The SPX declined -4.3% from the 1991.4 7/24/2014 high to the 1904.8 low on 8/7/2014, which was the 3rd pullback to the 100-DEMA zone in 2014. The index only closed one day below the 100-DEMA and has since reversed +5.2% in 13 TD`s to todays 2004.8 intraday high at 11:15AM EST.
The current market reversal from the 100-DEMA has been on light summer volume with thin liquidity, in addition to ever narrowing leadership. The longer term SPX monthly chart has a significant 123 negative 5 RSI divergence similar to the 2007 top, which means the technical risk reward of this market is obviously not positive, and that is supported by most any other sentiment indicators.
The pundits shamelessly try to rationalize the current market, but it is nothing more than the Fed`s fraud/ponzi scheme that will only end badly. However, despite the market manipulation, the day trading principles that only focus on the high probability strategy opportunities with symmetry continue to prosper. I have included some more of those 5-min chart examples in this commentary.
The SPX declined to the 100DEMA zone, which is an inflection point, and the SPX has also bounced of that zone after two prior pullbacks to this zone. The following high probability day trading opportunity was after the SPX made a 1916.61 low with the -1.0 VB at 1916.06 and 100-DEMA at 1916.26. The index ran to 1932.05 with a negative 5 RSI divergence, and the trade was exited below 1930.13 on 8/1/14.
The next SPX example has 3-way symmetry which includes the 20DEMA, -1.28 VB, and a .618RT to the previous 1955.59 low on 7/21/14.
The intraday symmetry when combined with, for example, the daily chart, increases the probability of successful trading opportunities. The SLB example shows this trading service focus stock pullback to the 100-DEMA zone with a 106.30 low, and a Dynamite Triangle setup, with a B/O above 108.48.
The SLB 5-min chart was also a Dynamite Triangle setup with the B/O above 109.02 that ran to the 110.34 high, versus the +1.5 VB at 110.13, and the trade was exited below 110.10. The 5-min chart happened to be a Dynamite Triangle entry pattern similar to the daily chart, but it didn’t have to be because the primary focus was the symmetry.
The current long term symmetry for early September is posted in the Trading Service commentary for 8/25/14, which you can read with a 1-week free trial to my service.
Kevin Haggerty