Moving from the Weight to the Wait

• Posted by Greg Harmon
• on August 9th, 2011

The last few days have been a panic ensuing move lower. There is a Weight on the market. A weight dragging it down. The Band wrote a classic song about Luke looking for a place to rest his head before the Judgement Day, titled ‘The Weight’. The distinction being that there was a weight dragging on him, not that he was waiting for the Judgement Day. There are signs now that the mood may soon shift from a Weight to time to Wait for basing. Waiting for stabilization. Let’s take a look.

S&P 500 Pitchfork

Part of the Weight comes from the view from the Andrews Pitchfork. It has clearly lost contact with the bullish Pitchfork and is now holding onto the Median Line of the Bearish Pitchfork. This view requires more vigilance and a bias to the downside. But look at another view.

S&P 500 Fibonacci

The Fibonacci chart above shows that price is now near the 76.4% retracement at 1095 and the Fib Arc near 1105. This would suggest that there is some support lower. Finally, there is one of my favorite extreme indicators, the Percentage of Stocks above their 200 day Moving Average. This indicator, the little dot at 8.6 below the long red line is near the extreme lows from the 2009 fall.

Percent of Stocks Above Their 200 Day Moving Average

None of these indicators can state that the fall is over, but rather give more context to the broad picture that suggests the bottom is near. Keep an eye on these along with your view on price and other indicators, and trade what you see, not what you want to see as we move from the Weight to the Wait.

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