I’ll take advantage of the President’s Holiday and review the S&P.
Figure 1 shows the 12-month swing (yearly trend). This is the controlling time frame at the moment.
Figure 1 12-Month Swing
The key questions are:
- Will US Stocks bounce off the Primary Buy Zone? If they do, there is a good chance we’ll see a congestion market form between the Primary Sell Zone, 1553 to 1434 and the Primary Buy Zone, 741 to 881. Or
- Will we see acceptance below 741 and the Maximum Extension 641? If so, there is a good chance we’ll see at least 370 to 294.
The 12-month chart shows that there is a Negative Development Setup (lower low than Oct 1 2002 on Nov 1 2008). We need to see a bullish conviction close above 882 to trigger the buy signal.
The 13-week swing (quarterly) shows the resistance and support zone that will appear on a 5-day swing (weekly trend). There are two congestion zones of note and I have marked one ‘ABCD’ and the other ‘abc’.
Figure 2 13-Week Swing
Figure 3 shows the equivalent of the 13-week swing, the 18-day swing (monthly trend; red line) and the 6-day swing (blue line). I have also marked the same ABCD as in Figure 2.
Figure 3 13-week et Lower Swings
There is a reliable Market Profile pattern to rely on in the price action bounded by BC. When you have a rejection at a high (B); rejection at a low (C) that is followed by a congestion zone around 50% of the BC range (DE), the market usually will break above D and head towards B. If instead, the market accepts below E. we’ll usually see acceptance below below C (!).
Now I want you to consider Figure 4.
Figure 4 5-day Swing
You’ll notice that we have the same pattern but with A being a low. So, normally we should see break to the down side. But if we do, the larger pattern suggests acceptance below of 741.
My cycle work suggests a high Feb 13 to Feb 17. I’ll complete this post tomorrow before 9:30 am EST.
Refer this blog post to a friend or colleague…
