Could it be....a trap?

Just looked at the SPX daily through arithmetic (linear) eyes. A few years ago I subscribed to Signalwatch and had a very hard time figuring out how Ed drew some of those lines he did.....until I noticed he wasn't using log scale. It's not my purpose to argue merits. Bottom line is.....in reality.....it should be done that way.....it used to be. But there was a problem with hand drawn charts on graph paper. The charts kept running off the paper.....so the rules were changed so to speak. Instead of price movements showing up on the charts in absolute degree....that is....a twenty point move from 1000 is identical to a twenty point move from 1200.....they started espressing the moves in terms of points and percentages. Thus, a twenty point move from 1200 is smaller than a twenty point move from 1000. Well, anyway.....look at the wedge.....and you cannot tell me that somebody hasn't been watching this.....well you could but I wouldn't believe you....look at the perfect touch at Wednesday's top and the perfect touch on the 23rd. Monday that bottom line will be right around 816.37 give or take a bit. And now I've gone and spit in somebody's soup. [attachment=9602:SPXDaily...ic013009.png]

Followed by another one.....a fourth wave triangle on the weekly....that says we go back to the 900 area.....and if you're a bear and get caught short....you had better hope it's not a triangle trap....that blasts through the top instead of breaking down....as it should... [attachment=9603:SPXWeekly013009.png]

i like the chart and the prospect of an opening gap down to spx 817 and an engulping stick which skedaddles north. though i am not sure of the intricacies, i am hearing that thurs/fri had a lot to do with cash raising for end-of-the-month reporting by some large funds. if that is true, the selling pressure may have wisped off into the ether.

Edited by humble1, 31 January 2009 - 01:07 AM.

bullish inverted hammer on the weekly? gravestone doji?

I don't pay much attention to candlestick patterns.....seems like 50/50 odds at best from what I have seen. IYB's dartboard method was that good....maybe better. But there is one thing that I left out of that second post on this thread. I was thinking in terms of the first trap possibility too much. The triangle "should" lead to a move back up to the top line in the 900 area and then it "should" break down. But if its a triangle trap it just breaks now.....I can imagine it is on a lot of radar screens. And we are in a faders world. Everybody is trying to fade everybody else.....because everybody else is "dumb money". The good news is that both of those charts break down within a couple of points of each other.

At least the lines break within a couple of points of each other. I guess the triangle isn't officially trashed until 804.30 is taken out to the downside or 943.85 is taken out to the upside.

Just looked at the SPX daily through arithmetic (linear) eyes. A few years ago I subscribed to Signalwatch and had a very hard time figuring out how Ed drew some of those lines he did.....until I noticed he wasn't using log scale. It's not my purpose to argue merits. Bottom line is.....in reality.....it should be done that way.....it used to be. But there was a problem with hand drawn charts on graph paper. The charts kept running off the paper.....so the rules were changed so to speak. Instead of price movements showing up on the charts in absolute degree....that is....a twenty point move from 1000 is identical to a twenty point move from 1200.....they started espressing the moves in terms of points and percentages. Thus, a twenty point move from 1200 is smaller than a twenty point move from 1000. Well, anyway.....look at the wedge.....and you cannot tell me that somebody hasn't been watching this.....well you could but I wouldn't believe you....look at the perfect touch at Wednesday's top and the perfect touch on the 23rd. Monday that bottom line will be right around 816.37 give or take a bit. And now I've gone and spit in somebody's soup.

Allow me to indulge in an anecdote.

My father used to manually keep a point and figure chart all day on the Dow. He'd chart off of it, too, but he'd always run out of paper.

One of the best signals, I swear, was to buy when he was close to the top of his sheet of paper and short when he was close to the bottom. It was nuts. The market would almost never turn at the top or bottom of his chart paper.

Probably some sort of subconscious explanation, but there it is.

He did love keeping the chart though. Seemed to give him a better feel for things.

Mark