S&P 500 - What is the Nature of the Retracement?

Discussion in 'Technical Analysis' started by hcour, Nov 30, 2005.

  1. hcour

    hcour Guest

    Daily chart:


    A parabolic rally late Oct/Nov that climaxes following a break of resistance at 1245 on 4 consecutive up bars closing on their highs, then the 5th bar a high closing at mid-range last wk w/a long upthrusting tail. Mon an EOM (ease-of-movement bar) on the widest-spread down since the rally began at 1175ish. Tues a gravestone doji on a relatively wide spread on strong vol, closing on the low as the up trendline support becomes resistance. Today a significant break of that tl and the uptrend has paused, at least temporarily, as is to be expected. Now we watch the nature of the retracement whether this is a breakout or an upthrust.

    First support points to be considered are the 1245-high/1250- 50% retracement area of the bo rally. Then the 50% retracement at 1225 of the whole uptrend/breakout, also a minor s/r area.

    Watching spreads, vol, closes, and for EOM's at significant s/r.

  2. ozzy


    How do you distinguish that its foreign money leaving the market and not american? I'm guessing you can see some signs of inflow/outflow by watching the currencies markets.

    Otherwise how do you know if its some zulu tribe leader taking money out or some 300lb pot bellied texan.

  3. First significant retracement lies right ahead tomorrow at SPX 1248.52

    Should that level fail to hold, the next significant retracement level to look for support would be 1243.30 - 1242.70
  4. hcour

    hcour Guest


    Dec ES daily chart w/total contract vol and OI, as of Fri.

    Last Thur a wide spread up bar closing near the high at support following a breakout, indicating a very shallow retracement of the previous rally had played out. Fri and today, as of this posting, may be showing a different picture. Looking at vol and OI and the lines there are a few cautions: The rally was possibly climatic, indicating the subsequent long trading-range had shot its wad on that parabolic rally; vol contracted on the rally at the breakout and expanded on the reaction; the utl has been broken and is still acting as resistance; despite the Thurs bar we haven't made a new high; OI has been trending up nicely during the rally but note it increases on last wk's brief reaction and is flat on Thurs. Fri was a doji on low vol w/little price gain and today intraday price is struggling.

    At this point Thurs is not following-thru and suggest further consolidation at the least. Be interesting to see if anyone has a PnF chart and projection from that trading-range.

  5. hcour

    hcour Guest

  6. hcour

    hcour Guest


    Volume expands on the Tues upthrust, then again on Wed down to support. Thurs down on strong vol, the highest since the Oct lows, but note the low and close hang in there at support once again, little price-loss on a very long-legged doji, indicating some demand there, as we seem to be seeing intraday as of this post. Note also for the first time the rising 20d ema coming into play, possibly relevant because it is converging w/significant price support.
  7. hcour

    hcour Guest


    ES, Mar contract, w/total vol and OI.

    12/09 - 12/14 a rally back to the top of the trading-range which becomes an upthrust as this is followed by a shallow reaction to 12/20, a nice doji sitting well off the previous low in a little apex smack in the middle of the range at the flattening 20d ema. But the subsequent rally is very weak, as 12/21 has a poor close and the next 2 bars are unable to follow-thru w/any progress at all and here we're seeing even more contraction of volatility w/in the range on the 12/23 narrow doji. 12/27 some volatility returns on a lower-high, a relatively wide spread closing on the low and from here price drops to break the range, barely. Certainly not a Wyckoff Sign-Of-Weakness at this point but could be developing as thus far the reaction is rather sharp and there's evidence of supply in the latter part of the range. Unless of course it's a shakeout.

    So currently watching this reaction. Given the background, I think the onus is on supply in the short-term to prove itself w/a SOW here. Otherwise expecting at least further consolidation if supply does not show up.

    Vol and OI should become less ambiquous now that the holidays are over, but note the relatively good vol and OI on the rally to 12/14 which is unable to follow-thru.

  8. #10     Jan 2, 2006