Friday, September 2, 2011

SPX and CRB Update - Possible Sharp Downside Next Week

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The CRB commodity index looks like it may be forming a tradable top here in a complex downward pattern/channel. The pink dashed "sell" line would be my sell trigger level once stochastics is overbought and makes a bearish cross like this. See the notes on the chart for the price/pattern logic.

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The S&P 500 has formed and extremely attractive upward ABC pattern since August 9th and had some nice reversal down from the resistance zone the last 2 days. That being said, I don't like the time relationships or channeling here that great for a textbook "flat" to form. But the harmonic and chart resistance area is extremely nice with multiple resistances at 1225ish on SPX. I will probably post these on another chart. The price logic still suggests a downtrend here because the upward moves are not retracing the downward moves in less time than the down moves took to form.

IF this is an upward flat pattern, then to confirm that we should see the market drop sharply next week to break below the bottom of the pink box. If we see that, then I think the next possible bottoming time frame in stocks will be late Sept to mid October. Some time relationships suggest Sept 26th-Oct 12th. See the chart for further notes.

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