Todays Hanging Man and the July 7 Decider

The daily tape on the sp500 is showing a small hanging man candlestick today which is so far unconfirmed.  Assuming the hanging man (strange isn’t it how a hanging man candlestick forms during this intense political and news cluster?) retains shape by the close today then it would need to be confirmed with a closing under it, perhaps sometime this week.

Hanging man candlesticks are essentially hammer candles that form at peaks of trends.  I should say though that hanging man candlesticks and candle patterns in general have not been too reliable on indices such as the sp500 on the daily time frame.

The other issue is the July 7 2011 swing high in the sp500.  This swing high needs to remain as a high during the next couple of weeks to keep the monthly bearish scenario alive and also to help keep the head and shoulder top scenario alive.

If we see the sp500 blast higher above the July 7, 2011 swing high, then it is going to put quite a big fly in the so called ointment.

I am waiting for a daily MACD histogram sell signal which so far is non existent.

Daily MACD is still in bullish mode.  Weekly MACD is in bearish mode but it is at a juncture where it could easily turn upwards for a bullish crossover.  But it is also in a zone that can transform it into a ‘weekly bearish kiss scenario’.

The weekly bearish kiss scenario would confirm very well with my monthly bearish divergence scenario and help strong to confirm the monthly bearish scenario into October 2011.

But we cannot blast up above the July 7, 2011 swing high!

If we do then something is probably very wrong with the bear scenario.

We have 5 trading days left for July 2011.  This means that the August 2011 candlestick is waiting on deck.

It will be very important to observe the transformation of the July 2011 candlestick to the August 2011 candlestick for bearish clues.I think they will arrive, but there are still some conditionals that keep me from saying flat out we are deep into the bear scenario.

P.S. I have reviewed a bunch of charts such as the SMH, XLF, the RTH and IYR etfs and they all seem to confirm the bearish case for now.

Posted in SP500, Technical Analysis
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3 comments on “Todays Hanging Man and the July 7 Decider
  1. RMT says:

    Today’s price action seems to be playing out just as many here predicted- a gap lower and a big reversal by the end of the day (wonder how many shorts got squeezed). I’m beginning to think the markets are poised to test 52 week highs. Think about it, there is so much fear and bearishness around, from a contrarian point of view, it’s almost too good to be true. I bet there are a ton of shorts in this market now, trying to play the HS and the default, etc; and with all this bearishness, there’s no way the big boys will let this markets fall hard and allow the amateurs to profit. On the flip side, if a deal does get passed, there will be a huge rally, and any rally at this point will have a short squeeze affect and prop markets even higher. Surprisingly, the volume is very light today. I feel like there is a big move coming in the markets. THere’s no way I could go long in this market but I feel a retest of the 52 week high is around the corner

  2. Larry says:

    I still stand sideways to up. Think about it. The markets went SAR down but yet still comes back to retest the highs.
    even with all the negative news out as of late. How can this be a weak market to go down. One day BOT short, the next day BOT long. Tom you must be driving your self crazy. I see some stocks coming off their lows of the year. I’ll p[lay devils advocate here and go long the market.

  3. Tom says:

    I am quite confident this market is going to plunge the next 2 months. Not saying it will happen tomorrow, but the tape is on cusp of weakness in my opinion from this juncture onward. Caution advised. This market is toast. I have seen the future and it has lower prices in it 🙂 .

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