This is the most extreme 7 day exhaustion pattern I have seen,certainly in a stock index at any rate ,with a gap up above the bollinger band and a shooting star candle.It should normally be a reliable reversal signal but of course this time is different because Bernanke has given the all clear for risk assets ad infinitum....hmmm
NYSE peaked a little earlier than the SPX,on March 19 so the Gann 180 cycle kicks in this week
NYSE peaked a little earlier than the SPX,on March 19 so the Gann 180 cycle kicks in this week
I'm with you on your analysis. Looks an awful lot like an exhaustion gap higher. Lots of factors that put good odds on it being so, starting with but not limited to everyone being so jaded and thinking "this time is different because Bernanke has given the all clear".
ReplyDeleteLot's of ways to trade this, depending mainly on how it opens. A gap lower on Monday morning, and it's an immediate short with a stop at the morning's high, or last Thursday's high, or Friday's open . . .
An open within Friday's range is different, and then you start watching for a range break . . .
The key in determining exhaustion gaps is for new highs NOT to be made.
And as you mention, big Gann cycles kicking in (we're very close to the 360 as well).
Yes its a tricky one HR.Even the permabear at PerfectStockAlert is expecting buyers to come in next week ! He may be right but I think a pullback off that 7 day pattern then maybe a final rally into the Gann360 in the first week of October (I noticed that would be 120 days from the 1266 low on the S&P and can't rule out 240 points to 1506)
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