Replies to post #1619 on FinancialAdvisor's College Class (FACC)

[FinancialAdvisor]

Yes mick, earnings are very prone and a concern with the currently overwhelming bullish market sentiment. We'll begin getting earnings warnings and pre-announcements next week, with earnings season coming into full-swing on January 18th. I'm expecting the climax top somewhere in between, using SIRI as my market sentiment indicator, I'm currently aiming for Friday January 7th as a market top, give or take 2 trading sessions.

While 4th quarter earnings may be strong, or even "in-line," it's not the 4th quarter earnings I expect to be particularly weak, it's the company's that will issue honest forward guidance that will abruptly change long-term market sentiment, this will ultimately shift the market's focus from a bottom's up approach to a top's down approach.

In other words, the long-term bear-market trend is in a good position to take over in the first half of January off of a climax top.

[AnderL]

If I may add here, I've said that the $COMPQ is creating an ascending triangle pattern and seems to be getting the most attention in the markets as the day traders enjoy the volatility. The $COMPQ is about 4/5 through completing the 5th wave and going into a large retrace. But reviewing the pattern and looking at the S&P500 and the Dow INDU I think it is more likely that it is a weak Rising Wedge pattern.

The problem is that the other indices are not agreeing with what I thought was an ascending triangle on the NASDAQ. Yes the DOW and the S&P500 have broken their previous highs and are trending upward, but look at the charts.

The S&P500 has been forming a Rising Wedge since August. And the Dow Industrial has been forming its Rising Wedge since October. This is usually a bearish signal as Rising Wedges typically breakout from the bottom of the channel.

Since the $SPX and $INDU are trading on top channel of both patterns the likelihood of breaking out of it is slim. Already today both Indices have shown there is resistance there. Over the next few days we should see a retest of the bottom channels. The $SPX does not have much time left because it will reach its apex in 7 days of trading (Jan 2nd).

Confirmation of a Rising Wedge pattern can bee seen on momentum indicators like the RSI and MACD where there is negative divergence when comparing the price tops the indicators tops.