Well H&S fails frequently (just like many other technical patterns). Besides, there was already an attempt to break the neckline yesterday, but it failed (hence the hammer).
This is when pulling out the weekly charts really helps. When you are getting significant skew on a shorter timeframe price will be contained within the weekly/monthly charts. This was an ORDERLY SELLOFF not a flashcrash which means there is likely more to come. As funds and folks redeem it will trigger more selling. Rush to the exits that a finger in the dike can't fix so to speak. You can squeeze some scalps in but most will wait for terra firma before buying this bruised market. The flash crash is so last year......
(referring to yesterday, one presumes) Exactly. All the buzz from the traders was WTF did VIX not spike? There was no panic, no fear. Today there was fear. Today we had panic. Does that mean this is the bottom? Couldn't say. But yesterday was clearly not the bottom. And if it matters, I suspect a lower open tomorrow (at least). While this could be a capitulation tank, yesterday obviously wasn't, even at this time yesterday.
I'll repeat...a single interval for candlestick analysis is not reliable. It is not bullish or bearish...nor Epic. The hammer Line is not a reversal candlestick. In contrast, a bullish hammer pattern (one that has confirmation) is a reversal price action assuming it has market context support. So far, there is not confirmation nor any market context to help with a confirmation. If you don't understand the difference between a candlestick line versus a candlestick pattern...read my old thread called Trading Hammers (revisited) @ http://www.elitetrader.com/vb/showthread.php?s=&threadid=52880 With that said, the Debt Ceiling crisis, ECB info, political issues and how a few ill timed speeches early May...again July 8th and again July 26th isn't your typical news events when occurring so close to each other. These are market turning events. It's something EVERYBODY is paying attention too. Therefore, why fight the tape. Simply, this is one of those times where market context means everything. Lets put it this way, did you ignore the 2008 financial crisis (market context) in that it had no impact on your trade decisions ??? That too was one of those events you don't ignore. I've traded amongst many other key events over the past +20 years...this isn't your typical economic report that hits the wire and gets talked about for a few hours and then move on to the next one. This is something that traders say what the fuck!!! and then we try to find a way to exploit it big time because we know these are those types of situations where big profits are possible during increasing volatile market conditions... We only get a few per year like this...events that causes volatility spikes consistently for several weeks or more. Regardless, if you're consistently profitable based upon TA alone while ignoring key market events like this...congrats and I will no longer debate such with a profitable trader. As for me, I've been using market context in combo with TA for a very long time...very happy with the results. Also, if TA is the only thing you use...pull up your $SPX index daily chart and correlate the above dates I mentioned involving market context... Nice looking Bearish H&S price action. A good H&S trader would have gone at it around July 26th, 27th, 28th or 29th. In contrast, the jump on the wagon H&S traders would be going for a neckline break. P.S. Tight stops on those Longs and lower your position size because it's high risk trading. Continue enjoying the ride if you've been hitting the short positions more in comparison to your long positions. Mark
The market sold off to a defensible support point. Now the question is do we rebound from here? This type of movement can force liquidations. Fear is more powerful than any other factor. I'd love to be a buyer here but am gonna wait for volatility to be shrinking not expanding.
look at commodities even gold and silver sold off yesterday. Sure sign of "forced liquidation" - same thing that happened in 2008. Will it continue. I dont know but I am going to my local shop and will sell all my physical silver today.