It's not over, or is it?
by
, 09-27-2014 at 01:37 PM (2704 Views)
___Here's a quick review of the Point and Figure charts. These are not the usually charts you'll see, but I thought I'd mix it up a bit. The hourly timeframe was chosen because the price objectives are tighter and I believe it speaks better to the intermediate scale many of us use.
AGG: While price has broken below 5 Os, there are still 3 Os of support at 108.1, and a bearish price objective of 108.4 nearly met, I believe much of September's decline may have already taken place. Within the Green/Yellow/Red boxes, we are within a hair's reach of median price and while the trend is still broken, the long term trend remains largely intact.
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SPX: Price has broken below 2 Os, there is minor support at 1946 & 1910 with a bearish price objective of 1940. With a .25% gain, we will tag 1987 and put in a column of Xs. Looking at the broader view, I think the damage is minimal, I have median price set at 1963, this has been a previous area of support with 3 Xs outlined within the yellow box.
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EMW: Looking at the Wilshire 4500, we can see we have a great many issues to deal with. Most recently, prices declined to major support at 997, ___held___, then put in a reversal with 3 Xs. For now, we have 4 Os of support at 997, but there is still a lot to be gained before we reach median price at 1017, and afterwards there's still 4 Xs of resistance at 1038. As you may have noticed, the correlation between Large & Small caps has fallen out of sync. The S-Fund has been under-performing on the way up, and over-performing on the way down, this is not a healthy relationship. The best advice I have is to do what we should always do "follow the winner" and transfer your risk over to the C-Fund. There will be a time when the small caps will resume their role as the leader, but that time isn't now and it could be months or perhaps even years before we see this happen. I have not outlined it, but if 997 breaks, the next major level of support is at 958, which is another -5% decline from current levels, so be careful.
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Note: The Green/Red bars running horizontally on the left is the Volume at Price indicator. For more information, click Point and Figure Charting - Basics, for P&F Intra-day talk, please visit James's thread P&F Chart School.
Trade safe...Jason