At Friday’s close, technicians were generally pretty bearish on equity indexes, based on the head and shoulders pattern identified below. (Click images to enlarge.)
Of course, this particular setup hasn’t panned out well so far:
In the jargon, this week’s rally decisively violated the neckline and pushed up to attempt a retest of the right shoulder. I am unsure whether there are any vaunted technical analysis conventions allowing for mutant patterns featuring two right shoulders, but yesterday’s move certainly sent some analysts scrambling.
Long…
In case you’ve missed it, technical analysts have been atwitter over sightings of the mystical-sounding “golden cross”. Among the latest observations from the mainstream business press are a Barron’s online article posted yesterday and a Bloomberg piece from last week, but recent talk of the fabled Crux Aurea dates back at least as far as early June, when the daily chart of the Nasdaq Composite Index showed the 50-day simple moving average crossing above the 200-day SMA. Since then the heavenly vision has…
The lower part of the chart below shows how far each day’s price movement deviates from its 21-day mean; the dotted lines mark two standard deviations up and down. With SPX at 895.70, today looked to be one of those two sigma days. The last such occurrence was on March 2nd of this year, a few days before what the “green shoots” crowd desperately hopes will have been the market bottom. From a cursory glance at prior instances I draw…
Investors and the financial media have been excited of late about the S&P 500 crossing above its 200-day moving average:
Harris Private Bank and Morgan Asset Management say the advance may indicate the bear market in U.S. equities that began in October 2007 is over, heralding more gains after a three- month, 39 percent increase. Analysts who base forecasts on price charts consider crossing above a moving average bullish because it shows stocks are rising faster than the long-term trend.
“That’s proven…
Bloomberg has this shocking bit of news:
Ever since the Standard & Poor’s 500 Index peaked in October 2007, six of eight strategies — which are supposed to make money whether stocks rise or fall — failed, according to back-testing data compiled by Bloomberg. As the bear market erased $11 trillion from the value of U.S. equities, buy and sell signals from those six technical indicators produced losses of as much as 49 percent, the data show.
“Technical analysis on its own…
Thursday, July 16, 2009
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