Finally a decent 5 wave impulse lower!

 

After what seems like forever going up, the market has created a very clear impulse lower followed by a three wave rally. Assuming the recent top sticks this creates a (very lopsided) head and shoulders pattern with March 7th as the left shoulder. At a minimum we are heading to the sub 1800's, but I believe that is an extremely conservative estimate.

 

The NASDAQ 100 chart shows the Head and Shoulders pattern far more textbook than does the S&P. The dates are somewhat different but they appear to be aligning at the right shoulder for the time being.

While this chart is a couple of weeks old, it display how on a logarithmic basis the recent all time highs were bumping into the lower end of this channel. These lines have been defining many of the significant market tops and bottoms over the last 30+ years. The bottom line is I believe we are currently at the very beginning of a new bear market.

 

 

*On a personal note, the reason I have let this page fall into a state of disuse is due to my current job as a Platoon Leader in the US Army. I cannot trade with the same focus as I could when I was in college; my primary duty is to my Soldiers and country. The demands of trading weigh on my mind too heavily to be dual focused on trading and training Soldiers. They deserve my all. I will continue to update when I feel there is something significant in the works, but still infrequently until I complete my service.

 

US Equity Market Rolling Over?

It appears as though the S&P 500 may have finally completed the first of many (yet to come) impulses lower. The trend line shown is the last bastion of support which is why I believe that we will get a modest rally from here which should not take out the September 13th highs. Although this impulse lower appears as a leading diagonal, which it probably is, when viewed from the DJIA it appears as a normal impulse wave.

This chart offers a very simplistic view of why I believe the top is in. As far as I know, I am the only one who has been tracking this long term channel forming in the DJIA. The price action in the S&P 500 has not reached the upper boundary of the channel; however, aside from traders I believe the Dow Jones is more widely followed and therefore has more relevance.

Decade long S&P 500 channel resistance looming at 1382

It appears that the S&P 500 may see a major top very soon upon reaching the secondary resistance of this decade long channel. This secondary  resistance previously acted as the tops of both shoulders from the 2007 Head and Shoulder's topping pattern.