Diary of a Financier

SPX making its first attempt at bottoming process

In Capital Markets on Fri 25 Sep 2015 at 11:54

Here’s an intraday update on $SPY…

SPX has traded in exact accordance with my last technical appraisal from a couple weeks ago.  The primary pattern governing this market is SPY’s daily LT H&S top, which has hit R shoulder resistance and is now descending toward neckline support @ 182 (-6.4%) — my base case target for this cyclical correction.

Now en route to that downside target, SPY is attempting to bottom early, with new, high conviction, bull reversal patterns being formed.

In the intraday fractals, SPY 15mindaily 2015.09.25SPY shows a 15min LT fulcrum bottom, within which is a classic ST H&S bottom — both aided by bull divergences.

These patterns suggest the following SPY priceaction…

  1. 192.6 (-1.0% fm current)
    R shoulder support of 15min ST H&S bottom
  2. 199.5 (+3.6% rally; +2.6% fm current)
    R shoulder resistance of 15min LT fulcrum bottom
  3. 191.0 (-4.3% drop; -1.8% fm current)
    neckline support of 15min LT fulcrum bottom
  4. 202.0 (+5.8% rally; +3.9 fm current)
    R shoulder resistance of daily LT H&S top

At that point, the fate of this correction will be determined by whether or not that daily LT H&S top’s R SPX seasonalityshoulder resistance @ 202 holds or breaks.  Since that would be the 2nd test of that resistance level and two gaps lay right above it (“gaps get filled”), it’s becoming increasingly likely that SPY can end this correction early.

There’s nothing to do in terms of rerisking/derisking the portfolio until we get confirmation.  This bottoming process will take some time, conveniently aligning these chart technicals with seasonality, which will swing to a tailwind by the week of October 12.

–Romeo

Advertisements
  1. Thank you Romeo, so, likely we’re not going to see 182 this time…

  2. How do you see it now? … gold make my upset ones again…, would you buy biotechnology after such correction? Thank you

Comment

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s