Little Big View

Market Overview: Use this page for a quick measure of the markets over several important time frames, and see whether the volume based accumulation or distribution measures are flashing a significant bullish or bearish warning sign.

View a Help Video About This Page

Mish's Daily: 16 Chart Patterns: Why They Do Not Say Bottom

February 9, 2016

By Mish Schneider


I’m Your Private Geomancer

Monday night, I referred to Mr. Ng (my Chinese New Year Fire Monkey Predictor) as a Geomancer. Ordinarily, I would let that go as nothing more than information. However, after further research, I learned that a geomancer uses various tools to access the hidden knowledge one is seeking; most often by connecting to the energy in the earth.

That means Geomancer’s create 16 lines of point or marks using materials such as rocks, soil or sand.

The figures or lines are placed into a series of patterns and then entered onto a chart. Naturally, this is a cursory explanation of a practice that goes back thousands of years. The point is that many different cultures have employed many different types of professionals to use Geomancy to make many different kinds of predictions.

Interestingly, we at MarketGauge have 16 different chart patterns we use at the end of the day to interpret and predict the market’s action.

Those chart patterns include number of days under or over floor trader pivots, phase changes, inside days, slingshot highs and lows, etc. Much of this information is what I use to report to you each night.

Our proprietary software scans over 500 symbols using these 16 criteria and then comes up with a small list of instruments as our main contenders to enter positions on (long and short).

Whether or not we decide to take a position in those on the short list depends on other factors. Macro picture, type of trade (day, mini or swing), risk/reward, parameters that instruments much reach and confirm the next trading day (opening range), etc. are the main criteria.

16 Patterns-Does that make me your Geomancer?

Sort of. After all, trading is a bit of art and a bit of science.

Currently, market conditions suggest that the 16 chart pattern list serves best for daytrades rather than swings. Position Swing Traders should be either already short the market from much higher levels or waiting for a bottom and looking to go long.

Personally, I have yet to make a case for a bottom. Transportation (IYT) seems the most logical member of the Modern Family to watch. I like the longevity of the bearish phase and its continuing outperformance of the indices.

However, until it proves itself as a bottom, which means filling a gap and then looking to buy the next dip, it could just as easily be forming am ascending wedge which at some point will break.

All the indices except the Dow, are trading under their January 6-month Calendar Range. The US Dollar is down, Gold is up and 20+ Year Treasury Bonds are on new multi-month highs.

“I’m your private Geomancer, a Geomancer for money,
I’ll do what you want me to do…” Retrofitted from Private Dancer by Tina Turner

S&P 500 (SPY) Getting close to the 200 week moving average at 179.Held so far. Need to at least get back over 187.20 now

Russell 2000 (IWM) Needs to fill a gap 97.96 if has a chance of holding any rally

Dow (DIA) Still holding the 6-month calendar range low at 158.23. Over 162 better.

Nasdaq (QQQ) Over 98 better. Otherwise, the 200 week is still a ways off

XLF (Financials) Big volume, new low and better but not good enough close

KRE (Regional Banks) I figure the bottom will smack me in the face when happens-all I see now is a relief rally

SMH (Semiconductors) 46.14 the 6-month JCRL tested, held. Over 47.67 better

IYT (Transportation) 128 is the 200 week moving average. Want to see that gap fill then a dip before I buy for swing

IBB (Biotechnology) Bounced from the 200 week moving average at 239.40. A weekly close over 252 improves this appreciably

XRT (Retail) Under the 6-month JCRL for now.

GLD (Gold Trust) Inside day correction to Monday’s new multi-month high. A close under 113.50 could see that better correction

SLV (Silver) Has to hold the 200 DMA at 14.45

GDX (Gold Miners) Wrote Monday night “Possible topping candle”. Indeed with real support not until 15.40

USO (US Oil Fund) Low 7.92 held for today. Not sure that means much

UNG (US NatGas Fund) Need to see a confirmed phase change and a positive slope on that 50 DMA when/if it does change

TAN (Guggenheim Solar Energy) 19.54 here we come?

TLT (iShares 20+ Year Treasuries) Into early 2015 resistance now, but still not oversold

UUP (Dollar Bull) Expect to see an eventual move down to around 24.20