Head and Shoulders Trade Continues

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August 4, 2011 6:12pm NYSE:IVE NYSE:IVV

I first started talking about the Head and Shoulders Pattern in the S&P last week, and followed up on Tuesday with a chart showing the neckline of the pattern getting tested. The neckline was the 1255-1285 area. The measured move of the pattern is down to


1180-1160.


So far, this down move has happened quickly (quicker than I envisioned), as the market has closed down 8 out of the last 9 days in the market. I outlined a minor support area of 1220, which was tested late morning, as it tailed into this level and put in a low around 1216.

This is probably a decent spot to cover some shorts (if you took advantage of this bearish pattern) as we have seen a 90 handle down move from Monday’s high to today’s low.  No need to wait for the absolute bottom.

For the active trader, use this morning’s low as the new short term pivot to trade against, but macro longs should wait for more clarity in the market.

High beta tech feels heavy and banks are super weak.  Oil and OIH are getting crushed.   I don’t see anything compelling that can reverse us like we did yesterday.  Maybe some people squaring positions in front of tomorrow’s jobs number.

If you came in long with some trailers from yesterday’s reversal, hopefully you salvaged some of the trade and took the loss. When you step on a landmine, you always have a bit of time to run and maybe only lose a limb.  If you stand on it like a deer in headlights and get stubborn, you can blow up with the crowd!

Here is a link to the blogged strategy on CNBC
.
I can’t believe Bank of NY wants to charge to save money or have cash in the bank. The main reason why we went into crisis a few years back is because America–as a country and as individuals–lived beyond its means.
The Baby Boomers used their houses as ATMs. People bought houses with interest only loans, buying $500,000+ houses when they make $30,000. Individuals used credit cards as banks accounts and had no savings.

There are about 50 other reasons as well that I won’t get into today. Now, people want to be safe and save for a rainy day, the opposite of our government, and now they might be charged for it.

Cash is always king during market corrections. Read Investor’s Business Daily,  they said go to Cash Last Thursday.

Scott Redler
Scott Redler is the Chief Strategic Officer of T3 Live. He develops all trading strategies for the service and acts as the face of T3 Live. Mr. Redler focuses on thorough preparation and discipline as a trader. Scott Redler has been trading equities for more than 10 years and has more recently received widespread recognition from the financial community for his insightful, pragmatic approach. He began his career as a broker and venture capitalist where he was able to facilitate relationships that led him into trading. Beginning his trading career at Broadway Trading in 1999, Scott moved on with Marc Sperling to Sperling Enterprises, LLC after establishing himself as one of the best young traders in the firm. As a manager at Sperling Enterprises, he maintained his status as a top trader in the industry while working closely with all traders in the firm to dramatically increase performance. Scott has participated in more than 30 triathlons and one IronMan triathlon, exhibiting a work ethic that also defines his trading. His vast knowledge and meticulous attention to detail has led to regular appearances on CNBC, Fox Business and Bloomberg, and he has been quoted in the Wall Street Journal and Investor’s Business Daily among other publications. Scott produces much of the media and content available to subscribers and followers. T3LIVE.com is an online financial media network and education platform that provides active traders and investors with market analysis, real-time access to strategies, and in-depth training from real traders, real-time

This material is being provided to you for educational purposes only. No information presented constitutes a recommendation by T3 LIVE or its affiliates to buy, sell or hold any security, financial product or instrument discussed therein or to engage in any specific investment strategy. The content neither is, nor should be construed as, an offer, or a solicitation of an offer, to buy, sell, or hold any securities. You are fully responsible for any investment decisions you make. Such decisions should be based solely on your evaluation of your financial circumstances, investment objectives, risk tolerance and liquidity needs.Visit the T3Live Homepage, Virtual Trading Floor, and Learn More About Us.


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