Wednesday, August 10, 2011

outlook for 08-11-2011

The volatility continued today.  I am looking for clues that a bottom may be in.  Looking at the 10 minute chart it appears we may be making an inverted H&S over the past 2+ days.  The left shoulder and possible right shoulders fit nicely the bottoms of the 2.8TD cycle.  The head could be the bottom of the 20 week and 9 month cycles. Today's close marked the potential right shoulder.  I would think by mid day tomorrow we will know if this pattern plays out.

There is no assurance this pattern plays out, but if it does we can start to feel a bit of confidence we have seen "a" bottom.  Will it be "the" bottom?  Not sure as I expect the 22TD cycle to bottom  next week around Aug 17 (or early Aug 18). 

If the longer cycles have bottomed and are now starting to turn I would expect their impact to be minimal as it will take some time for them to turn as they have at least a 1-2 week turning radius.  With that possibility in mind I looked at the shorter cycles.  The 2.8TD cycle, the 5.8TD cycle and 34TD cycle are up.  The 22TD cycle and the 11.2TD cycle are down.  So we may see some upside bias tomorrow.  We will see.

Here is the SPX:

GL traders.  Be careful - this is a high risk market and things may not play out as described.

1 comment:

  1. The small inverted H&S pattern seems to be playing out. Because it is small it has limited upside potential.