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Prior to turning to any charts, let me state the challenge of these “crazy” markets and that is sideways trading reminiscent of last spring and summer for a little déjà vu. Complicating matters right now is the fact that the pattern responsible for this trading and the same one from last year – the bearish Broadening Top – may – sudden death – or may not – sideways – be ready to fulfill after little bit of sideways trading.
What this means for all of the equity indices is that the daily charts are bearish intermediate-term bearish for a 10%+ type drop, but it is less clear whether that drop might start in a few days on Bear Pennants or in many weeks as the Broadening Tops take the equity indices well above this year’s highs. Right now, at this moment, these charts look more vulnerable to a serious drop in the very near-term as opposed to the decline after the measured rise, but this is my opinion only and both possibilities must be taken into account.
Supporting my opinion is the chart of the S&P and its failure to drop to 1340 to make for a nice bottom Broadening Top trendline touch and something that provides pretty decent support for its more sibling pattern or the Head and Shoulders. Had the S&P touched 1340, its chart would probably support a move above this year’s highs toward 1440 but without 1340, there appears to be less of a bottom Broadening Top Trendline – now – and more of a Head and Shoulders neckline.
What makes the chart above even more complicated and challenging is the fact that the possible Bear Pennant of recent days may be morphing into a Double Bottom while the level that should have invalidated the Bear Pennant at 1402 does not invalidate the H&S with a higher right shoulder always preferred. Unless you love trading volatile swings, then, sideways may mean sidelines considering that the confirmed Double Bottom carries a target of about 3019 and a level that could be achieved right as the S&P swings back down or an objective that may not be hit as the S&P swings back down with its chart presenting bearishly on the aforementioned aspects along with the index’s recent reversal of its intermediate-term uptrend as shown in the chart on the following page. It just seems that the risk-to-reward ratio favors risk right now even if the S&P took out this year’s highs.
In part, this is due to the dominating pattern in the year-to-date chart of the S&P and the one that shifts the definition of sidelines, it is the Broadening Top/H&S that begins to confirm at 1357 and very safely at 1340 for a current target of 1292 and a level above the S&P’s 200 DMA.
Should that Broadening Top/H&S confirm to fulfill whether in a few days or after a number of weeks, it will set a very bearish Rising Wedge into motion toward its target of 1075.
Interestingly, though, and as can be seen above, the S&P’s bearish Rising Wedge has already started to confirm to fulfill and this may be a sign to think the true H&S wins over a peaked out Broadening Top and this would mean that the S&P will start to fall again within days toward that all-important 1340 level for starters with the Dow’s outside candle for April providing the bearish precedent.
It seems, then, that the odds favor, more than slightly, sideways coming to an end sooner rather than later.
Can you help answer these questions from other members on NexusFi?
my 2cents, the TF forecast was where the market usually makes a U turn @ "-88.6%", plus the candle bar was screaming "enough"! at this point the forecast calls for the price to fall back to the 0% level!
I was going to post that there is a short at 807.8 but it looks like a trap...so I won't tell you guys about it
I'm just watching....this stuff is to insane to trade.....tried something earlier that cost me 9 ticks and after seeing on how things are playing out am glad that's all I donated.
I just want this to break out of this area and go from there....
Can make a weak argument for a long at 792.7 .....this one really is iffy but keep an eye on that spot anyway for something.
I've been somewhat remiss in that I haven't been paying a lot of attention lately because of how messy it's been and I'm waiting til it looks better to me and it looks like tomorrow should be ok so.....
