NYSE Composite: Symmetry Is A Beautiful Thing
One of the things I write about quite often on this blog is that there is symmetry in the markets. I am not a follower of GANN or anything that has to do with what I call voodoo technical analysis, but over the years symmetry is something that I've seen happen over and over again in the marketplace. In fact on this very blog, I've caught two big trades based on symmetry in the past month...One was the Silver short trade and the other was XLE short which I've written about BEFORE both markets sold off.
If you look at the above weekly chart of the NYSE composite, you will see 3 rallies over the last 3 years which I have labeled.. Rally A to B advanced 19.95% in 30 weeks and then the sold off. Rally C to D advanced 19.96% in 29 weeks and then sold off. Rally E to F advanced 19.47% in 29 weeks. Do you see the symmetry of the moves? All of them are identical in both price and time!
Notice in the lower panel the RSI indicator. Almost every time the RSI gets above 70 and then moves back below 70, the market made a top. That's exactly what we are seeing happen right now with the RSI.
Given the above chart, the seasonal tendency for technology to sell off during this time of the year, bullish market sentiment, semiconductors weak, bearish RSI pattern, stocks reporting good numbers and selling off...etc I have to be bearish and I expect the market to decline similar to the declines you see on the above chart.
Posts
![[Most Recent Charts from www.kitco.com]](http://www.kitconet.com/charts/metals/gold/t24_au_en_usoz_4.gif)
![[Most Recent Charts from www.kitco.com]](http://www.kitconet.com/charts/metals/silver/t24_ag_en_usoz_4.gif)
![[Most Recent Exchange Rate from www.kitco.com]](http://www.weblinks247.com/exrate/24hr-euro-small.gif)
11 comments:
How would you play this?
QQQQ?
Just a general question and thanks for the great job you do! Awesome.
hi Kevin,
Do you use any software to find cycles? It would be a bit tedious to do it manually.
Hi Cris..... I'd do the QQQQ or you can find a stock that is heavily weighted in the NYSE and short that one providing it's chart looks similar to the NYSE's chart. I think you are better of doing the Q's...
Hi one bad trade,
Actually I do it manually...I'm just looking for stocks that have swings that appear at regular intervals. Then I check to see how accurate the cycles are by checking the distance between the points.
Kevin
Interesting eye-opening article about symmetry. I wonder what the %age appreciation and no. of weeks is for the mini-rally between AB and CD? Just for interest's sake
Kevin, how about buying QID's rather then shorting QQQQ's ?
That's even better...I love trading the QID's.. I just don't mention it here because of the inverse relationship with the Q's. I don't want to confuse some people. QID's are always better because they move so much more than QQQQ. When I day trade and have an opinion on the NASDAQ, I'll trade QID instead of QQQQ.
Kevin, what is the management fee for QID's ? I like them too. They move twice as fast as Q's and I can put them into my retirement account.
Kevin,
Just started getting your trading blog and I am very impressed with your knowledge. I think the SPY is
headed for a major legdown; fairly
soon. What is your position on a downdraft?
Thanks,
Noel
Hi Kris...I'm not sure about the management fees for the QID's.
Hi Noel,
I'm bearish on the market..I'm not sure if this will be a major leg down, but we'll see how things unfold. We have yet to break the uptrend...lets take one day at a time.
Post a Comment