Diary of a Financier

SPY’s undulations render high conviction setup

In Capital Markets on Fri 31 Jan 2014 at 13:54

The market has meandered as expected, per my last discussion of its potential (and likely) paths.  Now it looks like $SPY ($178.4) has made a short term bottom, which will propel a multiday bounce to complete the bearish Head & Shoulders top’s right shoulder formation…

That $177 support level has proven itself significant.  As I noted yesterday, it will serve as a foundation for a multiday rally.  Naturally, that means a shorter-term bottoming pattern is setup in $SPY, SPY 15min/daily/weeklywherein the 15min has hammered-out a little fulcrum bottom that’s nearing its right shoulder as we speak.  To complete that pattern, SPY should test its $177 neckline again here soon, before taking-off higher up to the primary, daily H&S right shoulder ~$182.

Weekly indicators remain bearish.

This is the first, unambiguous technical setup I’ve seen during this correction, so I have higher conviction as to SPY’s path henceforth.  As I said on WednesdaySPY’s reaction at that $182 right shoulder is the signal I’m watching, and this aggregate technical setup says there’s a high probability of breakdown into a correction from there.

~~~~

Update (16:00 EST)

Good close for my thesis, as SPY hit that 15min fulcrum bottom’s R shoulder ($179.3), then plummeted into the close @ $178.18:

SPY 15min (close, 2013.01.31)

SPY 15min (close, 2013.01.31)

–Romeo

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