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JTH

AGG's Spike Highs

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___If you've ever watched football then you know when a player spikes the football, it generally is a moment of climax where he scored. The same thing can be said about candlestick spikes in that they can mark a top or bottom in price. AGG has a tendency to give us dramatic looking spikes but we often ignore them to our own detriment. This doesn't have to be the case if we know what we're looking for. So how do you know when to ignore a spike and when to pay attention to it?

Here are some guidelines for Spike Highs that mark a top. The same can be said for Spike Lows that mark a bottom only in reverse.

1. The spike high has a wide range that exceeds the previous and following days price action.
2. The spike high will close near the lows of the trading range.
3. The spike high follows an advance in price action from the previous days.

Looking at AGG I've identified some spike highs that have marked tops in price action. We can see that since we put in the last spike high, AGG has been trading sideways.
Patterns-1-png

Last month I harped on the importance of watching Fibonacci levels. This month I'm combining Fibonacci with weekly & monthly pivot points to show how they work together. If you know the levels then you can form a strategy to find better exits and entry's into the market. Here is a 5 minute chart with an embedded 1 minute showing us how well these levels work.
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During the last pullback the small caps took the biggest hit. I'm in at 517 so I'm not going to start getting excited until I break even. The good news is we closed above the March trendline. The bad news is we are at the top of a price channel. I want to see how $EMW will react at these levels before I form a bias to the price action.
Patterns-3-png

The Transports have some questions needing to be answered. Can they break above the 4 yellow circles and put in a higher swing high? Will they get rejected here and form a Bearish M then A pattern? I don't know these answers, but I'll feel a lot better if we close above these current levels.
Patterns-4-png

Holler if you love the decline of the Dollar because without it this market would tank! Ok maybe it wouldn't tank but you get the idea. Here is a war chart where $SPX battles the Dollar, or better known as the cost comparison chart $SPX:$USD. I'm watching the slow stochastic as it's been a pretty reliable indicator on where this market is going and when it's done getting there.
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Comments

  1. Nordic's Avatar
    Nice charts, the slow stochastic looks like one to keep an eye on.
  2. Gumby's Avatar
    JTH,

    Thanks for sharing.....Great information!

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