Yesterday, we approached the congestion area. All three major indices are now inside the critical congestion area, a sort of ‘make it or break it’ type of intermediate-term level.
Long-term channels are marked by the purple lines. The COMP has penetrated and is comfortably above the upper long-term channel, however the Nov low-Jan/Feb consolidation level provides resistance. The COMP’s volume remains level, stable, and without drop off. The DJIA closed slightly into congestion. March’s volume cannot be rivaled by any other month in the DJIA’s entire history. The SPX entering congestion can be seen in the 2-month close-up below. Targets are marked with a red box.
The 100-day MA has become a critical level because the SPX & DJIA have not met it since June 2008 (August 2008 for the COMP). Many indicators indicate increasing overbought situations, but I won’t initiate committed short positions until one of those advanced distributional sell-off days (ADS) occur. Shorts who shorted early, even the strong hands, are feeling intensified pressure at this point, and I can assume that many of them are folding their cards as each day goes by, unless they shorted months ago.
*All figures are for the DJIA, except 2000 (COMP) and 2007 (SPX)
In addition, during these times, I like to breakdown each sector and analyze them individually. All are either in continued uptrends (XLK, XLI, XLP, XLY, XLB) or in bullish consolidation patterns (XLF, XLE, XLU, XLV). Since all sectors are not moving in tandem, it is contributing to the large number of indecision days and large intraday swings. The ascending triangles have a higher chance of breaking out to the upside, while the sectors in continued uptrends are threatened with a pullback as they enter/or are approaching congestion zones.
Great post. Really excellent work. Thanks.
Thanks CA. It’s good to see the fins prepping for another jump.
Seems like the rally’s continuation or failure only depends on what bank CEOs say.
really? not on charts? huh…
The charts will reflect the immediate moves.
Added FAZ @ $19.7999
So Chartie…
You say XLF is forming an ascending triangle, but then you add FAZ??? I’m seeing you’re calling BS on the triangle, so what pattern are you looking at to build your case for shorting here?
One thing is for sure… a GS or MS short here looks very nice. Kissing of the 200 day SMA. MS punched through a little bit, but fell back and GS is stuck.
Goat
chartie..that’s a new one.
The FAZ position is a feeler, sort of a “let’s see what happens” type of position. If there is follow through from Friday’s gap down+sell, then I will commit to the short side. Otherwise…let’s see what happens.
The ascending triangle is still in play, but several financials and tech have exhibited significant weakness.
you maY get a 5% pb in SPY but higher prices are ahead. Notice the $NDX has moved over the JAN 6 HIGH….this is the roadmap for the rest of the market….keep aN eye on IYT & IWM both acting well….
shorts here are going to be fuel for higher prices IMO
full moon fever