The setups I include on this blog are used in conjunction with the 3/10macd and the criteria I ascribe to it as a way to alert me to an existing condition of price. The key concept to take away from this blog is that I try to anticipate what will happen on the higher time frame by using a faster time frame to trigger the trade setup. I do not trade a "system" I use two indicators to clue me in to price conditions. Please read the Disclaimer located in the sidebar of this site. I can be contacted via email at
I am always open to questions, comments, or suggestions on how to improve this blog.

Saturday, August 11, 2012

into resistance

We're right into resistance; 1% from fresh post-Lehman highs and 10.5% from all-time highs on the SPY (weekly charts below).  We either get a strong momentum bar to breakout (getting very extended and compounding a short squeeze) or we fade to entice buyers.
There are often dual levels of resistance in these circumstances, coinciding with previous breakdown points.  Interestingly, the previous 2 breakout to new high attempts were faded for larger corrections.

We also appear to be forming smaller seed waves which kick off these measured moves to higher highs.  Below is a chart with Fibonacci projections based on the highlighted seed waves (7 of them):

The chart below adds in the 3 larger cycle moves (green) with red Fib. projections.  The $143-$146 area has a good deal of Fib. confluence:

 In the grand scheme of things, this monthly chart below we can see price has done a good job in filling in the previous momentum selling that began in June of '08.  Price could stand to test lower for constructive price discovery,  particularly given the importance of the overhead price levels which previously resulted in a double top.  Trends end in a climax, and in my opinion we haven't seen one yet.

At any rate, the longer we take to test the $154.50 area, the better for sustained trend development.  Keep an eye on the VIX  going forward, which hasn't given any hints at a correction, though is holding a higher low (weekly) while the S&P holds this current lower high.

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