Daily S&P 500 INDEX TRACKER

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diagonal triangle

http://homepages.ihug.co.nz/~peat/im...ClubReport.pdf

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traditionally these diagonals spike up to clear out the weak before their precipitous fall.

yeh the event could be anything , another tentacle of the GFC could pop up anywhere. we never expected Dubai, tho the PIGS were pretty obvious.

[Hoop]

Hmmm...interesting Peat....Yep a diagonal triangle...don't see these babies every day of the week do you...the rising wedge formation which is rather unreliable is rare enough and that's without the rare EW involved in it.

I have been wondering about my Head & Shoulder formation breakout and subsequent pullback in progress postings. To date this current pullback has gone a lot higher than I thought possible without turning into a continuation recovery. The 1130 is the point when the pullback starts eating dirt. 1130 is an important resistance level. Above this 1130 level the bear market trend weakens out as the rally forms a higher high ..an uptrend line can be drawn and gives confirmation that the latest rally could be genuine and not another sucker type.

Peat that identified DT is yet another string of confirmations that the Bear downtrend may not over yet.

An Interesting post

..so investors are warned that the S&P 500 is still in Bear Market mode.

traditionally these diagonals spike up to clear out the weak before their precipitous fall.

yeh the event could be anything , another tentacle of the GFC could pop up anywhere. we never expected Dubai, tho the PIGS were pretty obvious.

Shanghai my leading sharemarket index has turned upwards (end of June) and some asian markets + Germany are still in Bull mode. European markets are tending bullish but very fragile.. The American markets seem to be about 3 months behind now.Australia has a similar formation to the SP500but it doesn't meet the DT rules but it has a bullish double bottom look about it and NZ has a favourable short term uptrend...but both markets are still bears.

So...maybe the Bad News could be more local such as an American economy double dip recession becoming a reality. Remember USA is cot case as well as the PIIGS..

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bond markets are alerting as well

http://www.businessspectator.com.au/...cument&src=kgb

“Declines of this magnitude very often presage the onset of bear markets and recessions. Typically, equities and then economists are late to the game. Nothing we are seeing is any different from the past, at least on this score. What is key to note is that the bond market is the tail that wags the stock market’s dog – it leads.”

and the forex markets have change direction dramatically this week as well.... all looking like somethings about to happen if you ask me.

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some opportunities for bears last night.... I got some
but Bernanke came to the rescue hahah. not only does he have a helicopter but he has the Cavalry riding with him as well!

last nights fall was actually the break of a smaller scale rising wedge as well. which retraced back to its starting point (back to test)

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diagonal triangle

wedge truly broken now

but what is worth mentioning at this (supposedly late but not according to this) stage is that if you read the link I posted on how Jeffrey Kennedy likes to play the DT then he would only be shorting it (approximately ) now as it has just passed the 4th wave - which is what he waits for as confirmation that the move is happening. Theoretically the whole triangle will be retraced so that leaves up to another 80 points left. This would require a 46 point stop though so risk reward is a bit marginal but ok I guess.

Lets see.

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even Tony Robbins is preaching the shift
http://www.huffingtonpost.com/2010/0..._n_677769.html

long video but hes really talking things down (and he's a positive kind of guy)

[evilroyrule]

here comes the hammer, hammer, whooaaaaaaa, they put me in a mix.

[Hoop]

Attached is a more complex chart showing the successful (bad) outcome of the rising wedge formation... Peat gave the warning on the 9th August....the rising wedge fitted all the EW rules so deemed the name diagonal triangle from the EW guys.

Bulkowski says that 70% of the rising wedge down-breaks fall less than 20%.
EW guys say the fall back to the baseline of where it all started.

and

H&S formations with a pullback feature only 8% fall less than 5%.

which all may result in an area below the 1040 support/neck line

..Conflict...

If the market falls below the 1040 support and also the neckline around the same area (1040). chances are that it may get ugly...however I said that in my previous posts and got caught in a bear trap.

..Also (not marked on the chart below)...Maybe the H&S formation hasn't yet ended and is going from simple (one shoulder and neck each side) to complex formation which involves 2 or more shoulders and necks......

As the market is meandering in between the 1130 -1040 zone I guess 1040 could be a bottom Belg..then again ..

The last few months the S&P500 market has been hard for the chartist to fathom except they know that it is in bear market mode and bear markets often disappoint the long investor..even those with a medium amount of TA knowledge.

A good day on Friday but the bad news was it failed to go above the Flash/gap resistance line 1065 which could be a worry for the pessimists..then again an optimist would say it is reading itself for a gap up on Monday.

Bear markets are called bear cause the bears have unpredictable tempers and sometime it is against rational logic...so...Uncertainty reigns supreme....therefore any guess could be a good guess... eh?

Probably best to follow P's charts (I guess it will still be red).

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yeh I reduced shorts at 1040ish, we had a couple of hammers and several long lower wicks
but I'll be back in again short in a day or two - the bad stuff aint going away

look at these returns and std dev for SP500 , NASDAQ , and a few random companies April 2005 - April 2010 abysmal