Between Dec 12 and 16. Nasty head and shoulders pattern formed on DXO. Dumped for nearly zero gain. :-/ I might buy again if I see more convincing signs of strength later.
Here's the H&S on DXO. Today's drop apparently precipitated by Saudi announcement that they would cut 2 million barrels, which is less than the market was hoping for. At this point only a close above 3.30 would convince me to go long oil again.
try not to get too obsessed with chart patterns and how they "should" work. use the chart to show you where buyers and sellers are. like if i am looking to get long DXO then i wouldn't go for it until it was somewhere closer to 2.60ish where there is better support. also, try to not think of it as a "head and shoulders" pattern. chart patterns are hindsight. with crude it was on an extreme bounce off of lows in an extreme bear market for crude. on the 11th the top (left shoulder) was the support of the prior consolidation before it broke down on the 2nd. a simple case of support becoming resistance. then you have the "head" was the spike high after the opec/russia news when it spiked to 50, a very significant number for many, and immediately reversed. so you have a bear market rally for crude with that 50 price area likely becoming major resistance now. then you have the right side of the shoulder that you see forming which is a failed rally attempt on that opec summit after an extreme up move in bear market for crude. it's that same sort of confirmation that you look for when you are looking to short something you see that has had a massive run up...tries to rally back to prior highs...and then fails. always remember to look to the downside after an extreme up move in a bear market. expecting the market to consolidate and move higher when the trend is down is a losing battle. take your profits on the spikes and possibly look for short ops when they are there. that SPY chart simply is not a double bottom on the 30 min. that support you are looking at is not reliable with this level of volatility and the time between tests of the support you are looking at is too short. the market needs to show some ability to actually stay above that support level for more than a day. if you want to look at stronger support then look at the 82.50-83ish area. btw...not trying to rip on you. just trying to give you some help/constructive criticism so you can view the charts in different fashions.
Actually I would have sold at the highs ... if I had actually had a chance to. Oil has been extremely volatile lately. In this case, it was a matter of going to take a shower, coming back and finding that it had hit opened at a high and collapsed within about 40 minutes. Normally I would stay long since it was still in the upward channel, but the H&S pattern was a definitive danger sign for me. Your explanation of the pattern is good, but price action reflects actual events and market psychology. In other words, you shouldn't have to have an explanation of why the market is doing what it does -- often by the time you're figuring out why, the market has left you behind. As for the double bottom on the SPX -- there are different types of patterns, and like you said, not every pattern resolves the way it's "supposed to". Different time frames can have their own patterns, and usually the pattern you're looking at is just a subdevelopment in a larger one. In this case, I'm not saying that the bottom pattern is definitely resolving upwards ... my charting says that the overhead resistance at 887 is much stronger and will have to be broken before we can have any bullish action. I still think there is a strong possibility that we get a selloff after the Fed rate announcement. But don't discount those trend lines on the chart -- those aren't short term lines, those are all the way from September. I am still very conscious of what constitutes strong support/resistance and what doesn't. Your suggestion for strong support is actually a little too high -- the strongest support level for the SPX is between 815 and 820.
Best Buy and GS rocking today. I guess looking for companies that are going to announce billions in losses is a good strategy these days
I've been wanting to get back into GS again, but kept saying I'll wait for it to drop right around earnings... it never dropped like I had hoped, so I never got in. Arrrgg.
Still negotiating the overhead resistance area between 887 and 897. I'm not convinced yet, and if the market fails to rally on this kind of interest rate cut, then there isn't much hope.
So here's what I'm looking at now: Both downward trend lines are from September, the top one being the highest overhead resistance so far.
Told you about EUR. I would probably want to go short right now though. Coming up against major resistance at 1.406 and that thing has to be overbought by now. This looks like a great opportunity to go bullish on the dollar, but if somehow the market pushes past these levels, all bets are off.
910 retracement level holds. We are still above the 50day moving average (which is right along the upper trend line at the moment).
