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.

IWM Technical Top vs Passionate Top

Crashes Don’t Start on Technical Trading

IWM Keeps Reversing on Exact Touches of its Red Megaphone Top

IWM Keeps Reversing on Exact Touches of its Red Megaphone Top

IWM keeps reversing on exact touches of its 3 1/2 year red megaphone top. It could do that all the way to a breakout from the pink rising megaphone.

If it does, the green or blue scenarios become the favorite.  Great crashes don’t start on exact reversals from important lines.

If IWM can break through the red megaphone top by enough to form a topping pattern up there, it becomes a favorite to go all the way for the red megaphone bottom after it completes a top and breaks out of the pink rising megaphone.

Potential Set-Up for One of the Great Bull Markets of All Time

Note that the green scenario’s reversal at the red megaphone VWAP would lead to either a second trip to the red megaphone top before a crash to its bottom, or a genuine breakout from the red megaphone (blue scenario) with a technical target of at least 200, and the breakout could lead into one of the great bull markets (or bubbles) of all time.

The blue scenario would essentially convert the red megaphone into a giant Sornette melt-up set-up.

I posted a few days ago that Neely is looking for a market crash.  When you have a set-up for a crash, and the market won’t crash, that’s a great set-up for a melt-up.

 

GDX Inverse H&S Targets at Least 50

GDX Inverse Head and Shoulders

GDX is Forming an Inverse H&S Bottom on the Right Shoulder of an Inverse H&S

GDX is forming a large inverse head and shoulders bottom on its move down from its 2011 high (orange neckline).

Right now it’s working on the right shoulder of the inverse H&S, which appears to be forming an inverse H&S bottom of its own with a likely triangle right shoulder.

GDX could break out through its red neckline for a quick slice through its orange neckline to head straight for its minimum target of 50.  Or it could complete a triangle right shoulder at the red neckline and then a larger triangle right shoulder at the orange neckline before breaking out.

The inverse H&S target of 50 is just above the VWAP of the megaphone top GDX formed between September of 2009 and 2011.  GDX needs a retrace to at least that megaphone VWAP, where it could bog down for years.

Or GDX could put in some kind of fast continuation pattern at VWAP before heading up to new all-time highs.  The purple scenario is a fast slice up through the H&S necklines to a Sornette melt-up set-up at VWAP.

The green scenario is more likely.