Thursday, July 22, 2010


One of the few patterns that I actually pay attention to besides triangles and the T1 pattern is the "crawling pattern".

Most of the time this plays out in bearish fashion as a stock or index crawls or bumps along a rising 50 day moving average. Once the support breaks it's usually followed by an aggressive move down to test the 200 day moving average.

Recently we saw this pattern play out in the dollar index.

As you can see when support broke the dollar moved aggressively lower and may still have further to go as it still didn't move all the way back to the 200 DMA yet. I've also noted that the break down powered the rally in the stock market. As a matter of fact both legs down in the dollar powered strong rallies in stocks.

I'm pretty confident that if the rally is to continue Bernanke is going to have to keep pressure on the dollar.

Now we have this same pattern starting to develop on the S&P although in reverse form. If the market breaks above the 50 it should power a very aggressive move higher.


  1. Toby,

    What % chance do you give to a break above the 50 day moving average on the S&P, and therefore a powerful move to the upside.


  2. AS I'm pretty confident we did in fact put in the intermediate cycle low on July 1st the odds are good this breakout will lead to further gains.

    It still remains to be seen whether or not this will be a bear market rally that fails to make new highs or whether the cyclical bull still has some kick left. If so then the market will go on to make new highs during this intermediate cycle.

  3. Toby,
    Gold is doing the crawling under 50 day moving average about a week ago. Do you think it will run to 200D MA soon?

  4. The crawl pattern works when a stock or index crawls along the top of a rising 50 DMA.

  5. Tony, I read your articles for the first time when you recently called an intermediate cycle low. Fear was everywhere, head & shoulders crash coming, etc. BUT you called for contrary, a multi week rally. NICE JOB!!I read all your articles now! THX

  6. Now that the market is back to making higher highs and higer lows I think there are a few trolls out there that owe me an apology for all the abuse.

    I do believe I was exactly right. The market was due for a rally, bear market or otherwise just like I said it was, and we are now getting it.

    The question is are they man enough to admit they were 100% wrong? :)


Note: Only a member of this blog may post a comment.