Location, Location, Location



Those of you who followed my work way back in April of 2010 know that I grew cautious on the market then as we formed that diamond topping pattern, with a higher high, but also a lower low which gives way to the downside after more chop. After a prior downtrend though, the diamond can be a bullish bottoming pattern, with confirmation of course.

On the 30-minute chart of the S&P 500 below, you can see we have formed one of these rare chart patterns, and we look to be awfully close to confirming here. This is not a daily chart, so I am reticent to make a huge “this is the bottom” call, but a strong close does bode extremely well for the bulls over the next few days.


4 Responses to “Location, Location, Location”

  1. Thx, Chess.

    Long some TNA as it cleared 42, tight stop. I hope the algos don’t change their mind.

  2. Ah, yes…good eye as always. Those megaphones are sure a loud tell sometimes. I’m sure you remember this one:



  3. […] That rare diamond pattern that I flagged for your  here last week is proving true. As I noted in the title of that post, it is the location of the diamond pattern that matters. If it comes in the midst of a trendless market, it should probably be discarded. After a sustained uptrend, it is a reason for caution, especially when confirmed. If it comes after a market crash, like last week, then you should be on watch for an upside reversal, which is exactly what we have seen. Remember, the psychology behind the pattern is that one side is slowly but surely wrestling away the initiative from the other side–In this case, the bulls from the bears. […]

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