Still a Good Spot for a Megaphone

Can't Guarantee a Megaphone Here, But Still a Good Spot for One

Can’t Guarantee a Megaphone Here, But Still a Good Spot for One

It’s still a good spot for a megaphone. If ES is going to form one, it should start to zigzag back and forth very soon. For example, a reversal at 2080 to put in a lower low would be standard, then up to 2090ish, another lower low, etc.

This is also a good spot to watch for a mini Sornette bubble set-up. It would look like this.

B Waves Before Crashes are Often Mini Sornette Bubbles

B Waves Before Crashes are Often Mini Sornette Bubbles

You often see Sornette bubble retraces right before crashes.  A Sornette bubble set-up would be a good excuse for nimble short-term traders to pick off a quick long play.

ES would usually retest the bottom of the rising wedge it broke out of today, and it would usually get there promptly.

ES Would Usually Retest Bottom of Rising Wedge Promptly

ES Would Usually Retest Bottom of Rising Wedge Promptly

Trading Notes (Updated)

ES is below 2080 and no one should be long for any reason.

ES looks like it’s going all the way for 2065ish.  Should bounce or triangle there.

Update, 12:15 p.m. Pacific Time:  Although usually ES would retest the bottom of its rising wedge at up around 2100, and it would usually do that within a day or two, really there’s nothing technical to stop it before the triangle bottom except the potential H&S neckline at 2065.

Update, 12:20 p.m. Pacific Time:  Could put in a falling megaphone here, which would be a retrace to 2100ish followed by a fast move to triangle bottom, then falling megaphone retrace, then kaboom.  We’ll see.

 

Vegas Indicator

Just heard on the radio that Vegas hotels are suddenly cutting room prices for Mayweather/Pacquiao fight weekend.

The guy who was interviewing the hotel info person said, “Uh-oh.”

Everyone in Vegas who heard that knew what it meant.  Weakness in vice means weakness for the broader economy to follow.

Perfect Spot for a Megaphone

Perfect Spot for a Megaphone Stall-Out Into NFP Report

Perfect Spot for a Megaphone Stall-Out Into NFP Report

ES seems to be forming a falling wedge to its complex H&S multi-neckline area. This is a spot with great odds for a megaphone to form.

First, the falling wedge is likely to run out of steam with the minimum number of required touches on its sides.  That almost always results in the wedge breaking out into a sideways move like a megaphone.

Second, ES has multiple retrace targets above and yet still hasn’t reached one of its neckline targets below.  The way it would usually carry out the trips to these conflicting nearby targets is with a megaphone.

Third, the nonfarm payrolls report is next week.  Big turns are often made in the days around that report, and the market loves to use megaphones to buy time.

A megaphone here would put a megaphone right shoulder on the H&S on the chart.  Usually megaphone right shoulders are a tell of a fake head and shoulders, with the megaphone right shoulder leading to a new high.  But that’s not the case when there was a megaphone left shoulder leading into the head of the existing H&S.

A megaphone right shoulder after a megaphone left shoulder would usually break out downwards.