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This publication is
designed to provide accurate and authoritative information in regard
to the subject matter covered. It is sold with the understanding that
the publisher is not engaged in rendering legal, accounting, or other
professional service. If legal advice or other expert assistance is
required, the services of a competent professional person should be
sought. From a Declaration of Principles Jointly Adopted by a
Committee of the American Bar Association and a Committee of
Publishers and Associations.
Copyright
HarmonicTrader.com, L.L.C. 2008
This material is protected under all copyright laws. This
material may not be reprinted or reused in any manner without the
express written consent of HarmonicTrader, L.L.C. and Scott M. Carney.
All rights reserved!
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September
2008 Report
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| Greetings Harmonic Traders,
As the "Fall of 2008" sets in, I am ready to
move forward with the new Harmonic Trader Report series.
Before I begin this report, I want to outline the general
plan of how HarmonicTrader.com will move forward to expand and
to organize these initial reports into what will become the new
"The Harmonic Trader Report.” Each report will be
posted approximately 3-4 pages that will cover the most
pertinent markets and general investment environment for the
months ahead. Although I will focus quite regularly on the
most pertinent of U.S. markets, this will not preclude me from
in-depth analysis of opportunities foreign markets and
commodity-related issues. In particular, oil, agricultural
commodities, currency futures and other critical sectors will
comprise a thorough and accurate presentation of the financial
landscape and the overall trading environment at hand. The
Harmonic Trader report will be a subscription newsletter
starting in November with the first one free to the
public. There will be more details to follow in the next
few weeks. Now, let's begin with the current report.
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In the
prior report from July, I outlined the scenario for the Dow
Jones Industrial Average. The weekly structure possessed a
distinct Bullish 5-0 pattern that identified the 10,500 level as a
substantial target completion for this index. The index
reversed sharply after a perfect test of the entire
support range. The
distinctiveness of the structure of this pattern suggested that
the first test of this area would provide temporary support and
a brief reaction at a minimum. Now that the index
is in the process of an incredibly important retest of
this substantial support, the primary question is: Will
this area mark the low for the current downtrend.
Although the severity of this decline does present a cautionary regard for the eventual failure of
the 5-0 pattern, the support zone does offer other technical considerations
that confirm its importance. In particular,
Relative Strength readings are quickly approaching oversold on long-term
timeframes and retesting extreme readings from earlier this
year. |
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For the Standard & Poor's 500,
the
distinct 5-0 pattern points to the general 1150 area, as a
last-ditch retracement that could potentially mark a historic
low point for the index. The index reversed
initially
at the anticipated harmonic
levels. For the S&P 500, it possessed a distinct range in the
1150-1170 area. The recent decline may suggest that an exhaustive
drop into a
substantial harmonic support zone will mark the end of the
entire bear market. Although the capitulaton phase is
trying to offer signals that it is nearing its completion, there are several considerations to
regard as the next few days and weeks unfold. |
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The indices must stabilize now or face the
possibility of an entire retest of the last 8 years of
price action. Specifically, the S&P 500
would trigger a much lower downside target at 880. Therefore,
the recent lows must stabilize and begin to follow to the upside
to confirm the recent substantial rally or face a full
retest of the weekly lows.
The S&P 500 is representative of
the state of all major equity indices and must find
support in this general area. The index has hit
a penultimate support area that represents a
definitive make-or-break that will soon confirm the
recent exhaustive reversal. |
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| The crude oil
market tested the critical weekly 38.2% harmonic support level
that was outlined in my prior report from July.
The initial report
on crude was posted shortly after the extreme
peak in the $147 area. I outlined a few of the most
important
technical considerations that defined the 95-110 area as a
long-term support level. In particular, the weekly 38.2%
retracement sits at $95 represented a critical long-term
retest. The $95 area represents the current low of the
support zone.
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| Without question, the current
environment requires a great deal of caution. I recommend
giving the major equity indices a few weeks to confirm the
recent lows. My main point is that this is the time where
significant harmonic patterns have completed that can define
historic price levels. If the downtrend does not end in
the next few weeks at these respective pattern completion
points, the continuation will be severe. I would watch the
S&P 500 in particular to gauge the extent of this
confirmation. 1150 is the line in the sand. The next
several weeks will be truly historic, as this entire situation -
both technical and fundamental - resolves itself. And, if
there was ever a time to be paying attention to the markets and
your own finances, it is now!
Good Trading,
Scott Carney
HarmonicTrader.com |
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