A change in the techincal conditions...

it appears that our consolidation triangle has transformed through various false breakouts into a MEGAPHONE or NUTHUT pattern... (higher highs and lower lows) see hourly chart... this puts us at a point of true indecision... as their is no historical bias as how such a pattern statistically breaks... one could flip a coin... but... on the same hourly charts... we can see MA and MOM indicators biased towards a continued move up... w/ the exception of the 20 per CCI which has moved into an oversold state... in a strong uptrending market... this has little meaning... however in a strong downtrending market... as we are currently in... this is a great indicator leading to profitable shorts... (a look over to the 30 min chart will also indicate an oversold condition)...

but point is... our consolidation tri has morphed upon us into a much more indecisive pattern... leaving much more risk on the table for anyone else but the daily scalper...

however... there may still be one longer term indication that we will see a move up out of this pattern in the weekly charts with the same 20 per CCI... as it has moved above oversold condition... and as i posted last week... has a very very low failure rate for a weekly swing trade... to the upside... if we are still measuring the move by the triangle... a break up would produce a target of 1450ish...

The Nut Hut Pattern (Megaphone)...
http://stockcharts.com/c-sc/sc?s=$SPX&p=60&yr=0&mn=1&dy=5&i=p35294528580&a=130657134&r=2656.png

The Weekly CCI buy Signal...
http://stockcharts.com/c-sc/sc?s=$SPX&p=W&yr=10&mn=0&dy=0&i=p09913281143&a=131062659&r=8969.png

On your weekly.


Take a look at the MACD oversold condition and compare it to other CCI divergences back in the 01-02 bear. In the past this situation has signaled a further move up (not that this is "the" bottom) but rather this rally does not look done on the weekly. The daily is appears to be on a buy as well.




Also, you could draw a new trendline from the Feb 6 low to the Feb 22 low and what do you see then? I wonder if its too early to call this a megaphone? The reason I wonder is because look where you have drawn from the middle of the intraday breakout feb 12 and not from a ST low?

Edited by CHAx, 26 February 2008 - 12:48 AM.

I would like to note I reposted your charts WITH my edits "painted" in. Those are not my charts --- credit to Architect.