In keeping with the whole déjà vu all over again theme of recent weeks, it makes sense to wonder whether this year’s peak was put in back on April 2 and a few weeks earlier than the May 2 and April 26 peaks of the previous two years in order of youngest to oldest.
If so, it would carry that theme of déjà vu to 2011 and 2010 with US economic data worsening into spring and summer as the liquidity effects of the previous year’s Federal Reserve aggressive policy moves wear off simultaneous to the “reemergence” of the sovereign debt and banking crisis in Europe.
Based on the way the two-year chart above is marked, it seems that the answer is, Yes, this year’s peak on the S&P has probably been put in considering the similarity between last year’s trading around a set of Bear Fan Lines on a multi-month Complex Head and Shoulders and Broadening Top formation and this year’s trading around a tighter set of Bear Fan Lines and a smaller Head and Shoulders pattern. Should this year’s bearish configuration start to fulfill down, it will take the S&P toward the 1292 target of that H&S or perhaps toward the 1075 target of the index’s unmarked Rising Wedge.
In turn, such a potential turndown in the S&P will probably match continued weak US economic data – again – and more disruption out of Europe that might mean a possible Greek exit from the Euro as bond yields soared – again –in Italy, Portugal and Spain to put further pressure on the health of European banks – again – until the Federal Reserve and the ECB are “forced” to inject more liquidity to keep this peculiar cycle going – again.
However, the S&P’s H&S could try to take out 1422 to fill out the Broadening Top aspect of its H&S and this would mean, clearly, that this year’s peak has not been put in, but such a possibility seems less likely in considering the upward-sloping bottom trendline/neckline of that H&S along with the fact that it does not appear to be a Complex H&S pattern and the only sort that is interchangeable with a Broadening Top.
When the S&P Bullish Percent Index is brought into this analysis, it appears to support the idea that 1422 is likely to mark the 2012 high on the S&P having dropped below the all-important sell signal at 70 while allowing for the sideways trading that has begun to take over the index in the form of that H&S.
This means that the index could trade for weeks if not months between 1340/1357 on the low-end of the range and 1415/1422 on the high-end of the range before potentially, and likely, breaking that sideways trading to the downside toward the aforementioned 1292 or even 1075.
Such a move to the downside after some sideways trading makes sense in the context of the VIX too with its current Symmetrical Triangle calling for narrowing range bound trading between 15.75 and 19.87 ahead of using that pattern to spike higher to fulfill its confirming Falling Wedge that carries a target of nearly 48.
A possible spike toward 48 in the VIX would probably mean a drop in the S&P well past 1292 and toward 1075 but one that may be reversed – again – this fall by some potential monetary policy move made by the Federal Reserve and the ECB considering the statistics of S&P performance in an election year.
Since 1952 and putting aside 2008, S&P returns during an election year were about 9.4% while including 2008 takes that figure down to 6.2% and these statistics put the S&P at 1397 and 1357, respectively, and this means that any big decline in 2012 is more likely than not to be reversed back up to some degree for more sideways – again.
Unless, of course, 2012 turns out to be a repeat of 2008 then it seems that the recessionary call of February 10’s Recession, Depression or Recovery? would turn out to be true this year rather passed into 2013 or 2014 as seems increasingly likely at this point with the relatively near-term when less relevant than the rather likely what of the S&P revisiting 640 or so.
Putting aside that longer-term call, it seems likely that the S&P has put in this year’s peak unless some sideways slop takes it briefly above 1422 in a potential peak that would make for that much more of a drop down.
I'm still focused on 795 as being the number we have to get over to go up as I said in an earlier post...if we stay below that we remain bearish.
If we get a daily close under 780 things will start to get uglier....in the mean time watch 786, 781.5 and around 771.5.........on the upside watch 795 and 802
I have a footprint now at 788.7 (this is a short term deal).....I'd be looking for a bounce back up from about 786.2 back up to that.....it might go lower but the point is when it turns and goes up that's where it will go (788.7)
If it goes back to 788.7 at any point after you read this it's over......
Don't stay up all night watching...just see what happened in the morning and call me a nut if I'm wrong
It appears so, but it is a very fragile shot at this point and in the interests of time, let’s turn straight to the charts and levels starting out with the Russell 2000.
This is a great looking pattern and should succeed on that nice Spike Bottom/Hammer apex but it can be taken seriously only if the Russell 2000 confirms its Bull Pennant by rising above 796 for a target of 830 with the RUT lucky probably if it makes it to 820 on this pattern even as nice as it is.
Turning to the Dow, its Bull Pennant is nice but may have a bearish Hanging Man for its apex so confirmation is key at 13049 for a target of 13339 with a partial fulfillment at best likely here too should it confirm at all.
Now what is interesting in comparing the two charts above is the fact that the Russell 2000 hit the bottom trendline of its bearish Broadening Top while the Dow has not and perhaps this happens today as its last Rising Wedge hits its target of 12711. Should this happen, it will be truly interesting to see whether the Russell 2000 hangs flat or rallies even as the Dow drops and if so, it will provide a strong signal of another sideways swipe up.
On the other hand if the Russell 2000 drops and moves below multi-year support near 772, it will be similar to the S&P dropping below 1340 and a signal that all bets are off on how bearish things might become on the Broadening Tops marked in above that serve as apexes to 20%+ drop Rising Wedges. In other words, this situation is very tenuous and the levels must be treated with kid gloves.
Turning to the Nasdaq Composite and S&P for just levels without the charts, the Nasdaq’s Bull Pennant confirms at 2970 for a target of 3085 and the S&P confirms its Bull Pennant at 1374 for a target of 1415. Failure for the Nasdaq comes at 2885 and for the S&P below 1340.
Whether the equity index Bull Ps have a shot is to be seen, but it is pretty clear that the watching around the answer will be very, very exciting as immediate-term bullish aspects attempt to take on long-term and quite bearish aspects.
How do have yours Set up for TF. I know the particulars are bit complex, but is it necessary to have the 3 segments
separated by the session template. I have been using "use instrument settings" lately and my pivots track fine.
What is the actual point of the session template? ....Indicator tracking?
Ha !! lol If you use daily pivot indy's, the Daily OHLC and SR will be based on the start and end times of
the RTH / ETH.. so, IF you have it incorrectly set, the pivots will be off. I know the TF has three different
segments. I just started up a VPS and a fresh install of NT and I don't want to set that monster up again.
What session template do you use in the Data series of your chart? Or do you not even worry about it?