AMZN Rising Wedge

A Super-Extended Move is a Neely Tell

AMZN is Now Coloring in the Top Third of the Red Rising Wedge

AMZN is Now Coloring in the Top Third of the Red Rising Wedge – A Neely Tell of a Major Top

AMZN is now coloring in the top third of the red rising wedge. That represents a super extended move and is a Neely tell of a major top forming.

AMZN could continue moving up the rising wedge, extending it into its very tip.  Or it could start a small fast megaphone inside the wedge to work the price to the wedge bottom before breakout into a crash from here.

Or it could extend the rising wedge into its tip then crash to the implied price channel bottom and make a new high from there before collapsing to the wedge bottom.

The first technical target for a correction is the rising wedge bottom at roughly 500.  Ultimately AMZN has to work its way back to the bottom of the purple rising megaphone at 100 as well.  But the route to that target could be very complicated and even include a new all-time high from 500 en route.

Unless some disaster is about to befall AMZN (like an antitrust suit and break-up), the most likely scenario is a drop to roughly the rising wedge bottom to establish a new megaphone trading range across roughly 600.  Some years down the road, from a new high, that megaphone could include a drop to 100.

Neely Crash Call Update

A week ago I posted information about a public crash call from Glenn Neely.  You can read the post here and my comment on Neely trading set-ups here.

Now Neely has made a follow-up call.  He is saying that either the S&P will complete the move out of the 2009 low within the next 1-3 months, or it will begin a period of increased volatility that will last into early 2018.  He says either way, upside potential is limited for the next few years.

Neely cites the following fundamental evidence for a topping scenario:

1. According to ZeroHedge, corporate “insiders” are selling stocks “At Levels Rarely Seen.”
http://www.zerohedge.com/news/2017-05-03/they-know-something-we-dont-–-corporate-insiders-are-dumping-their-stocks-most-7-yea

2. Consumer Confidence is back to 1987 and 2007 levels.

3. U.S. Margin Debt is at all-time highs – historically, a very dangerous condition (compliments of dshort.com)
http://www.zerohedge.com/news/2017-03-30/margin-debt-hits-new-record-high-analysts-say-“don’t-worry”

4. Information obtained from a client stated: “More than half the increase in the S&P 500 has come from just five stocks! This kind of narrowing of ‘market breath’…is a classic warning sign of a bubble peak.” 

Neely goes on to say the market could still stage a 1-2 month bubble blow-off from here.

To Neely’s credit, at the September 2015 low he put out a call for a move to 2400.

Since May 11, I’ve posted crash set-ups and melt-up set-ups for ES, IWM and QQQ.  You may want to scroll back to take another look at those.

Neely runs a fund that trades his method and offers trading advice at Neowave.com and is author of The Neely Method, a book from which I’ve learned a number of valuable trading set-ups.

 

 

Critical Retest and Tell

Fast Stab Lower vs Up Into Fast Top vs Up Into Prolonged Topping

ES is Headed Up to its Red Megaphone VWAP and a Retest of the Inside of its Navy Blue Megaphone Top

ES is Headed Up to its Red Megaphone VWAP and a Retest of the Inside of its Navy Blue Megaphone Top

ES is headed up to its red megaphone VWAP and a retest of the inside of its big navy blue megaphone top.  If it reverses there, it will likely take out the March 27 low.

That kind of fast stab at the navy blue megaphone VWAP that fails to get there would be a perfect set-up for a breakout upwards from the megaphone into a melt-up (light blue scenario).

See the melt-up set-up I posted recently for IWM.

If ES breaks through the navy blue megaphone top it’s still working on a topping pattern before a plunge to at least VWAP and possibly the megaphone bottom and beyond.

The purple scenario represents the kind of fast top that could reverse at VWAP back to the navy blue megaphone top before a huge move down. (I missed a mandatory bounce in that scenario, but you get the idea.)

The green scenario represents the kind of prolonged topping process that would usually lead all the way to a trip to the navy megaphone bottom and then back to its top.

Neely and Corzine

In the IWM post I link to a post about Glenn Neely’s public call for a crash. Yesterday I saw that Jon Corzine, the Democrat bundler who took down MF Global along with hundreds of millions of dollars in customer accounts, was trying to set up a third hedge fund to bet on a Trump crash.

When you start getting lots of people making public calls for crashes, especially for bad reasons, you often get melt-ups instead.

XLE Megaphones with Potential Melt-Up Set-Up

XLE has a Potential Sornette Melt-Up Set-Up on its 60-Minute Chart

XLE has a Potential Sornette Melt-Up Set-Up on its 60-Minute Chart

XLE has formed a beautiful megaphone inside a megaphone on its 60-minute chart.  Even better, XLE has formed a potential Sornette melt-up launch pattern across VWAP of the red megaphone.

An upwards breakout through the navy blue megaphone VWAP, typically with a double bobble as the orange megaphone fails to retrace to VWAP, would target the red and blue megaphone tops.  The move would usually be fast (green scenario).

The light blue scenario represents a series of megaphones inside megaphones across the navy megaphone VWAP.  We’d usually see this is a triangle right shoulder is forming on the potential inverse head and shoulders bottom on the daily chart (see below).

The purple scenario represents a top before a collapse back to the 2016 (see below).

 

XLE Inverse H&S Bottom with Right  Shoulder Triangle vs Neely Set-Up

XLE Inverse H&S Bottom with Right Shoulder Triangle vs Neely Set-Up

XLE formed a price channel on its move down from the June 2014 high to the January 2016 low.  That kind of move is a Neely set-up for a partial retrace then retest of the low before a melt-up back to the all-time high (purple scenario).

The green scenario on the daily chart is a triangle right shoulder on the inverse H&S before a breakout to retest the all-time high.  It’s possible but unlike (because of the megaphones on the 60-minute chart) that XLE will break out of that inverse H&S without a triangle right shoulder.

The Neely set-up is the favorite longer-term.