I've been looking for the big swing move. Let me show you why I think this could be the setup:
Take a look at the weekly. We haven't had this long of a stretch on the MACD oscilator without a reset in some 15 years. That isn't to say we can't get more oversold levels, we definately can. However, looking at the last major corrections in 98 and 2000 we see a lot of similarities in both terms of price correction (around 15-20%) and also relative levels of oversold. I am looking for this level to reset. In order to do that we need something like 80-120 point move north. What I am saying about the weekly is it has not yet signaled anything, but this is the area to start watching (atleast from an oscilator standpoint).
The daily IS constructive. We have some positive divergence, we appear to be building pressure under the previous lows - a few posters who I respect a lot have been calling for compression, I see this too (infact it is what compelled me to make this post). I've added some trend lines that I know a lot of others have constructed, particularily the triangle. The MACD does not appear ready to turn over despite the action today. Take a look below - I've circled areas of interest.
Here is our 60 minute SPY with trend lines. We have yet to break decisively outside our trends, though I think most of us recognize we will very shortly. Notice the touches to the bands are narrowing and reacting more violently, classic end pattern action. Notice how the last bar perches nicely on the bottom of triangle.
Finally a 10 minute chart because I wanted to show how more detailed falling wedge in today's action.
Edited by CHAx, 22 February 2008 - 12:46 AM.
