Look: I am eager to learn stuff I don't know--which requires actively courting and posting smart disagreement.

But as you will understand, I don't like to post things that mischaracterize and are aimed to mislead.

-- Brad Delong

Copyright Notice

Everything that appears on this blog is the copyrighted property of somebody. Often, but not always, that somebody is me. For things that are not mine, I either have obtained permission, or claim fair use. Feel free to quote me, but attribute, please. My photos and poetry are dear to my heart, and may not be used without permission. Ditto, my other intellectual property, such as charts and graphs. I'm probably willing to share. Let's talk. Violators will be damned for all eternity to the circle of hell populated by Rosanne Barr, Mrs Miller [look her up], and trombonists who are unable play in tune. You cannot possibly imagine the agony. If you have a question, email me: jazzbumpa@gmail.com. I'll answer when I feel like it. Cheers!

Tuesday, August 23, 2011

Tuesday Market Action

I wasn't going to post a chart of the SP500 until the end of the week unless the trend channel was broken, and that happened today.   This completes the five wave impulse of some minute cycle, and a corrective wave is now in progress.

I've labeled subwaves i through v.  The complete drop from Wednesday's high of 1208.47 to yesterday's low of 1121.09 (narrowly beating out Friday's 1122.05) covered 87.38 points.  Today's closing high of 1162.35 is within 2 1/2 points of the 50% retracement of the entire impulse.

(Note my typo in the chart.  The wave label at the bottom of the channel should be v, not iv.)

Simple chart from Yahoo Finance, all the folderol added by me

A new channel is trending up at the moment.  Coincidentally, the 50% retracement at 1164.78 is right in the middle of a support-resistance band I noted back on the 12th.  It seems the 1120-1130 support-resistance band from the 8/12 chart might also be in play.

Despite the tidy trend channel containing subwaves iv and v, the actual charted values are a bit of a mess.  Regardless, the subwave 5 bottom is in, and the corrective wave might be close to over.  If not, the next potential top would be at 1175, the 61.8% retracement.  This is also the failed support level from last Thursday morning.  Curiouser and curiouser.

Remember, this is all part of the development of wave 5 down from the 7/07 top.  A rise above the subwave i low of 1184 calls this wave counting into question; and if 1208 is topped, it all goes out the window.

Update: S&P Equity research chief investment strategist Sam Stovall offers a very bearish assessment.



The Arthurian said...

"Curiouser and curiouser."

Nice, Alice!

Jaz, your explanatory post *definitely* helps me understand what you are saying in this post. EXcellent. Thanks.

50% and 61.8% are Fibbonacci numbers I now presume. 1 1 2 3 5 8 13... the next number is the sum of the most recent two numbers. As I recall... Hope I'm not embarrassing myself!
1/2 = 50%
13/21 is closer to 0.618 than...
I forget.
But DEFiitely, I get it better now. Thanks, Jazz.

Jazzbumpa said...

Right, and no embarrassment. The ratios of adjacent numbers in the sequence approach 0.618 and its reciprocal, 1.618. There is a lot of strangeness surrounding the golden ratio.

Frex, (0.618)^2 = .382 = 1-.618.

Start with any two numbers and build a sequence where the next entry is the sum of the previous two. The ratio of S(n) to S(n+1) approaches 0.618.

Actually, the real time stock analysis is pretty risky. I hope I'm not embarrassing MYSELF.