Monsanto Head and Shoulders Pattern

Mos released earnings tonight and had a big miss. conference call in am.

It is best to Wait until a Daily close below dotted line and a giant volume spike before entry.

Head & Shoulders Fri 7-17-09... It Aint over Till it's Over the Head

SPY Daily

I know, we are all sick of IT!

BUT...

The upward sloping complex Head and Shoulders pattern tag is still in play as well as the MACD divergence. This is a Daily chart of SPY.

I believe the structure begins at the apex of the triangle on the left (the apex is the net retracement of a triangle pattern). Typical support is at the bottom of the first shoulder but this has not been a typical market.
Almost every pattern has been driven to extremes or doesn't follow through at all.

The robust nature of this last rally is no exception.

One would think if this is a failure of the pattern the volume would be through the roof! But this week volume was very low.

I think this was a brute force push by the big trading houses.

There have even been reports of short position blocking, tape manipulation, and forced short ticket cancellations from the guys at Zero Hedge.............

And the earnings reports continue to try and convince everyone that things are getting better! Well you can't grow an economy on IBM government contracts , Obama jobs, Apple iPhones and apps made in Asia, declining top line company revenues , depleting inventories, cutting jobs, raising taxes, printing currency to buy down debt or mandating everyone have health care.........OH ya ....Did anyone notice that the USA was the largest consumer of China's products? So how is China going to save our economy? Well that's my long term view and really doesn't effect my day to day take on the market. Only the tape can guide us there...........Enuf Ranting.

The pattern is now at the top of the 2nd right shoulder and the trade count is 25 days peak to peak from the head to the right and left side.

The valley count is 31 trade days from the apex to the center line of the head.
As you can see there is time left, 5 trading days to move back to the lower neck line.....

The candle pattern at the top of the right shoulder is two opposing dragonfly doji's which indicates an indecision in the market.

Based on this analysis I am more comfortable short , with a stop above the high of the head, than long. Next week the market could go to 1000 as easy as 800 so stay on your toes and keep your dukes up!

For more on head and shoulders , John Lansing has a great analysis as well as John Murphy

[tags][/tags]

Complex Head and Shoulder Pattern

Complex Head and Shoulder patterns are rare but when they happen it takes every one buy surprise.

The reason is the bulls interpret the failure of the first right shoulder as a reason to get very bullish as the price starts to rise to the 2nd shoulder peak.

The bears who are very heavily short get squeezed out and start throwing their positions over board. The squeeze causes the price to spike higher and the bulls buy more .

Bang! Peak 2 rolls over and everyone gets beat up.

According to Bulkowski's book, on a scale of 1 to21 ( 1 being the best) this Pattern is a 3 and has a high potential of reaching the target zone.. once the neck line is broken.

This chart is a percent comparison of the three major markets Dow /Naz / S&P .
All three put in 2 left shoulders and a head. We are now waiting for their right 1st and 2nd to finish. As you can see, the 1st right shoulder is about to be or has completed in all three markets now we wait for the 2nd one to form.

Good chart patterns will always be well defined and have balanced appearance when completed . They are like anything beautiful. They look right and you just know it when you see it.

Based on this analysis, I expect to be long Spy Monday Am up to the top of range of the left shoulders. Then I will become a bear again Wed or Thurs.

Spy Head and Shoulder Patern 7-10-09

Here is a Head and Shoulders target zone chart .
This pattern has a 60% chance of reaching the red zone.
Valid price movement is when a candle is completed and there is an open and close at key levels...the wicks are important as well but the big money is more concerned with open and close price. Although price has broken neck line, today was the first significant open and close below neck.....now we need to see a big push to the down side with a big spike in volume to really get this pattern completion .