By: GZ on Venerdì 18 Giugno 2004 20:11
Gli S&P 500 sono in questo momento a 1.136 dopo aver segnato anche 1.139
Jeff Cooper su TSC fa notare che 1.136 "risuona" con il minimo degli ultimi cinque anni degli S&P a 768 nel senso che è sullo stesso angolo di Gann e quindi è cruciale ora
Sintesi: per il 24 giugno dovrebbe essere a 1.160
Time to Unwind for Tightly Wound Tape
By Jeff Cooper
6/18/2004 7:02 AM EDT
The market is wound up. The countdown is on into a cluster of events into the end of June:
The FOMC meeting at which the Fed will reverse course and raise interest rates for the first time since commencing its campaign of accommodation of 13 rate cuts.
Quarter-end fund and games.
The transfer of Iraq.
And, of course, the Time and Price square-out that we have referred to many times in this space. Namely, 1552 days from the all-time S&P 500 high of 1552 on March 24, 2000, is June 24, 2004.
Although it may seem like numerology, I have seen these important squares generate major turning points in the market time and time again. Turning point means just that. The end of June/early July could be a high, a low or an acceleration point. Or nothing.
But again, I have seen too many square-outs of Time and Price impact the market to ignore them. For example, the recent May low coincided with a square-out of the all-time closing high on the S&P 500. The market has its own innate symmetry.
Moreover, the overhead 3-point declining Trendline now at 1140, which defines second-quarter resistance, and the 3-point flat-top resistance at 1160 from the first quarter beckon. Additionally, the S&P has carved out a Cup and Handle, with this week's action tracing out the handle.
I mentioned the end of June and into July for the turning point to play out because it is important to know that the Fourth of July (a natural anniversary date for the U.S. and stocks) vibrates off the bear market low of 768 S&P from October 2002 (see the Square of Nine chart). Happenstance? It is my impression that the market is coiled, and that likewise, this tight band of sensitive time between June 24 and July 4 should magnetize prices into this time frame.
The tight trading range of this past week -- on Wednesday for example, the Nasdaq had its tightest trading range of the year and by some accounts its tightest range on record -- suggests volatility is poised to explode. Isn't it special that quarterly option expiration is Friday?
It is my impression that the market did not paint itself into this corner/triangle just to fade away -- that a breakout beckons. The bulls are unlikely to liquidate ahead of quarter-end markup season. Also, the smart bears probably realize that the third time is a charm, and already have had three bowls of porridge shorting resistance. Likely, the smart bears will save their porridge to short at higher prices, if they are still so disposed, while the fuzzier bears likely will short into resistance just because "It worked each time before."
Now shorting resistance is generally a good risk-to-reward proposition in the trading range. But sometimes you can go back to the well one too many times. But those who are shorting current resistance, who yet again probably plan just to cover on a breakout above 1140 or maybe 1160, will simply add fuel to the potential breakout. We will only know in the fullness of time who is right.
As I like to say, if it is not going down, it is probably going up, and this market has had many excuses to go down. Additionally, when the Boyz have an agenda, such as window-dressing into a flat quarter, it could get interesting.