11:45pm – small gartley pattern setup into the noon hour reversal hour

12:50pm – first target levels, pocket trade to support

NYSE – TICK indicator used for intraday scalp momentum readout, “momentum proceeds price action”

4:00pm close – PPT in the final hour of trading?

This NYSE advance/decline volume indicator shows how lop-sided the action becomes throughout the trading session.  Today presented an exception where the last-hour trend reversed itself into the close.  Thanks to Kongfuzi in b-line for the chart.

11:15am – Measured move target is achieved based on bull flag setup.

1:45pm update – early setup for measured move target by Buffy is called at 10am. Target is tagged at the beginning of PM session.

2:00pm profit taking level – pattern traders will also recognize the gartley on larger timescale and definitely ring the cash register here.

3:00pm – just a quick note to remark on the correlation of a short USD (US dollar) position to equity markets.  Showing the EUR/USD cross.

10:05 am – The first short sale is triggered as the SPX approaches the BZ (Brach Zone) running from 867-871.

10:30 am update – Parallel channel projection suggest a bounce at these levels. A ‘b’ wave low? Thanks to tipper in b-line channel.

11:00 update – a completed gartley pattern rises to the 78% retrace level at 871. Another a-b-c measured move is in place. This will require a tight 2 point stop, since the gartley setups have been having difficulty in the last few trading days

1:00 pm update – an amazing resilient market in the face of another round of bad news. A wolfewave is running in the stampede higher. Notice that all scalp trades are best handled with 30 minute entry/exit time horizons.

4:00 pm update – the markets manage to close the AM gap down. Most bulls consider this wildly positive action in the face of ugly news. The fact that the automakers are shot down in a senate vote is certainly far below the radar on this rather rambunctious day. Except for the noon hour, intraday jerk and scream motions are limited to 30 minute scalp plays.

Employers cut 533,000 jobs in November as reported by the government. “In addition, job losses in recent months turned out to be worse than previously reported. October’s loss was revised to show a cut of 320,000, originally given as a 240,000 loss, while September’s drop was revised to 403,000 from 284,000.  That meant 199,000 more jobs were lost in September and October than previously thought and the total reduction in U.S. nonfarm payrolls for the last three months was 1.256 million, with almost 2 million shed in the year so far.”

Based on the 2-day intraday action on the S&P cash index, I expect prices to drift down to the 820 levels (overnight globex lows have already visited this level).  Here is the pattern setup, which also represents a rising channel breakdown target.

Intraday action

Markets open immediately with a 3*push higher sequence, a small wolfewave pattern showing overlapping structure.

10:30 am update: 2-day wolfewave target tagged.

12:30 pm update: after a low print at ES 817, markets rebound. Once again, overlapping structure shows on the 5min chart, pointing to an imminent trend reversal taking shape.

2:00 pm update: Markets have continued to lift on waning volume. A gartley pattern sets up as prices enter the ‘Brach Zone’ (BZ) running from 850-858, a 62%-78% retrace level of the two-day trading range.

4:00 pm update: OUCH! What a bad call to anticipate a partial retrace. An opening range reversal instead takes shape (842 – 817 = 25 pts) with a push well above the target level around 867 (842 + 25 pt measure). One can only construe that the bad jobs number was already ‘baked into’ the price action and has been anticipated by the market. This represents amazing resilience in the face of poor economic measures, and is quite bullish.

Yes, even the automakers can now celebrate a Merry Christmas as they get their wish fulfilled for a government handout.

The consolidation tension has been worked off following last Monday’s ugly down draft. Interestingly enough, the -680 point swoon on the Dow Jones stopped at the 50% retracement level off the November 21 lows to November 28 highs (7,392 – 8,840 = 1,448).

Are we “out of the woods” yet? Technically, prices have moved in a choppy rising channel, and completed a solid wolfewave pattern showing on an intraday basis over the past two trading sessions. Gartley players are positioned exactly at the 78% retrace level of Monday’s impulse down move. Most markets are at ‘grail’ (daily 20 exponential moving average) resistance. Today’s session is once again a make-or-break scenario and should dictate the overall market direction – watch for impulsive action.

Where did the initial bounce on November 21 start at?  Exactly at the 50% retracement of the entire bull run started in 1982.  This is a brilliant chart created by Jeff Cooper which was sent just as the Dow Jones broke below 8,000.  It was accompanied with the warning “One can only wonder what the countertrend rally will look like when it arrives. And arrive it will.”

Intraday action

The ES futures contract fills AM gap down in a small 3*push higher series right into the 10 am turn.  Keep 870 on the radar for hard resistance.

11:00 am update – the first tradeable pattern setup is a wolfewave visible on the 3min chart.  The S&P has lifted a bit above gap fill, but shows a negative divergence (higher prices, lower momentum).

1:45pm update – the lower end of multi-day channel is tested.  Most likely, a short-term bounce can be expected off these levels.

4:00 pm update – markets bounced off 1:45 pm trendline, only to form right shoulder of  intraday head&shoulders pattern.  Once completed, price action accelerates to downside.

“Hegemony is a concept that has been used to describe and explain the dominance of one social group over another, such that the ruling group or hegemon acquires some degree of consent from the subordinate, as opposed to dominance purely by force.” – wikipedia.org

About a month ago, I wrote about the issues facing gold.  Despite the printing presses whirling at an every-alarming rate by our treasury secretary Paulson, the precious metal seems to be unable to advance any significant amount.  Perhaps this is due the perceived notion that the US is now firmly entrenched in a deflationary environment similar to what Japan experienced throughout much of the 90′s.  The hard cold numbers are readily available for examination, and it appears the gold delivery scheduled for November 28, 2008 didn’t inspire a run on bullion that many expected.  Quite the opposite, gold tanked a solid -5% or -$41.6 yesterday.

What can we gleam from the price action?  The initial bounce from the October spike low of $681 to $775 three days later could be considered a nice ‘A’ wave.  ‘B’ wave lows were established around $698 by mid-November, followed by an advance to $833 in another three day wonder – wave ‘C’ (measured move approximating $100 push upward).  Put all the pieces together, and it adds up to another bear flag pattern on the daily charts.  In the larger context, it is a gartley pattern with a rebound very close to a 62% Fibonacci retrace. Examining the weekly chart, gold was barely able to lift into the midpoint of a well-defined downtrend channel.

As mentioned in the last post, gold would need to see a significant reduction in the forward hedging activity before a buy was initiated. This has yet to occur, and quite to the contrary it seems that the forward selling in bullion is picking up each time the price spikes higher. Thanks for nothing, hegemon JPM.

Both the hedged and unhedged gold miners indicies have encountered downtrend channel resistance on their respective daily charts. The chart patterns can also be considered bear flag formations. Sooo, the wait continues for a solid wolfewave pattern to form in the GC futures contract and XAU / HUI indicies – only then will I consider this bear market in gold to have run to its conclusion.

I never imagined it was possible to trade through the historic ‘crash’ day that the media promised on the open. For pattern traders, the name of the game is measured moves in the form of bull and bear flags, but Gartley pattern setup is giving the best edge.

The afternoon session presents a bull Gartley pattern.

End of day structure