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Erik McCurdy
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Erik is the senior market technician for Prometheus Market Insight and has been performing chart analysis since 1995. The software program that he developed to monitor long-term stock market trends has correctly identified 92% of the cyclical turning points in the S&P 500 index since 1940. His... More
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  • Stock Market Rising Wedge Breaks Down 1 comment
    Jul 24, 2012 8:03 PM | about stocks: SPY, DIA, QQQ

    At the beginning of July, we noted that the rebound off of the low in early June had developed into a rising wedge, which is a bearish technical formation that usually terminates with a break below uptrend support. Today, the S&P 500 index closed moderately lower, breaking well below the lower boundary of the rising wedge formation.



    (click to enlarge)

    From an intermediate-term perspective, the decline this week has created a potential cycle high signal that would indicate the intermediate-term cycle high (ITCH) of the cycle from early June formed last week. As always, only the close matters, so a weekly close well below 1,345 on Friday would be required to generate this intermediate-term signal.



    (click to enlarge)

    The elevated volatility that has characterized short-term market behavior during the last three months continues to drive violent daily moves in both directions, but the big picture urges extreme caution. Since the breakdown in early April, the stock market has exhibited behavior consistent with the development of a long-term top, so it remains likely that a new cyclical bear market has begun. As we often note, the formation of a long-term inflection point is confirmed in stages. The next technical breakdown that would further support the development of a cyclical top in April could occur during the next few weeks, so it will be important to continue monitoring market behavior closely.

    We will identify the key developments as they occur in our daily market forecasts and signal notifications available to subscribers.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: SPY, DIA, QQQ
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  • rkschae
    , contributor
    Comments (60) | Send Message
    Very nice technical analysis.
    25 Jul 2012, 12:43 PM Reply Like
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