Focusing on Just the Rallies – an Interesting Pattern Emerges

What does price reveal if we focus on “just” the recent rallies?  A stealth bullish repeating pattern emerges that demands our attention.

Let’s focus just on the spike-rally impulse phases in the S&P 500 recently:

I’ve purposely eliminated the sell-swings from mid-June to present on the S&P 500 30 min chart.

We can thus compare ONLY the rally swings (impulses) and focus our attention on something compelling.

Notice that each green highlight represents a strong intervention force of buying pressure at the start (or in the case of July 1st and 14th – in the middle) of a non-stop bullish impulse.

Just like yesterday’s price action drew a number of bears (short-sellers) into the market, today’s intervention and bullish surge turned the BEARS into BULLS at least in the sense that they were forced quickly to buy-back instantly losing positions with their stop-losses that triggered.

Compare each green highlight with the outcome of a straight-up, similar angled, market impulse.

These are created in part by buyers buying but also by sellers buying to cover losing positions.

Here’s a closer look at the price action without any highlights:

As traders, we look for patterns in price and compare recent events to discover these patterns – and then exploit them when a similar pattern occurs in real time (like this morning).

Sometimes it’s simple patterns that overrule complex analysis, especially if complex analysis keeps us protected on the sideline or – worse – short-selling a market that has so much hidden bullish pressure supporting it.

Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).