One of the conceptual ideas I've been writing about is the idea of a time symmetrical head and shoulders pattern. Where the time between the left shoulder and the head equals the time between the head and the right shoulder. That time is 14 weeks. It can be a few days off, but the concept is what I'm looking at for a potential finish to the pattern. If that is the case, we still have two weeks left. Below is the chart of the DOW.
The blue lines highlight the 14 week time symmetry. The black lines highlight the left shoulder occurring where the channel line is at, which also happens to be the 50% retracement level. The red line is the 62% retracement level.
If the view is still a move up within a great bear market, I'm looking for an ABC pattern up into this right shoulder. We have or are close to finishing wave A. If so, then we consolidate for a few days, then push higher into wave C.
This structure would move the MACD slightly above the zero line. This is the area that would be most bearish for the market to roll over and coincide with the right shoulder time symmetry concept.
Below is the 1 minute chart to reflect what the wave structure is on the intraday. It's overlapping which looks corrective and I expect it to expand sideways. However, on the daily chart, I can make the case for a little more upside to finish Wave A up. More corrective sideways and downward pricing would better confirm we are in Wave B.
IBM: Nothing new so far it's still closing higher but testing the blue trend line.
JNK: It's still trying to grind higher. I've add in a potential broadening top. In this view I would expect a minor high and a weak strike the RSI as overbought creating another divergence. The counter view is a H$S pattern, if so, it should roll very soon.
MCD: Trying to push a break out to the upside. I'll be taking this off the watch list soon. It's had a nice move, but volume is declining on this stock, and the RSI is nearing oversold, and I expect a bearish divergence.
KO: Has made a little consolidation above the downtrend line. It's worthy of a little trade. If I do, it will be with a reduced position to start.
BRCM: I'll be removing this from the watch list as long trade tomorrow. It's pushed higher and back tested support today and held. However. the stock is beginning to look very tired. I might add this as a short side candidate in the near future. It's a touch premature. I'd watch to see the MACD curl over while price breaks back below resistance.
CTSH: I'll be taking this off the watch list for long trades. It still might push into a new high, but I'm concerned it will be a small push. It's forming bearish divergences. It might become a short candidate in the near future like BRCM. Need more time though.
SRS: Still in a range. Today's structure suggests we need to push lower. Still no trading set up.
Tech Stocks: AAPL, AMZN, BIDU, GOOG, and PCLN coming a little later tonight.
Gold: Also a little later.
From My Trading Desk:
No trades today. The market is over extended. I'm not comfortable taking new long trades. I do think we are or will shortly consolidate into Wave B and push into Wave C. I expect Wave C to be a fraction of Wave A. While I'm not excited about trading long, I'm also not ready for adding shorts. It's too early, and price data is needed to confirm the bearish view. There's no sense in creating frustration. Let's keep is simple, and simply put, I think we are in No Man's land currently.
Hope all is well.
J.D. Rosendahl, Rosey
Thursday, July 15, 2010
|Charts: Time Symmertical Head and Shoulders Pattern Posted by J.D. Rosendahl at 6:17 PM||Print Page||Email This Post|
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