So what's the answer?
Last night I gave you a little homework. You know what it was. Calculate the downside target price for the running triangle. Many of you couldn't resist the challenge and gave it a go and the results are in.
What happened? Who was right? Did anyone GET it right? Would you believe that no two people gave me the same number? And NO ONE gave me the number that I came up with! NO ONE! Hey, maybe I'm wrong. Let's find out.
To be fair, I didn't give you instructions...and for a reason. Different people calculate these things in different ways and come up with different numbers. That's part of the reason I did this....to see just how many different numbers I'd get, and you didn't disappoint.
So how did I calculate it? Here goes. The widest part of the triangle consisted of the intra day high on November 4th at 1007.51 and the lowest intra day point on November 21st which was 741.02. The distance between these two numbers is 266.49 S&P points.
We then need to find the breakdown point. This is where one area where some people may differ. To me the obvious breakdown occurred the day AFTER February 13th. So the February 13th intra day low of 825.21 represents the trend line breakdown point.
Now all we have to do is subtract 266.49 from the breakdown level of 825.21 and we get our answer...558.72 (I hope!) So that's the OFFICIAL number!!!! How close did you come? Many came close, some didn't. That's okay. It was a fun exercise I'm sure I'll repeat sometime.
The reason (or reasons) the numbers differ so widely is because some use the cash market, some the futures market. Some use intra day extremes, some use only closing prices. Some vendors may even report different prices. I tell you this to say that there may not be one "exact" way to calculate this. I expected different numbers and I got them. You're probably surprised or in disagreement with my number. That's okay. The idea is to get close, and most of you did.
I actually would be surprised with a move below 600 in this leg. There are three reasons why. Your assignment tonight is to tell me what ANY of them are. I'll let you know tomorrow night. Two of them are obvious if you look at the chart and do some math.
As far as todays action goes, the market mustered some strength as it tries to close the gap at about 734 and retest the breakdown point in roughly the same area. It should be able to do at least that much. The bulls were quick to jump on todays action as possibly the bottom. That's a sign they STILL haven't given up. As a contrarian that's a bearish signal.
Gold is showing weakness still and oil is showing some strength. Perhaps some of the fast money is switching trades. I'm concerned about the dollars pattern. It could be rising bearish wedge. We'll just have to wait.
What happened? Who was right? Did anyone GET it right? Would you believe that no two people gave me the same number? And NO ONE gave me the number that I came up with! NO ONE! Hey, maybe I'm wrong. Let's find out.
To be fair, I didn't give you instructions...and for a reason. Different people calculate these things in different ways and come up with different numbers. That's part of the reason I did this....to see just how many different numbers I'd get, and you didn't disappoint.
So how did I calculate it? Here goes. The widest part of the triangle consisted of the intra day high on November 4th at 1007.51 and the lowest intra day point on November 21st which was 741.02. The distance between these two numbers is 266.49 S&P points.
We then need to find the breakdown point. This is where one area where some people may differ. To me the obvious breakdown occurred the day AFTER February 13th. So the February 13th intra day low of 825.21 represents the trend line breakdown point.
Now all we have to do is subtract 266.49 from the breakdown level of 825.21 and we get our answer...558.72 (I hope!) So that's the OFFICIAL number!!!! How close did you come? Many came close, some didn't. That's okay. It was a fun exercise I'm sure I'll repeat sometime.
The reason (or reasons) the numbers differ so widely is because some use the cash market, some the futures market. Some use intra day extremes, some use only closing prices. Some vendors may even report different prices. I tell you this to say that there may not be one "exact" way to calculate this. I expected different numbers and I got them. You're probably surprised or in disagreement with my number. That's okay. The idea is to get close, and most of you did.
I actually would be surprised with a move below 600 in this leg. There are three reasons why. Your assignment tonight is to tell me what ANY of them are. I'll let you know tomorrow night. Two of them are obvious if you look at the chart and do some math.
As far as todays action goes, the market mustered some strength as it tries to close the gap at about 734 and retest the breakdown point in roughly the same area. It should be able to do at least that much. The bulls were quick to jump on todays action as possibly the bottom. That's a sign they STILL haven't given up. As a contrarian that's a bearish signal.
Gold is showing weakness still and oil is showing some strength. Perhaps some of the fast money is switching trades. I'm concerned about the dollars pattern. It could be rising bearish wedge. We'll just have to wait.
Comments