“I think this is a song of hope …” Robert Plant Live Stairway to Heaven

The S&P 500 has been climbing a stairway to Heaven ..


folks coming into 2015 we had some pretty strong patterns appearing.  some worked and some didn’t – isn’t that what we expect? that being said, it was prudent to be cautious due to their presence.

here’s what I posted around a year ago:

“Let’s don’t jump up and down and scream the BEAR MARKET is here till this chariot of the bulls breaks a swing low.”

so, while we’ve sold off for the past couple days let’s not go crazy.  we have broken ONE swing low and that’s it, and it’s ONLY a weekly.  WE HAVE NOT BROKEN A MONTHLY SWING LOW.

so, keep it ALL context of the big picture.  We break a swing low on a MONTHLY and then a second then we have “issues.”

but for now, EVERYONE knows this puppy was on steroids and need some shaking out so let’s look for a pattern to BUY on a weekly (hint hint – it needs to breathe a bit) and if a bear I would still be very cautious.

what do we know and see … ?

  • we know a weekly swing low is about to be taken out and we’ll know that ONLY WITH THE CLOSE TOMORROW … we also know this has NEVER happened since March 2009 bull market began.

so, here’s the logic:

  • if weekly close below a swing low … get defensive.
  • if not, then keep in mind, we have pressure on the downside and it probably needs to breathe down so just chill …

enjoy the post below .. you’ll see some of the patterns were early, some were spot on.  that’s not the point .. the entire post below is around the market action around a SWING LOW or SWING HI and to respect them — very very strongly.

let me know if you have any questions.

chart below is the ES .. note the red horizontal swing lows. those have never been broken on close. it might happen tomorrow …


S&P Futures Swing Lows since 2009
S&P Futures Swing Lows since 2009





As we have discussed multiple times in this venue, the move since 2009 has been one heck of a ride.  This chariot of stock market emotion is, literally, off the charts.  It is at an extreme that has surpassed 1929, 2000 and 2007.  For the past 6 months it has defied the powerful cycles and patterns we follow.  However, we are at another “potential” inflection point and based on this weeks price action the chariot appears to be running out of gas.  So, objectively, the cycles and patterns we follow appear to be working.  Let’s don’t jump up and down and scream the BEAR MARKET is here till this chariot of the bulls breaks a swing low.

djia march 15 2014

Below you’ll see a quick demonstration of the Dow Jones Industrial Average from 2002-2009.  No patterns shown but just an example of the power of the swing low.  Take note, when we lose one swing low there is usually some selling and then it bounces back and, here’s the key point, it fails to make a new high.  Price might congest in this area (going either direction – up or down) and then it starts down.  One thing to watch is “usually” the third swing low. When that gives away, selling is vicious.  So, as much as we see MAJOR patterns completing let’s not get to confident.  THE MAJOR US INDICES HAVE NOT BROKEN ONE SWING LOW IN 5 YEARS.  Over the coming weeks, pay attention to these swing lows and swing highs (note the VIX chart – not one swing high has been taken out since 2007!)
Also, note the Dollar Index swing low track record and the very thin neckline that is coming into play a little lower.  We’ve reached some daily extremes in metals (Gold, Silver) and the Euro and Pound.  Sentiment means nothing when a multi year extreme is taken out and one that has been tested roughly 10 times since 2012.  Folks, a lot of stops are hiding beneath 78-79 on the dollar index.  Certainly hope support holds here …
Dollar Index Swings
so, keep an eye on the swing lows and highs over the coming days and weeks … note price action after a first or second swing low is taken out and, seriously consider safety if/when a 3rd long term swing low is taken out to the up or down side ….
DJU March 15 2014 utility and industrials
dow jones transports march 15 2014

Author: BART

BART is a CMT and an expert a "advanced" pattern recognition used w/in the intermarket analysis discipline. He's also an accomplished Business Development Executive providing solutions to a myriad of business markets.

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