last quarter of 2011? It's a mad, mad, world sometimes- but I love it. It is almost comical watching the masses being shifted by every wind of doctrine.

Let's call a positioning now for a new international benchmark. It will not be a return to a gold standard but a positioning of a new international basket of currencies, partially gold weighted and centered on Germany - 'possibly.' Because, there are NO absolutes. Five years ago there were calls for an Asian Union with a common currency. Pres. Hu called for it but an informant from the CPC has since told me it will not happen. That was a plan that was promoted but driven underground because fear was generated by rhetoric about the rise of China. Back to Germany, that's the plan, though - a return to Germany which is aligned through Putin to the papalcy - it is said. I might add, in my opinion Putin is more than a politician - he is a diplomatic statesman! If anyone thinks this is entirely socialist driven - think again!

Quote Kaibo: An 'ism' is a schism, and a 'schism' is isolationism of a societal disorder - that is where the dollar is driving itself - into 'isolationism.'

What a pity!

It should be that Iran is on the outer but that nation has positioned itself for protectionism, alongside Putin and China. Enter the big boost for gold. With India speculating yet calling for gold traded commodity exchanges. With China and Russia backing the call ... 'isolationism' is being rendered as we speak. With Southern and Central American states turning away from the hand of the dollar that burnt them in the north, to friends that woo then in the east, isolationism is alive and well. The oil weighted currency has run its' race - a change is in the offing. This is not terminal but it is an opportunity for the congress to be shaken from the complacent, disunified and dysfunctional state it is in now. The writing is on the wall. The change in sentiment will not be reversed. The Iraq oil scandal declared the hand; and the public face on the US admin with a dark skinned Pres, has not achieved the miracle.

I have heard very little about Obama's "State of the Union" address but I thought it was brilliant. What an orator! Give the man any 'bill of worth' as he said, 'he will sign it.' Obama is a 'peoples' person - what he needs is the 'square-head' congress to become responsible for the people also. Perfect he is not, but if his signatory could change the course of a nation then get the bastards who resist change out of the congress and give the man a bill of worth - such as 'sack the fed' - before they crown the prince!

Hillary is a great politician, but she is part of the steering committee to reposition Germany at the top of the tree in world economic affairs. There is one country in this world that needs a revolution - the great nation of the Free - the USA. Buck the trend; break the shackles; and save your own people first and then turn back to help the world. The great nation is crumbling even as we speak as they poor billions into saving the unions, the EU inclusive. The dollar will be a 'has been' if the rot is not stopped. Sound the alarms or the alarms will sound you out as you sink and slide down the road of yesterday's hero. Slap a 'pollie' tomorrow with an affidavit for disservice to the nation!

I was partially educated through Americans; I was as pro USA and Israel as any person could be. I supported 'Operation Desert Storm' under 'Daddy' Bush. But that was until I realised that the umbrella I was under had holes in it. 'Baby' Bush let it rain and now it's pouring. A torrent will soon arrive unless the people shake the tree and get rid of the nuts in office.

Okay, it hasn't been a major breakout, as the Dr. said last week, but it has turned sentiment and the 'street' interpreted 'Ben the Banks' statement last week as liquidity - QE - weeee! You can see the 'herd' mentality as the 'sheeple' all piled back in. Now they are again calling for 100 plus silver, even 4.5k gold. Give it a rest! It will get there when the bell rings - not before.

Note on the silver chart the reverse head and shoulders in a similar trend to the S&P chart depicted here. A wait and see approach is wisdom but also weigh it up with sentiment and we are seeing a major swing back into industrial sentiment here. Other sectors are sliding and might drag the whole lot down at some point, maybe even sooner rather than later. I am not telling you anything you don't understand better than me. This is 'hay-making time.' It is a window of opportunity that might be longevitized or short-lived but it is open right now.

'This old world keeps spinning around.'
'It's a wonder tall trees ain't laying down'
'There comes a time.'

'A time for every purpose under heaven.'

This is the time to position ourselves for changes but in the meantime we aim to make bank and capitalize. This is a time to sow the seed. The S&P declares opportunity not a major reversal. Even if we save dollars - it is an opportunity that many failed to do but is said that many western nations are now realising - at least when we save we have them. Purchase some bullion - opportunistically -great. As they say, 'get it while it is this cheap.' If it goes down, so be it. If the dollar slides you will still be glad you have bullion.

The S&P is likely to go through the ebbs and flows - short a little here and there - but the first quarter will be strong and overall, the 'experts' tell us the 'January indicator' calls for a reasonable year.

Sorry about the trending in this post to politicized rhetoric. It is my nature that I can't change. Here's hoping that economically, the biggest turn around this year will be strong growth in the USA. God knows I need it and the world needs it.

Growth of the positive sentiment of the people, coupled with the creative intelligence and capital investment from the private sector, and you have opportunity - miles of it.

I love the US and I hope it is well with the people this year. Whether you are socialistically inclined or capitalistically biased, who gives a rats arse. Remember, the 'Russians love their children too.' So too do the Iranians and the Chinese. There are no isms that should become schisms that render benevolence to protagonists. Joy to the world and peace on earth.

'Make hay while the sun shines' - because we never know what tomorrow will bring.

anikolov
anikolov's picture
Offline
Last seen: 11 months 2 weeks ago
Joined: 12/09/2011 - 05:24
my latest view on $SPX

S&P500: 1365.78 - uptrend

The market is just below 1378 level and the bulls remain in control. I still believe that this level will be touched during this uptrend. The question is what will happen once this level is reached. The daily chart is very overbought and a pullback is overdue. On the other hand, if we look at the weekly chart, I have an upper target at 1454 which the market may decide to reach as well. So, the only thing I can say now is that the trend is higher and that it will most likely top out somewhere between 1378 adn 1454.
On the downside, a move below 1340 will be a strong sing that the uptrend from the Dec 2011 low has already ended...

here's my chart:
http://www.trendrecognition.com/images/stories/2012/indexes2012/sp500_st...

Alexander

Log in to post comments


JOIN: WALLSTREETWINDOW FREE MEMBERSHIP

* Join and receive the Two Fold Formula guide to picking stocks and combine tested fundamental valuation metrics with technical analysis.

*Align yourself with the big trends of the stock market and be alerted when these trends change.

*Receive free updates when we see an investment opportunity in an emerging sector before the crowd gets in.

CLICK HERE: JOIN WALLSTREETWINDOW FOR FREE