SPX-SPY- Are we in an expanding Megaphone or Broadening Top?
I've been traveling the country the past few months visiting friends and family. The stock market was breaking new record highs. The sell zone was hit as indicated in previous posts. The yellow abc completed near the upper blue line by the 3009+ level... very nice.
Then, the market made a sudden scary break to the downside with the Chinese Tariffs going into place.
This Past week we've seen another fast move up. should we buy this dip? Hmmm...
Let's take a bigger view as shown by this chart. Since last year, I've been thinking that we may be in an expanding Megaphone pattern. The sell off in February 2018 and December 2018 were 3 wave moves down, not 5. So that would indicate a corrective pattern, not a motive pattern. However since the January 2018 high we have seen these twisty abc moves up ...also not 5 waves. These corrections look to be part of a bigger Expanding Megaphone pattern as shown by the blue lines. Do you see the look of a Megaphone?
Within the megaphone I have labeled A-B-C-D? in green. I'd like to see the final E which would be another crush down towards the other bottom blue line. This would be the final correction making a wave 4 as shown in Purple.
We also have the set up of some nice Shark Patterns!
I've drawn 3 possibilities of the common 88.6% retracement, 112.8%, and 127.2%. However I'd like to remind us that the last crush in December was the square root of 2 ratio (141.4%) that would be below the lower blue line a bit unless we take more time getting there... eventually the blue line would drop that low :)
Please take note of the possible time ratios on the top part of the chart. Simply measuring top to top to project the bottom, we see that last time this happened was 38.2% of the tops to get to the bottom. Hmmm... that could project a late November low?
So should we buy this dip? If the market breaks the previous highs then we are participating in a broadening top formation with more upside... we'll see.
Until then I'll take the bearish side as the Expanding Megaphone pattern seems to be playing out nicely so far.
So where do we take a low risk position to try to make some money? Let's try for this bounce to go a bit higher. I've labeled in green the area I'd like to see for the short set up. Please look for the follow up chart with a closer view in a few hours it should be posted.
Later my friends-
Old Fart
Then, the market made a sudden scary break to the downside with the Chinese Tariffs going into place.
This Past week we've seen another fast move up. should we buy this dip? Hmmm...
Let's take a bigger view as shown by this chart. Since last year, I've been thinking that we may be in an expanding Megaphone pattern. The sell off in February 2018 and December 2018 were 3 wave moves down, not 5. So that would indicate a corrective pattern, not a motive pattern. However since the January 2018 high we have seen these twisty abc moves up ...also not 5 waves. These corrections look to be part of a bigger Expanding Megaphone pattern as shown by the blue lines. Do you see the look of a Megaphone?
Within the megaphone I have labeled A-B-C-D? in green. I'd like to see the final E which would be another crush down towards the other bottom blue line. This would be the final correction making a wave 4 as shown in Purple.
We also have the set up of some nice Shark Patterns!
I've drawn 3 possibilities of the common 88.6% retracement, 112.8%, and 127.2%. However I'd like to remind us that the last crush in December was the square root of 2 ratio (141.4%) that would be below the lower blue line a bit unless we take more time getting there... eventually the blue line would drop that low :)
Please take note of the possible time ratios on the top part of the chart. Simply measuring top to top to project the bottom, we see that last time this happened was 38.2% of the tops to get to the bottom. Hmmm... that could project a late November low?
So should we buy this dip? If the market breaks the previous highs then we are participating in a broadening top formation with more upside... we'll see.
Until then I'll take the bearish side as the Expanding Megaphone pattern seems to be playing out nicely so far.
So where do we take a low risk position to try to make some money? Let's try for this bounce to go a bit higher. I've labeled in green the area I'd like to see for the short set up. Please look for the follow up chart with a closer view in a few hours it should be posted.
Later my friends-
Old Fart