Don't Cry Wolfe ... Again!
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Not those kind of Wolves but they do have something in common to the XJO(tops) as they come in packs and can be quite nasty....
BUT these kind of WOLFE's(or 5pt Topping/Bottom Patterns) ... Occasionally also seen similar to the Broadening or Megaphone Patterns(see some examples latter).
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As an Opener for this discussion pls allow me to repeat a posting I made late this afternoon on the
XSO thread ... You can skip the 1st two charts if you wish and go to the 3rd chart and my P.S. under it to expedite things if you wish.
XJO/SPI ... As we are approaching the end of another 'horrible' week I thought I'd try to make sense of "where to next week?"
No strong signals to suggest the current downtrend has found a bottom yet so I guess I couldn't recommend even a BUY for the Brave. However, as we look at 3 Timeframes(Hourly, Daily and Weekly) there are 'hints' that all is not as bad as many here would think.
To start with ...
SPI/CFD Hourly Chart ... Its possible yesterday's late low(5691.5) is good enough to be a bounce point of significance(coming from the
Gann 1x4, ~0.707% retrace of the 5589 to 5945.5 range and we have had two higher highs and lows out of that low). However, that comes with a lot of provisos ... The last 24 hour rally fails to impress ... Any rally hasn't even tested the 38.2% retrace of our impulse down from the 5945.5H, nor get back above what I was thinking earlier in the week as a possible support(pink dotted lines now becoming resistance, right) and the current SP action looks very much like a corrective pennant pattern atm. Also, the 3rd outer GunnerArc continues to hold any rally attempt(we would need a clear break to up side of this but we are damn close to the perfect Time frame for that to do so ... note 3rd sq. vertical timeline.).
One +Ve is that both CCI's shown are rising but would need to hold its uptends in this Timeframe.
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Now looking at the
XJO Daily ... Pro's ... Its (slighly)possible the move down from the late August 6373H is in a state of completing a clear 5 wave Impulse down(EWT talk). The best case scenaro, and most bullish in the S/T, is that we could have seen a completion of a "failed" 5th wave at yesterday's low because that [w5] ~ = [w1] ... we came within 18pts to do so exactly. ... The next best case scenario is that we still doing a wave[5] down but need to reach somewhere near 5500([w5] = 1.618[w1]). To support both these scenarios is that most 'slow' momentum indicators are looking like they are trying to form bottoms(I have shown a MACD). The Cons ... SP action at its highs over the last two day's has failed to get back above that Decision Line and is really just holding onto the important (orange) support TL which we already broke earlier in the month. A second break of that line would be seen a 'technically' not good at all.
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And, finally, the
XJO Weekly Chart ... To marry up with the concerns of both previous charts the "Wolfe" (5pt)Topping Pattern shown here that has been in play for the last 18mths hasn't quite met its (purple)"target line"; very close to it but not yet. There is a 'claimed' 80% reliabilty of this pattern's target line being reached and, once 'touched', a very good likelihood that the fall from pt[5]H has reached at least 80% of its likely move anyway.... so near a trend change. So has pt[6] been reached yet....hmmm? ... I think not yet! To support that have a look at our 'slow' MACD again ... showing signs of breaking horizontal support but still above the "0%" Bull/Bear level. So still mixed signals and certainly not 'married' with the Dailly MACD, right! Having said that we also have the 'magic' XJO 50% retrace level @ 5540 below that also may be our 'magnet' for this downtrend low ... sort of within the ball_park of the [w5] = 1.618%[w1] objective mentioned on the Daily(closer to [w5] = 1.382%[w1] level). Check out the top(orange) horizontal TL's channels(we have again closed right on its top) that is still currently holding this market. Not sure what will really happen if they go but I would be decidely uncomfortable.
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P.S. I will follow up on some more
XJO "Wolfe" Pattern stuff(charts) that varify why I pay attention to them as a dominant(regular) topping pattern for our XJO ... meant to paot them last eekend but didn't get around to it.
I stated at the beginning that Wolfe Topping Patterns(or similar) do indeed "hunt in packs" as far as the XJO patterns go.(Some here may recall I mentioned, and illustrated, this some years ago). I'll show you some evidence.
BUT first lets look at another chart of our current Wolfe pattern to help explain why I don't rely on them alone(pls note I was to post these charts last weekend so they don't include this week's action). Using a Andrew's Pitchfork Chart and its MT, UT and LT's lines may also help to locate a potentional turning point; it may only be a minor one, major one or not one all. In this case the LT(sorry, Lower Tyne) of the yellow Bull and red Bear seem to be somewhere around 5500(I suggested somewhere that level maybe this current fall's objective in my XSO assessment, right).
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NOW to those
"Pack" of Wolfe's ... on the XJO. Going back to our All Time Highs in 2007. Have a look how regular this pattern occurs as a Topping Pattern for the XJO. There are 5 shown here on a Weekly Chart.
ALL reached there measure move objectives("blue" Target Lines)... and some! Well, of course our current one is still to complete, maybe, probably! You should also note how important our current low is in terms of two(orange) TL's together where the LT 195SMA comes in. Its no wonder we are currently at the cross_roads of important time(and price) for our Equity Markets.... P.S. For those wondering why I have numbered some pt[5]'s in orange ... they are the pt[5]'s that went above the the extended pt[1] to pt[3] lines ... Quite common for this pattern!(a version of a false breakout as it were).
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(20min delay)