I analyze macroeconomic issues from a fundamental perspective, and I analyze market behavior from a technical perspective. Original macroeconomic analysis can be found here and both macro analysis and commentary can be found on my Caps blog. If you like or appreciate my analysis, please add yourself to my Following List

Thursday, February 7, 2013

Feb 7

I am seeing an interesting setup take place, which is the 'broadening top' (which is highly distorted and stylized at this point). The reason why I think this is a possible valid setup is because of some very interesting similarities to the short term peak in early 2010.

The early 2010 peak displayed a 'broadening top' for about a week in mid January 2010. The current churn and potential broadening top here has happened the last week of Jan/first week of Feb 2013. So the seasonal phasing is pretty good. We had a strong and very pronounced 3-wave move up from the previous November lows in both instances. And we have extremely similar long and short duration PPO movements on the 60-minute timeframe.

This is making me question if this could be a reversal pattern instead of consolidation which is what I had been thinking. However, we have a pretty good defined level now (see second chart below), and if we stay above that level then I still think the 1530 target is appropriate before the next significant correction. However, if we close below it, then I think the chances of a significant correction being in progress now becomes greatly increased.

2009-2010



2012-2013

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