The 207 and 208 target numbers weren't randomly selected It is base on a probable algorithm.
I think they will come up with something over there, they must or the situation will not change, and when they do, the market will rally. However, it will take time to show real economic progress.
I think they will form a head and shoulder pattern and take the market down to the weekly chart's 200sma next year.
We will see a higher high on the SPY to 207 or a pierce to 208. If that happens, lighten up and hedge.
They may let the retail investor climb the roof and take away the latter to test the over head supply, and support it at the retracement to the 20sma or consolidate it side ways before the 50sma and break it out after they build a three to six week base.
That's called an island bottom; however, we have seen distribution in the market every Monday, Tuesday, and Wednesday. It was also the third Friday of the month which is an monthly option x day. On option x if there are more puts then calls they go the opposite way to make them expire worthless. Break away gaps may have three gap ups before it run out of steam. If they decide to take the stock up on Monday they will gap it above the 20sma and rip it straight into the 50sma. If that happens..........................
We have seen oil stocks take a hit with lower oil prices, but the price of regular gas at the gas station is still $3.99 a gallon. I don't see any benefit yet!
It also put in a nice bottoming tail on the daily chart and had a very bullish follow through today. I don't think the market will crash with a 20% decline. However, I firmly believe the over all market will have a healthy 10% correction which is already showing signs of over sold conditions.
I am in the camp who thinks the company will post better than expected numbers on the next earnings call.
Slick many professional traders were waiting for a correction which is considered a 10% move down. The Federal Reserve defines a market crash as a 20% drop in the market, so at 10% they will step in and frustrate the short sellers.
Another observation is the pivots on market pull backs did not close below previous pivots since breaking out on 1/6/2012 except for what has happened so far this week. This will mark the first week of lower lows. The bears will dominate the market if the bulls don't step up to the plate and swing for the fences tomorrow!
A SPY move down to 177.50 and bounce would confirm the downward trend and set up a short entry on the retracement to retest the 50sma. If the 50sma becomes resistance, and the SPY closes below 177.50 that tells us they will be gunning for the 200sma on the weekly chart. The 200sma is the brick wall.
We really don't know what will happen, but looking at a weekly chart of the SPY, we see that it broke down and pierced the 50sma with four touches since it broke out above the 20,50 and 200 on 1/06/2012. Typically trend channels like to stage a false move on the third hit; however, a lot of stocks actually do reverse trend on the fourth hit. We know that there are two ways a market can refresh itself. One, by a big move down and two, by side ways consolidation. The upside down cup pattern target is telling us that we just hit a pivot point. A strong close tomorrow to recapture the 50sma will paint a different picture. However, the measured move on the trend channel break down is suggesting a move to 177.50ish.
202 minus 182 equals 20 divided by 202 = 9.90% correction. A 20% move down would be considered a market crash in a low interest rate economy.
It also pierced a double bottom major support. However, we need to see if the institutions will take it back up tomorrow. This seem like a shake out pattern to test conviction. Good luck longs, when the tide turns it lift all the boats.
I took a position in USO, this should be a turning point. The mm has been shaking the weekly call holders out on Monday and Tuesday and frustrate the put holders at the end of the week.
The charts tell us the scheme of the trading algorithm of the big institutions. The pattern tells us where they will eventually take it. In this case we know they were going to take it down, but price targets aren't 100%, we need to find where the stock had previous institutional support. When we find them we need to take the trade. However, there is always a price that says we are wrong. For instance if the stock closes below an intraday box pattern that tells us they will take it down another noch, usually in increments of the previous box pattern size.