Correction Indicator triggered.."get out"
"Get out" warning fired off yesterday with KST, last of the 4 necessary indicators to give the red arrow was triggered...KST only just triggered and being a day behind I'm not sure what todays S&P 500 bullish bounce off the critical 1775 support/trend double point will do to the KST indicator...
So with todays respecting the 1775 support...is it all good news?....urrr definitely a Yes with sounds of relief!!!! and.. maybe later a... no..
...........with reference to No!!!..the interesting scenario of correction indicator firing off warnings now at a time so close to a bullish continuing uptrend reinforces and increases the probability of that forming H&S pattern currently in progressl to keep forming to completion.....As of now the righthand neck has been formed at 1775....areas to watch is for any breakdown from now to around the 1810 1820/40 area if that happens, that is the completion of the right hand shoulder...if the rally continues then 1850+ is the next area to watch as the simple H&S pattern formation is deemed as broken down and disappears forever...a higher high signals an end to the correction and another rally should be expected to continue....
So ....Is my experimental indicator a "cry wolf" indicator?....I think not...it's proven itself now as a very good early warning correction indicator...it just happens that the recent corrections have been very shallow....
Increasingly shallow corrections breeds confidence and exuberance as more and more investors lose their fear and start take advantage of any drop to buy more thus creating increasingly shallow and smaller corrections ....a typical bull market last stage in the cycle signature....At this BMC last stage its no worries, its good times, future looks rosy, no need to fear making money is easy!!!........unfortunately it is at this stage when nearly everyone dismisses that all rising markets need breathers to stay healthy and investors start to ignore their disciplines and indicators as they are seen as failing to do their job..."this time it's different..eh????"
Rule No 1: if your reliable indicator triggers off, one should always respond to it..if its another shallow event, then no harm done... just get back in and treat the "get out, get back in" expense as an insurance policy...just remember the correction indicator will give you advanced warning of the "big one".
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EDIT 1/02/2014: 30th January removed the doubt...On a bounce day as a relief rally raised the market off its Critical support (1775ish).. the KST break widened
Correction still in progress?
S&P 500 had a good day today ...1773 +21 +1.22%
So is the correction over?....maybe but too early to tell...As with most corrections the biggest fall of the falls is usually at the beginning of a correction ...we don't know the time frame of this correction..
As with all corrective behaviour late in a Bull Cycle we don't know if this is another correction or a start of a cyclic reversal...we have to wait to see what develops ...
The good news is.... todays rise is a relief rally in an attempt to create a bottom,,,dip buying and very short termers in and out.
More good news is...the amount of selling volume is a worry but could be viewed as healthy if that available money is sidelined and ready to fuel the next upward momentum...
The warning news is.... todays rally tested the 1775 major support on the chart but so far has not created a bullish break above it...
The bad news is ....the S&P500 chart is still technically broken...and this time it has many hurdles (resistances) to jump to create a new high..(continuation of the bull cycle).
More bad news is...the index needs short term good news to enable it to form a bearish H&S pattern...so breaking the 1775 support is the short term good news needed
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