Saturday, March 2, 2013

Nemo's Findings week of 3/3/2013

(Course on chart pattern recognition is available now:  

Has the long awaited/anticipated pullback begun?

Well, the week started out in fine fashion creating what looks like a lower high on Monday.

Tuesday started out promising in a The-Grinch-Who-Stole-Christmas sorta' way, but the everfaithful Monthly Pivot did the Cindy-Lou-Who thing and stopped the pullback in it's tracks.  Notice:  I had mentioned how the Semesterly R1 in IWM and SPY had been providing support since January 25th or so.  Well, IWM violated it for less than 15 minutes and SPY spent about half a day under it.  Might be worth looking IWM SPY and FAS formation here.  Late in the day I shot off my mouth saying this chart formation looks very bullish for the 'morrow. (mmmmhhh, just heard the Canterbury Tales in my head).  Indexes had bounced basically at strong support, and if you look closely you will see a red "23.6" to the left of IWM and SPY on that day near the bottom of price action for IWM and SPY.  THAT, is the fib retracement from the November 2012 low in both instruments.  Confluence...funny how that works.


  Oops...I screwed up on the chart copy, so this will be for two days.  As you can see, the 27th proceeded as I thought bouncing off the support from the prior day.  Now what adjective will we use that I absolutely hate in financial headlines:  "rocketing"  "surging"  higher.  As you can see on the 28th SPY had broken the Weekly pivot, with IWM and FAS making the weekly pivot  and bonds found a floor at the Monthly pivot.



We had a quick sell-off in the morning with FAS IWM and SPY all bottoming basically at levels in different time frames, and frankly, this is something I look for:  an inflection level for each instrument doesn't have to be one defined by the same time frame, but often you will see inflection when the instruments all arrive at different multi-time frame levels at the same time.  In this case, the FAS reached QR2, which coincided with the breakout of the formation from the 26th.  IWM tested support of the breakout from the same day, whereas SPY only approximated the breakout level. 

 Of course, this raises the logical, but irrelevant question: 

"Well, how do you know which was the cause and which was coincidence?"  

Simple answer:  "I don't."   

But...the more levels that coincide for different trading styles the higher probability of something happening.  Then, it's up to your skill at understanding price action at that level.  Look, I had ADD/ADHD/multiple personality-schizophrenic psychosis long before they had a diagnosis.  This method allows me to focus on specific levels when price gets there without having to maintain concentration continuously.  When you have as much bouncing around in your head during the day as I do, that's a good thing.  

On a related note regarding distractions to concentration: had to corral bunny this week, she was attacking my father in a territorial dispute. Actually rather comic watching an 80 year old man with an oxygen bottle in his hand, balancing on one leg while attempting to shake the other leg to dislodge an attacking rabbit from his pants.  Amazingly vicious for such a cute little thing. 

Brings back memories:

Who'da thunk?


Back to the chart:  So, Friday basically left us treading water in the range we entered on Thursday.  Notice how TLT oscillated around the 50 day SMA.

So, we had pretty positive price action this week for all intents-and-purposes.  The Italians couldn't tank it.  Walmart's crappy results couldn't tank it.  The sequester, which is a thimble full of water in a septic tank full, couldn't tank it.  We'll see what Monday brings, but my bias is long going for new highs in the market this week.  Buy some lubricant for your local bear.

Anyway, the week that is...