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PUBLIC: Caught between two lines

SEE UPDATE BELOW…

Note this is an HOURLY chart of the SPY about 3 hours before the close on Friday, November 17.  Please orient yourself to previous posts on the channels still indicated on the chart from previous posts if you need to, but the pink uptrend channel has been in place for many weeks and price finally dropped out of it.  A salmon colored downtrend channel was created over the past week or so and was well defined until yesterday.  Price popped above the salmon channel and bumped back up against the pink channel.  Now price is stuck between the two.  I fully expect one more tag of the pink channel lower boundary today into the close or early next week.  That should create an all time high again on this SPY product near $260.

If the market is going to head lower from here, this is a very technical pattern known as the “kiss goodbye” when price leaves a channel or trendline and then rallies back up to tag it before falling away.  Entering the pink channel and staying above it would be bullish, entering the pink channel and falling back out would be bearish, and rising up to tag the pink channel from the underside before falling away would be bearish.  The bears have 2 out of 3 scenarios in their favor….except the overall trend is UP, so the bulls likely still have the odds in their favor.

Have a great weekend everyone.  There are some initial subscribers reaching their renewal period this month (this site was launched in Nov 2016) and I hope you have found value in staying on the right side of the trend.  2017 was a good year in the markets…I trust you made some good money on your investments!  Thank you for your renewal when it comes due.  As you’ve seen, I’ve been pretty busy posting long and short term thoughts on the market.  I hope they help!

 

UPDATE after the close on 11/21/17:

Same hourly chart advanced by 2 days (Monday and Tuesday) showing that price did indeed rise to tag the pink channel from underneath as expected in the post above and setting a new ATH (all-time high) on the SPY product [red arrow].  Is this the “kiss goodbye” or is this a rest before jumping back into the pink channel?  Tune in tomorrow and Friday (the market is closed on Thursday for Thanksgiving) for the answer.  Very interesting development…let’s see how this plays out!  Happy Thanksgiving everyone.  Enjoy your families and friends.

2 Comments

  1. kevin
    kevin November 17, 2017

    Great Value for me i will renew Thanks Ernie
    Is the POTENTIAL for a kiss good bye a time to secure some more profits and raise cash?

    • Dr. J
      Dr. J November 17, 2017

      First off–thanks for the feedback and glad to hear this blog is helping you. Comments like this give me motivation to provide more short-term content than long term alone.

      If you are a more “nimble” trader and want to be more involved, absolutely. However, two thoughts should come to mind: 1) what if price LEAPS back into the pink channel and just keeps pushing higher, are you willing to chase to get re-invested?; and 2) How much am I invested percentage-wise right now? Losing money is never a pleasant experience for most of us–we easily recall the pain of the loss much more than the ecstasy of the big gain (trading psychology 101, it’s been studied)–but if you can look at in the context of HOW MUCH you could have lost if you were 100% invested vs. your current level, having SOME level of investment and focusing on the long term goals rather than the short term losses will generally give you the security investors seek. As a nimble trader, willing to take on a more active role, there is potential opportunity here to sell high and look to buy lower when you get the opportunity.

      Harvesting profits awaiting a better entry in a long duration portfolio is always a hard decision. If you have a game plan BEFORE pulling money off the table, it makes the decision easier. Using the recent price action as the example…I have outlined THREE price channels on the charts published. TWO of them are moving up. ONE is moving down. You know what the Market Alert System is currently indicating the LONG TERM TREND of the market is based upon the monthly e-mails and private posts (hint….we aren’t on a SELL signal). We recently moved ABOVE the downtrending channel identified. That is still bullish (upward bias). A move back into the pink channel along with a daily close in there would be more bullish. A move back down into the salmon channel would be bearish and raise some thoughts about raising some cash if a nimble trader wanted to pay more attention to the markets at this time. If your life allows such action, and you have a plan, then do so. If life doesn’t allow it, or you can’t make a plan and stick to it, then realize the bullish bias SO FAR hasn’t been violated. So why fight it and get in your own way?!?

      I always enjoy questions. I hope to see more! Thanks.

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