back to the basics …

Posted on March 28, 2014     Leave a Comment

a very good friend of mine has sought my assistance in becoming a pattern recognition guru.  I do this very sparingly because before I ever accept this challenge and privilege I make sure they have read http://www.constructingtheuniverse.com/bookinfo.htm.  Why?  Because the PATTERNS fly against the convention of any modern portfolio theory, CNBC talking head pundit and, quite frankly, many noted technicians.  Flush the brain, find a pattern and take the trade ….

so, in a nutshell it comes down to 3 things : Project, Extend, Retrace.

PROJECT – the basic (no less important) is ab=cd.  (shown below)

EXTEND: from the b  point EXTEND based on the bc leg UP (or down) into the ab=cd region by 127%, 141.2%, or 161.8%.

RETRACE: Xa retrace by .618 or .707 or .786.

Where they come together … a PATTERN is formed and you take the trade.

That is ALL you will EVER need to know …

Below is the JPY 120 minute SELL pattern at/around 103.09-103.30

Make it a great weekend.

Main20140328070008

 

all time low on NASDAQ log trend line

Posted on March 27, 2014     4 Comments

CLIFF NOTES: this is major resistance on the NASDAQ

folks, it’s all about the swing low … while the NASDAQ is continuing to break down like our targets expected, it has not broken a major swing low, yet.  This weekend will be very key as we “square out” in days the all time high of 5132.  Additionally, note we are only 15 points from 4188 which is the calendar day count from the 10/10/2002 low.  So … we have 1) targets being hit in PRICE and 2) equal TIME rally up (noted by blue triangles) and 3) butting against major trend line resistance and 4) a potential square out of price and time from major highs and lows.

NASDAQ LOG trend line from all time low

NASDAQ LOG trend line from all time low

Top 4 A/D contractors, the PPA and GOOG

Posted on March 23, 2014     Leave a Comment

Cliff Notes: they are showing sell patterns and we have visited the correlation of the Defense Index ($DFI // PPA) and GOOG before ….

PPA Defense Index PPA and GOOG BA BOEING LMT LOCKHEED RAYTHEON RTN NOC NORTHRUP GRUMMAN

JPM updated w/ a SELL pattern complete

Posted on March 23, 2014     3 Comments

in November 2013 we targeted this area as a SELL pattern:

JPM beautiful sell pattern

much like the movie Inception  w/ the dream w/in a dream w/in a dream concept we also like PATTERNS to behave in the same manner. a pattern w/in a pattern w/in a pattern.  all this does is increase the probability of a pattern working.  does not guarantee it will work but does tip probability in our favor.

w/ JPM we have the following:

  • Monthly Gartley Pattern w/ a Buttefly pattern inside of it.
  • Daily 5 point reverse wave w/ a butterfly inside of it and inside of that butterfly is a 3 drives.

Folks, only probability but this pattern is complete.  If we get a daily open/close above 64 I would assume this pattern had failed.

Main20140323113036

Main20140323114517

around the world …. the song remains the same

Posted on March 22, 2014     Leave a Comment

cliff notes: not one new high across the world.  Malaysia has given it a good try, but has not “on close” exceeded it’s 2007 high.  the song remains the same …  http://www.youtube.com/watch?v=CcYZlRWWxO0

EWW Mexican ETF March 22 2014 EWM Malaysia EWA Australia March 22 2014 CNY Yuan March 22 2014 EWH Hong Kong March 22 2014 EWC Canada March 22 2014 ACWI Global Equity ETF March 22 2014 FXI China March 22 2014 EWQ France EWG Germany ETF EWU UK March 22 2014 EWJ Japan March 22 2014 EWY Korea March 22 2014 EWT Taiwan ETF EWZ Brazil ETF EZA South Africa March 22 2014 Main20140322103557

Chinese Yuan continuing to watch

Posted on March 22, 2014     Leave a Comment

we correctly ID an inflection point and it took off … now, a little higher is a SELL USD vs YUAN pattern a little higher.  Watch this level shown below as it’s going to be extremely important.  Here are the former posts …

https://bartscharts.com//?s=chinese+yuan

Main20140322084126

 

Chipolte …

Posted on March 22, 2014     Leave a Comment

Main20140322083252

Swing Low, Sweet Chariot ….

Posted on March 16, 2014     Leave a Comment

chariot-topper

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!)
swings
VIX SWING HIGHS
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 ….
CHINESE YUAN 3152014
DJU March 15 2014 utility and industrials
dow jones transports march 15 2014
COPPER CORRELATIONFXI 032014 EEM 03152014

great explanation on the importance of the Yuan vs USD

Posted on March 14, 2014     Leave a Comment

my wife tells me I am a geek and so do a lot of other people so …if my lines, charts, music, vibrations and square roots don’t make sense perhaps this might:

http://www.forbes.com/sites/tomessaye/2014/02/26/why-the-chinese-yuan-is-the-most-important-currency-right-now/

keep calling me a geek, I’m thick skinned.

also, I read the last paragraph … the patterns say DO NOT buy FXI, yet.

ROCK ON! OK?

Chinese Yuan weakening … not what we wanted to see

Posted on March 14, 2014     Leave a Comment

From a pattern perspective there are two scenarios:

  • recent up move is a B wave that will complete in/around here and then fall into area located and then up (orange sequence of arrows)
  • recent down move (blue arrows) completed the a-b-c correction and the dollar is going UP against the Yuan.
  • note: when the candles go UP it’s Chinese Yuan weakness and when the candles go DOWN it’s Yuan strength
  • summary: we spent some time last night showing the FXI (China) and Copper correlation .. any chance that the PBOC has a crystal ball w/ regards to their stock market, horrific credit and real estate bubbles?
Chinese Yuan continuing to strengthen? two possible scenarios shown

Chinese Yuan continuing to strengthen? two possible scenarios shown

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