Hope everyone has been noticing this...this market has been gaining new leadership during this down move. When the tape changes, here are some of the sectors that could take the lead. Transports, Healthcare, Staples, and the biotechs!
Global weekly chart matrix shows the large head and shoulders patterns like FCX are prevalent across the globe in a wide array of markets. They are also receiving a lot of attention. Does that make the pattern less likely to work? Here's an academic look at the pattern. http://peterlbrandt.com/academic-research-on-the-hs-pattern/
I think you have to use these patterns in context. Right now we are over 30% off the highs in FCX, also FCX is basically an emerging market play. Check out EEM and you will see the correlation is very high. In order for this pattern to play out you will have to get a huge downmove in the emerging market equities and in our market. Now anybody following this market would know that this market looks poised to break higher. There are lots of stocks making new highs and showing strength. Does this mean that emerging markets, X, FCX will not complete these patterns? I think the more likely scenario is that you will see these names underperform the US markets in near term! I personally think these are buy areas in these names. Most H&S patterns fail becasue they never confirm! They usually lead to higher prices!
I also think this market is going higher. Too many stocks breaking out to new all time highs and 52 week highs. I'm sorry, that does not happen before a plunge. When we sold off last August on this very thread I mentioned how more and more stocks and sectors were breaking down as the indices moved higher. Same thing was mentioned on this last selloff when we got up to 1425. Now we are seeing the opposite. As indices grind lower, more stocks are firming up and more sectors are basing. The number lines are getting stronger. I'm not saying we are just going to launch higher. I actually think there is a decent chance we test 1290 before going higher. We need another scare. Every new scare in Europe though is having a lesser and lesser effect on our markets as we begin to price in the expected news. I actually think we have a shot at 1500 by the end of the year, I'm that bullish. But certainly a re-test of the highs. I've said this before and I'll say it again, I still believe Bonds are the tell and they have to break down for equities to go higher. I think part of my reasoning to push equities back up is the money to drive them higher has to come out of fixed income. Now that the fed has pushed operation twist through the end of the year, that news is out there and already priced in. I don't know what further catalysts the bond bulls have and if I was long billions in bonds like many pension funds and bond funds, I would start lightening up ASAP and sell into this last bit of strength. Historically speaking, rates have a tendency to take the stairs on the way down and the express elevator on the way up.
http://www.smartmoney.com/invest/st...-1339513989350/?link=SM_mag_inside&mod=sm_mag Life of a day trader
"Right now, though, he's having his worst month since he started day trading, down an average of $465 a day. It's only his third losing month since he started in January 2008. It sucks to come into work early every morning, do a really stressful job, and go home with a weekly paycheck of negative $2,325.15." This gave me a chuckle. I think every trader's been there at some point.
also from that article the day traders mantra,"the best trade made in the middle of the day is the one, not made at all"