Stock Market Harmonics: Signaling the Unexpected

November 8th, 2012
in contributors

Harmonics are Your Friend

by Pebblewriter

It seems longer than seven weeks since we led with this chart on Sep 14 [see: The World According to Ben.] QE3, the ECB’s latest stick save and the German Constitutional Court’s pro-ESM decision had all just been announced. According to just about everyone, stocks were about to explode higher.


Follow up:

Click on graph for larger image.

To me, it was a long-awaited shorting opportunity.

Meanwhile, SPX is nearing our 1472 target. I will ease some stops into the equation as we approach it, as I’d like to remain long for as long as possible. This is a 35 point gain since we went long yesterday at 1437 with the Fed’s announcement.

And, less than an hour later…

Going ahead and pull the plug on my longs here at 1474. The 5-min, 15-min and 60-min charts are all showing negative divergence. I’ll place stops at 1475 or so, trailing lower as need be, just in case it makes another run higher.

It wasn’t rocket science — just a big Bat Pattern that had finally completed. Those who simply hung on to that short position scored 86 points for a nice 5.8% gain. For buy and hold types, it’s been a great trade that is nearing an end.

For us swing traders, it’s been a wild ride with (much) higher returns [Results] from anticipating the swings that had most analysts scratching their heads. Yet, most of the swings were signaled by Harmonic Patterns and/or chart patterns that usually agreed.

We were able, for instance, to short again just ahead of yesterday’s plunge — earning me some sympathetic private messages from well-meaning friends ["Are you sure, man? This one seems kinda out there, especially without any election results yet." B.B.]

This is essentially the same chart as above — seven weeks later. We’re coming up on the next Fib level lower — the .786 retracement of the 1576 to 666 crash. And, it just so happens that we’re nearing the SMA 200 at 1380.80.

Click on graph for larger image.

Not shown on this chart, there’s also a Crab Pattern completion at 1384.13, not to mention the .786 of the 1354 to 1474 run at 1380.30. So, as the rest of the investing world is jumping on the bearish bandwagon, harmonics are signaling another important and unexpected turn.

Click here for information about pebblewriter's subscription services.


Related Articles

Ben Bernanke: Hero or Anti-Hero by Pebblewriter

Read more by Pebblewriter.

Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.



Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day


Asia / Pacific
Middle East / Africa
USA Government

RSS Feeds / Social Media

Combined Econintersect Feed

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution



  Top Economics Site Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved