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S&P - Broadening Formation

  1. After the failure of what could've been the most anticipated/watched sHs formation, it seems as though we're seeing the development of a broadening formation.

    Is this a broadening TOP? It's hard to say here, especially in light of all of the upside juice being provided by earnings management, and timely upside market forecasts being provided by GS.

    I'm still baffled as to how exactly the market can continue to rally in light of a multi-month negative volume divergence and lack of corporate revenues.
     
  2. I dont expect this rally to hold on for much longer. We should see a retracement to the downside once retail figures next month show lack of bullishness. Ppl just dont have the income to drive it where its needed. Seems alot of people are getting mesmerized by these corp. earnings calls and creating hype to pump up the market when the fundamentals still show otherwise.

    Then again, I dont really try to look that far into the future since im a short term/scalp trader. :cool:
     
  3. It's up on lack of sellers, if sellers come in it might not be too difficult for them to drive it down...
     
  4. Of course, I agree and understand. I'm just amazed at how long this has gone on (decreasing volume trend). Since the March bottom, the volume has been slowly waning. That's over 4 months (and counting) of decreasing volume/increasing prices.

    At this point, it might only take 3 consecutive down days, tallying 250 million shares a day would put this market on its back. With all of this light volume, I can't believe that we haven't had ourselves a significant bear raid.
     
  5. LOL....... Isn't there a seller for every buyer?
     
  6. uhhh, yeah, correct.. I think of "buyers" as buy volume and "sellers" as sell volume.... I'll be doing Yogi Berra impersonations here soon...

    Obama probably has short sellers bound and gagged in the White House basement...
     
  7. Hit the upper boundary of the broadening formation at around 1:00 pm CST today. I know that we should see some hesitation for a few days, as late buyers show up a day late and a dollar short. I'm very intruiged here. It's either back down to 880 S&P, or up and away to 1090.
     
  8. position or swing shorting in the summer and earnings is a no no no.

    daytrade only.

    once earnings season is over, these shareholders will find no buyers. Market makers are propping up the markets as there are few sellers now.

    volume is so low it doesn't take a lot of money to move the market a few ticks.


     
  9. Well that's all good and fine, but since the credit crisis first arose in the summer of 2007, these negative volume divergences have resolved themselves in similar fashion. I hope I'm wrong, as I'd like to see this economy back up on it's feet, and I don't think that'll happen if we have another significant market breakdown.

    Linear regression study of weekly SPY negative volume divergences:
     
  10. thanks for that chart circadian
     
  11. Ridiculous.

    There is a TON of asset-allocation going on with managers selling Treasuries and buying equities, or have you not noticed that either?
     
  12. Trading based on volume and volume divergences is a total WASTE OF TIME.

    Traders get paid in PRICE not VOLUME.

    It's almost like someone that is going short because the A/D line is not all that impressive, or there is "light" summer or holiday volume.

    That's a big-time "rookie" mistake.
    Very dangerous!
     
  13. Well, call me a rookie, b/c I hold volume in very high regard, second only to price in my book.

    Updated chart of this broadening formation:
     
  14. I think Circadian's observation of a broadening formation is correct. I found this site by doing a search of "broadening top" to see whether my own observation of that formation was valid, as I'm fairly new to technicals. I've been thinking that earnings season derailed the H&S, but that a significant correction is still imminent, maybe around 995. BTW Circadian, what charting software are you using? It looks better than mine!
     
  15. I would suggest going back and looking at other historical charts of the SPX when coming off of a huge low, such as 1982. You will see the same kind of broadening ascending triangle formation. No big deal.
     
  16. Think or Swim
     
  17. Landis, like I said, I hope that I'm wrong here. I think that this fragile recovery cannot afford to have any crushing blows delivered to the market's confidence. I appreciate your input, and your views. It takes two to trade.
     
  18. The big picture:

    [​IMG]
     
  19. Could you point it out? I couldn't find it in 1982.

    http://stockcharts.com/h-sc/ui?s=$SPX&p=D&st=1982-01-01&en=1985-01-01&id=p80988904872&a=159169357
     
  20. Hmm, I just realized I posted this chart in the wrong thread. Sorry guys continue on.
     
  21. In two out of three of my trading systems, I have gone medium and light (LONG) in my allocation (exposure) models.

    Yes, the market blew out the last possible correcting formation - but at this juncture does overhead resistance seem imminent and at what level?

    Also, what other indications/formations are TA guys looking at?

    I use Price and Volume mostly and have shifted to bullish 12-Mar-2009. I know the NDX has been on a tear (up 16 out of 19 days) but am looking for a pullback to increase exposure. Gimme your take.

    pay$
     
  22. I would say that the prospects for the broadening formation working out are fading fast. Today was the first close outside of the upper boundary. If we immediately rally from this point, there will probably be a retrace/retest of this prior resistance point, and if it breaks look for the next key support to come into play at the 960ish level.

    I'd say now that the obvious setup is the large reverse sHs, whose neckline lies at the 960 level. The trend is up, and although it is too soon to completely rule out the broadening formation, it looks like the uptrend will chug on. 50% retrace for SPY is at 1120ish, so is the first material pullback of the rally out of the 2003 bottom. It looks like an important point.

    The weakening dollar will only help the longs, as will the economic veneers that the fed and treasury are slapping upon the rotten core that is the fundamental picture. Sentiment has improved, and people are pretty desensitized by this whole thing. Can't fight the current.

    I will say that I'm still really creeped out by the non-confirming volumes, but it took almost a full year out of the 2003 bottom for volume to start gaining into the rally, so I guess I'll forget about it unless we are still contracting into the holiday season.
     
  23. your megaphone is still intact, the triple chart lines define the pattern. the res line is at 1015, The fact that we are staying under the sub res line,the fact that everyone who was caught short and panicing today only resulted in 115 dow rally lends me to beleive the sellers are loading up here. Wednesday is a cycle day and a lunar event.
     
  24. still in force , need to crack 990
     
  25. forgot chrt
     
  26. It appears to be. I'm shocked that a large, multi-month bearish formation might actually play out in this market. I don't think the government will like to see the S&P, pardon me, the "Nation's Confidence" fall to previous lows, so I'm doubtful that this will get to play out to it's full potential.

    Who really knows, I could be wrong. There might be some prudent portfolio managers looking to really scale back after a 50% rally in the S&P. Only time will tell. Negative economic stats mean nothing if the money is only flowing in and not out.
     
  27. I'm not impressed with the volume so far, so I'm thinking the market is heading lower. If we break out of the broadening tip I think it will be from a correction of 50% of the last leg up which would be around 935.