Is it Time to Wake Up the Bear?
On the last update we were following an Ending Diagonal pattern in many markets. The intra-day one in the S&P touched the parallel lines to the tick on April 11th and 13th, but then penetrated them on the low made on the 17th. I'm sure many traders shorted that break only to watch it blast off to new highs! Trading the charts.com had no problem with that setup since we had posted and emailed an OEX chart of a perfect setup coming in the next day or so. I had noticed that the OEX had some slightly different pivots and because of that, the S&P diagonal was to be looked at slightly different.
Below is the chart that was looking for a slightly lower move and then to new highs. It shows a daily OEX on top of a 60 min chart with the fib cluster targets. The OEX made a new low that following Monday at 580 and screamed to a new high at 596 on Thursday! Our Forum has truly enjoyed some excellent setups lately with perfect follow through. The main reasons have been the lack of a bias, and the use of Market sentiment, while doing our technical work.
Below is the current chart of the OEX with targets that we plan to see. I have only discussed setups looking for a top and it wouldn't be smart not to have an alternate. I really don't see how we could be powering up much more than I expect, but if we were to take out the projected area with impulse and excellent internals, I would recommend stepping aside until it shows its intentions.
On the last few updates I was not able to call for a top with the highs that were being put in on the SPX. I was looking for a move to 1285, and then one last squeeze to new highs. So was that it? I'm afraid not, BUT I am NOW ready for the first time to slip on the bear suit. That sure was a squeeze but should only be half of the final move. I have been bullish for a very long time, and even though I think we have a little more work to be done on the Ending Diagonal, it isn't time to be cute. If I could have my way with the market, I would want to see another high into the 1319 -1338 area with stronger targets at 1320-1327. As you can see, IF the market doesn't make me wrong after following this setup for a long time, we don't have much room to play around with.
Perfection would be a high into May 10th to 12th with some sideways action in the upcoming week before a final blast to new highs. On the sentiment side, I am finally hearing what I need to hear. I am hearing less crash calls on this last rally, but more importantly, retail investors are asking a lot of questions about the stock market once again.
So, after a few years of following the larger rally from the Oct, 2002 lows, I am now turning bearish on any high that fails above the recent highs or takes out Monday's low first. I don't expect to take out Monday's low without a new high in the S&P, but like I keep repeating, it's not time to be cute and lose focus of a potential big turn. At the same time, if we do get the expected new high, waiting for the markets to show a reversal would be advised.
Another market that we were looking to short was Gold, and it sure did pay off big. I originally had a target of 608 and after waiting patiently; it reached it and recognized it, but had other targets to go to. On Thursday at 3:30 am, Our Gann expert (GWDann) posted this chart of gold. At 4am Gold, along with other metals, put in a high and reversed 40 points from it!!! We will be watching its action in the next couple of weeks to determine exactly what this move meant. Once again, just like the S&P's, many have jumped on the crash call for metals. That call surely didn't help anyone on Friday's recovery.
In other commodities, we keep waiting patiently for grains to start a move. We do have the opinion that Soybeans might have already bottomed, but we need some confirmation of that real soon. When we do get that confirmation, Beans could have some powerful moves coming.
Is Crude Oil going to $100 like many are now comfortable with or did it race to the upper Fork line on Friday's close? I'm sure we are about to find out in the next few days.
The most important thing on my mind after finally seeing the ingredients of an upcoming turn in the stock market is to wish that it's all technical. What I mean is, I wish that if we turn soon, it's not because of some outside event like terrorism or anything having to do with Iran. Instead, I hope it's because Time and Price is upon us for a High in the Market.
I would also like to express my deepest sympathy to the family of Zoran Gayer for their loss.
If you would like to see more of this type of work, please visit us at www.tradingthecharts.com.
We also look forward to seeing others post their work as well, so please come by and contribute.