See what happens with crowded trades?
Everybody wants out and not enough exit doors. Well, maybe it runs to a new high tomorrow, but for today, late arrivals are being run over by the early few.
S&P 500 – May 15, 2012
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Bottom Line: Long term trend is up. Mid-term trend is down. Short-term
trend is down Weekly S&P stage is Late Advance (2-C) Daily S&P stage is
Strong Decli...
1 year ago
Posts
2 comments:
On the ABX chart I noticed there was a small island reversal. I say small because because the gap was not really big, but it is there. I expect there will be some buying coming back for one last push. The price went back to the 50 ema very quickly, not to mention we have a 50 percent retracement. The risk reward for going short right now is much less, but if given the confluence of these technical events, weakness is certainly beginning to show. If the price doesn't even come close to the tiny gap, then I think that will be a confirmation of a new downtrend (13 ema peaked and is starting to turn down). Also, this overlap certainly puts this trend back into the corrective category. I would like to say that the double three has ended, but I need to wait and see what happens after this major sell off.
In any event, the next C wave down might just touch the 31 dollar line not only as a matter of support but because that could serve as a formation of the right shoulder of a reverse head and shoulder with 40 dollar range being the neckline. It is a crude formation, but given that support and resistance are 30 and 40 respectively, its non-formation is not of great consequence.
If we take the recent pop up as the end of the B corrective wave, this C wave would have to be at least 61.8 the length of A. That potential target puts it in the 30 dollar range. Given the recent bullish sentiment, this C wave might just become a failed C.
Whatever happens after this sell off will determine if we are already in the impulsive C wave down.
J.K.
JK,
good post, thanks
I don't regularly follow ABX, but I believe birds of feather flock together, I am not sure that I agree that shorting from here being less risky.
I am a bit short AEM from north of 50. Covered some, but am still there.
Yes, 50% retracement is very typical of a strong counter rally, but the trend is still up, and we will see some fighting, next week is Option EX, so, I wouldn't be surprised if savvy institutions were forcing action to tidy their books
I am still counting the decline in AEM and GG as a souble, so this might either be a B wave or an X wave, or a new Bull. We have to be patient to know
As for gaps, I am planning a post on that subject, so stay tuned
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