Tuesday, June 11, 2013

Inverse Head and Shoulders Pattern

The market put in the right shoulder for the Inverse Head and Shoulders pattern I have been tracking at the expected 1623 level, which btw has been in the picture for about a month now. A bullish W3 wave breaking 1649 resistance would confirm a break out for this pattern and the all time high will likely be challenged. As you guys know, I like pointing out these patterns as they appear and if I am not mistaken, every single chart pattern I have posted this year has reached its target.  I might be forgetting one or two but I don't remember any failing when they are on the chart as stand alone (meaning without conflicting patterns going the other way). Obviously, patterns do have a failure rate so we'll see how this one turns out. If 1623 support is lost, the next support level is 1614 which happens to be 26 points  from the 1640 high today or the exact length of the wave from 1649 to 1623 so the market could also be working on an ABC. Close under the TA is bearish and if not reversed the trend will go back to red, so a bullish wave has to appear in the next session or two. Last but not least, I know some would like to label the wave from 1649 to 1623 a bearish W1, problem with that is that there are only 3 waves on the micro count and then what could have been a W4, was invalidated when the bounce (1640) overlapped W1(1639).

I ended up selling the VXX position at a nice profit today and picked up XIV at $21.74, which at some point looked very good when it was over $22 but then it went all the way back down. Crazy volatility but it's a good way to get my morning adrenaline rush. Also, holding FXI which I did not position trade today.

Main S&P 500 Trends

Short Term Trend = Bearish Trend Being Challenged
Medium Term Trend = Bullish
Long Term Trend = Bullish 

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