S&P bottom?

Long term S&P: 50% retrace line is 1175

1 year s&p action. 1170 is channel bottom, and fib bottom too based on some previous reversals.

Still headed up!

Since the last S&P shot, we're still heading up off the channel low.
I want to emphasize that the upper and lower lines are not completely arbitrary. They are equidistant from a linear regression fit to the S&P index data since July 9th or so. And the market has set the slope of the trend line, and the early peaks have set the width of this bigger channel.

The fact that we can find support along the invisible line in the sand weeks later tells me I'm not the only one looking at this. The line can be violated, sure, and if it is, we know we have an event which is beyond the extremes of the last few weeks, which is a big deal to be concerned about for any long postions, and possibly a signal to go short.

But if the lines hold, well, that tells you something different about sentiment and the value of this channel as a predictor as well.

As for the middle zone, one can use shorter steeper channels to define movements across several days, and also 5,8,21, 34, 55, 89, 144, 233, 377, and 610 period moving averages on 5min , 15min, 30min, 60min , and daily charts to look for support/resistance. When one of these lines line up with fibonacci support/resistance across some similar time frame, the setup for a reversal is in place. Its like looking for a needle in a haystack sometimes, but I can't say how many times recently I've analyzed a bad entry/exit and found a good reason in these simple support/resistance lines to come up with a better decision. It just takes patience, practice, and discipline, but the roadmap is waiting there ready to reveal itself.


Here's a near end of day update...things are looking good so far for bulls, and my insanely overleveraged long SPY call position which is coming back on me...hooray!

S&P TA turmoil

Its been a while, but I'm back with new S&P channel shots. We had some amazing volatility since later last week and then after the weekend break. A lot driven by Gustav, RNC VP selection, and just low volume and uncertainty in the market. And you zoom in close enough, you can even see how the intraday bottoms today even follow that uptrending slope to some extent. This gives me some confidence that this picture is still on other peoples radar too.

So which way? Hard to say...I'd like to think up...there are good reasons to buy in here. But people are spooked too, so its pretty hard to really gauge sentiment. The recent history of the past week or so says we are completely range bound from 1260 to 1300 or so. However, impending breakouts always start before you really expect them, so I think its safe to say we are getting ready to jump now.

Breaking outside this channel towards lower values is definitely bearish movement we haven't seen in weeks. So be wary of that. Also be wary of simply hugging that lower trend line...that shows short term bullish behavior that could easily be smacked by a relatively light bad news event, and leave lots of room to fall without a lot of support lines to break the fall. But if we have nice push back into the middle zone, the bulls will have spoken again that they are not ready to lie down quite yet. If we take off, expect resistance again near the middle and the top of the channel. And anything goes in between, but in the channel is still technically "up".

Be careful out there!

SP riding new channel low line

I bought a straddle on SPY at ~1266, and it is losing money slowly. :-(

I was expecting a relatively large jump from this level within a day or 2 given the past history. The S&P hasn't wanted to stay anywhere for too long, and it was poised on channel line.

There are lots of little channels drawn on the chart above, but the longest one is the one I'm concerned with. The peaks and valleys were following a steeper channel until about a week ago when we dropped back hard from > 1300. I identified the shallower channel from the lower group of highs happening since july which also seemed to be in line with linear movement in lte june.

It looks like we resumed another linear movement right along the bottom line of my new shallower channel.

Its not what I would have liked having bet on big move instead of a slow upward crawl, however it is interesting that it is following the trendline so closely. I still think a breakout is imminent, especially if oil makes another big move, up or down. Falling into this narrow range action is rare enough, but much rarer is for it to continue for more than a couple days. So I'm still in my straddle. Just gonna take a little more work to clean up the losing side once it breaks.

Oil still in a channel?

Not much time to comment. A picture is worth a thousand words. Middle line is the regressed linear fit for the Oil down turn. Outer lines are at 1.82 sigma about the mean. A much smaller sigma channel defined the USO action for the past 6 weeks until yesterday. But just pushing the channel edges to 1.82 sigma captures todays peak, and shows it is in line with the mid july peaks using the same channel top line. So we may just be looking at an extreme channel excursion, and not necessarily a resumed oil rally.

If we bust further up, I will have that much more confidence the oils bulls are back. But if we stay within this 1.82 sigma line and start dropping, we're still obeying the channel, which means some more tradable pivots along the sigma values which have shown support/resistance in the past my come into play.

Tht all being said, oil will not be going to zero. Real bottom support and decent upward growth from there are due, if not overdue. But right now, technically, its battle of conflict support and resistance, and war in Georgia isn't helping those who would have it drop more.

Oil ready to bounce up?

Here we see a fairly long term chart for USO, the ETF which tracks crude oil prices. These days, the spot price of barrel of oil = 1.236 * (Price of USO).

Oil took off like a rocket this year, and built upon last years big gains too. But it hit its peak around $145 in July, nd strted falling as the general market recovered. The reason for the big dip and big fall is the subject of much debate. Some say real world demnd from developing countries. Other's say pure speculative bubble. Either way, one only really needs to consider price to understand what's going on.

Consider the big rise since Jan 2006. If we set a fibonacci range from this low to the July 2008 highs, we see some intermediate corrections landing in or around the key 38, 50, and 62% support levels. But perhaps most interesting is the situation right now. Based on this range of movement, we have retraced 38%, and from the looks of it, found some soft support and flattening right at this line. But we re also looking at intersection with the uptrending 200 day moving average around USO=88. This is strong combination of medium to long term technical support levels. We could very well find some support here, and any strength in USO which appears to break out of the channel it has declined within for the past 6 weeks could be considered a bullish oil opportunity.

On the other hand, continuing through this big retrace level and the 200 day moving average says there aren't enough bulls to keep it floating, and more precipitous decline is likely. But you can bet that $100/barrel isn't going to be an easy line for it to break if it keeps dropping. This is more or less at the 50% retrace level, and then $89/barrel is roughly the 62% retrace line. These would be good price targets to keep in mind if playing the downside.

AAPL channel adjustment

I've adjusted my channel slightly...the slope is steeper, and is better matched so some other features in the AAPL 15min price history. There's no science to choosing channels...its pretty arbitrary, but what I have noticed is that certain choices of slope match existing details better.

When AAPL prints the next local bottom, we'll have an even better idea of what the channel looks like.

In this case, the new slope matches the slope of some tight channeling around the middle line, and also connects the wider transition points above and below. The top and bottom lines are centered some proportion of the standard deviation of all the data in the regression, so it makes sense to me that a well fit channel should capture big peaks above and below the center line nd connect some smaller channels with the same slope of line. You cn imagin sliding the upper and lower lines vertically (up or down) to test fit conditions. Tweaking the slope is effectively done by changing one of the end points to include/remove some data from the regression fit. The choice of endpoints is tough in the beginning of new trend, but gets easier as the path unfolds.

And notice the channel also sets the avg expected gain and price movement. So if you have weigh price movement vs. premium loss, this helps provide some direction in an average sense.

Its all empirical, but there's little arguing boundaries can be set, and that there is a linear trend supporting the price movement for some time until some big event changes the dynmics.

Price movement to the boundaries sets up higher reward/risk opportunities for quick trades on the reversal. Good luck!