Diary of a Financier

Intraday update: SPY consolidation before the boom before the bust

In Capital Markets on Thu 3 Oct 2013 at 10:28

Just a quick update on the S&P 500 here after the red open…

$SPY failed to maintain a “sustainable breakout” last week, as I had required for a tradeable bottom.  Accordingly, it got “put in the penalty box to contend with $168 for another week.”  It’s now trading right at that $168 level.

SPY’s 1-minute chart shows a symmetrical wedge, which makes it look like the consolidation might last into this weekend.  Thereafter, a breakout from the 30-minute falling wedge with 3x bull divergence–part of a longer term bull flag–remains the high probability outcome:

SPY daily/30min/1min

SPY daily/30min/1min

~~~~

Longer term, I’m most concerned with the primary rising wedge developed in the SPY daily chart above, complete with 2x bear divergence in MACD.  That’s formed within an even larger rising wedge too.  A look at the weekly fractal shows 2 or 3x bear divergence unanimously across indicators–something that accompanied the 2007 top:

SPY weekly

SPY weekly

Suffice to say, I’ll be watching this closely.  Interesting to note that this plays into my 2014 thesis, which calls for a bear market.

–Romeo

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  1. […] on the S&P 500 ($SPX), which has reached a critical juncture after consolidating since my last note, as […]

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