Chaos Clinic for 3/27/2020
This chart shows the micro eMini since the COVID-19 virus struck. After 33 crushing days, the S&P has staged a rally this week.
That rally is a rally of hope, as the federal government works to pass a 2 trillion dollar rescue package.
This is a 24 hour hourly chart. A rainbow of EXMAs help identify the moves. The 144 hour is a 6 day EXMA. This EXMA tends to be a moving support/resitance line. From the high, down to the green outline 1, prices stayed below the 36 hour (1.5 day) EXMA, until rallying up to the green boxed 2. At that point the 36 hour and 144 hour EXMA gave a "continuation sell" signal. In a Chaos Clamshell, the start of move 3 is normally a good place to trade, because the trend is establihed and there are five moves to come.
From there, the decline was fqast, persistant, and awesome. The Fed cut rates to zero, and started quantitative easing. The market went lock limit several times. The normal reaction was "The sky is falling. Even trying to count the moves intelligently was hard.
However, a long standing tool of technical analysts did help : gaps. The only real gaps these days are weekend gaps. In gap theory, there is a breakaway gap, a measuring gap, and an exhaustion gap. These are marked on the chart.
The exhaustion gap came last weekend. From there the S&P has rallied, even getting above the 6 day EXMA. The decline from the February 19th top to the March 23rd low was 1222.5 points in 33 days. Typical re-tracements of .382 and .5 give 2641 and 2785 as retrace targets. A 24 day EXMA is currently between those two.
The decline looks to be move 1 of seven in a down Chaos Clamshell. A time projection of 7 x 33 = 231 days gives October 7, 2020 for a larger Chaos Clamshell. October is the the most common month for crashes.
I do not think that will be the end of this. Before COVID-19 hit, analysts were worked about a global economic slowdown. We are in a shutdown.
Chaos Clamshells are taught in my Cash in On Chaos course. A free online mini course called Trading The Chaos Clamshell can be found at http://moneytide.com/hans/institute.asp<\a>
This content was published on Dr. Al Larson's Chaos Clinic which you can attend each Friday for free.
Dr. Al Larson has developed a complete Chaos Model of Markets, four unique courses that let you become a Certified Chaos Trader, some very unique eMylar fractal pattern overlays, and tools that permit forecasting individual stocks and markets years in advance. You can also sign up for a free weekly email, and attend a free Chaos Clinic on Fridays. To learn more, click on the author's profile.
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Information on this page contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions.
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