• 3 hours Standards Go Out The Window As Employers Struggle To Fill Jobs
  • 4 hours The Two Trillion Dollar Markets Amazon Hasn’t Conquered
  • 5 hours Digital Supermodels Outperform Humans
  • 6 hours France Could Lose Billions In EU Trade Route Redirection
  • 7 hours Beer Giants Are Striking Out With Millennials
  • 9 hours What Is Bakkt And Can It Take Bitcoin Mainstream?
  • 11 hours Tesla’s Board Delivers A Stern Message To Elon Musk
  • 1 day Bitcoin Could Challenge Gold As Major Asset Class
  • 1 day Google In Talks With Tencent Over Cloud Business
  • 1 day Tech Giants Charge Deeper Into $8 Trillion Healthcare Industry
  • 1 day Lockheed Stock Soars On $480M Pentagon Contract
  • 1 day Ontario Moves To Slow Cannabis Drive
  • 1 day The Tech That Will Shape The Future Of Megaprojects
  • 1 day What Role Will The Saudis Play In Tesla's Private Listing?
  • 2 days Investors Flee Emerging Markets Amid Lira Crisis
  • 2 days Startup Aims To Attract Young Renters With Savvy Tech
  • 2 days The Last Frontier For Artificial Intelligence
  • 2 days EU Companies Struggle To Pick Sides In U.S.-Iran Dispute
  • 2 days Turkey’s Currency Crisis Raises Fears Of Contagion
  • 2 days Could Gold Fall Below $1,000?
Time To Buy A Lada? Russian Auto Sales Are Booming

Time To Buy A Lada? Russian Auto Sales Are Booming

Russia’s flagship carmaker was once…

U.S.-Turkey Tensions Take A Dangerous Turn

U.S.-Turkey Tensions Take A Dangerous Turn

U.S.-Turkey tensions have reached a…

Jeb Handwerger

Jeb Handwerger

Jeb earned a Bachelors Degree in Mathematics and a Masters Degree. He learned most of his technical analysis from the school of hard knocks, managing…

Contact Author

  1. Home
  2. Markets
  3. Other

Technical Patterns In S and P500 and Gold

S&P 500 SPDRs

The rise in equities from March 2009 to April 2010 lacked one key ingredient in a bull market: volume confirmation. There were many technicians who pontificated why the lack of enthusiasm of the uptrend existed. Some said that it was the 2008 de-leveraging of hedge funds that caused the decreased participation. I was never convinced of this far fetched argument because on each correction volume increased significantly. I've been skeptical of the claim that this time will be different. While studying charts over the years, one indicator I am always loyal to is volume. It is the enthusiasm in a market which shows if a rally or decline is convincing.

The H&S pattern is one of the most reliable chart patterns. The S&P 500 is showing an apparent head and shoulders top with volume confirmation. One way of affirming the validity of this formation is by checking the volume on the right shoulder, because the right shoulder is the first rally in the bear market. The low volume shows a lack of confidence in the previous bullish trend.

The sharp breakdown of the S&P 500 following after the rising wedge pattern tells me that this bear market is likely to continue. Several indicators, namely the bearish death cross, break in trends and poor price volume along with the bearish head and shoulders pattern and rising wedge all combine to weigh heavily against equities.

SPDR Gold Trust Shares

GLD is experiencing a "v" formation after coming to long term support and a 50% fibonacci retracement. On July 28th, many of you have read my views and why I believe gold was at a buypoint, contradicting the consensus of market timers at the time. Now I believe gold is in need of much needed respite in the trend and a shakeout before continuing into new highs. Gold buying has also gotten some TV airtime from a few famous commentators who are now turning bullish on the metal. That really concerns me, as it is a contrary indicator. We may see a healthy correction so that GLD can clear the previous resistance and make a move into new highs. A healthy correction could also provide an excellent market entry point for a trader who wants to add to their gold holdings before a new breakout. If you study the move into new highs from September of 2009 you will see the coil formation where it had three pullbacks to support. These formations are bullish as they provide the conditions to generate a high percentage move. For specific stock selection visit my website at http://goldstocktrades.com.

SPDR Gold Trust Shares

GLD is overbought and if you are trading short term, do expect a pullback to at least the 50 day moving average to find support or possibly shakeout the traders who bought in after it crossed the 50 day moving average.

 

Back to homepage

Leave a comment

Leave a comment