THO1! trade ideas
Energy and EquitiesPrices for gasoline and crude oil have been on the rise. When does demand destruction start to occur and what does this mean for the $SPY. Over the last couple years gasoline at $3.20 a gallon has preceded each major market correction. This may not be the point of demand destruction but is an important price level to watch in advance of the next decline. Keep an eye on rising energy prices because they may start to slowly hit consumers in the pocket book as well as drive up costs and reduce earnings for fuel intensive businesses. Rising energy costs could unsettle the earnings outlook for the S&P 500. Until then, thanks Ben for the boost to stock prices and hopefully inflation is under control as you say it is... ;)
Gasoline Price, Important Economic and Market Leading IndicatorThe price of gasoline isn’t one of the ten components of the Index of Leading Economic Indicators (LEI) in the US. Nor is it included in the LEIs of the other major economies around the world. However, maybe it should be. That’s because rapidly rising gasoline prices led or coincided with all six recessions since 1973. It might be different this time because Fed policy is likely to remain stimulative even if higher gasoline prices boost the headline CPI inflation rate. The latest batch of LEIs suggests that the global economy has plenty of forward momentum for the first half of 2013. If gasoline prices continue to rise along with crude oil prices in coming weeks, then the outlook for global economic growth during the first half of the year is bound to be reflected in weaker LEIs before mid-year.
Triple Top Pattern
The Triple Top Reversal is a bearish reversal pattern typically found on bar charts, line charts and candlestick charts. There are three equal highs followed by a break below support. As major reversal patterns, these patterns usually form over a 3 to 6 month period.
Throughout the development of the Triple Top Reversal, it can start to resemble a number of other patterns. Before the third high forms, the pattern may look like a Double Top Reversal. Three equal highs can also be found in an ascending triangle or rectangle. Of these patterns mentioned, only the ascending triangle has bullish overtones; the others are neutral until a break occurs. In this same vein, the Triple Top Reversal should also be treated as a neutral pattern until a breakdown occurs. The inability to break above resistance is bearish, but the bears have not won the battle until support is broken. Volume on the last decline off resistance can sometimes yield a clue. If there is a sharp increase in volume and momentum, then the chances of a support break increase.
1. Prior Trend: With any reversal pattern, there should be an existing trend to reverse. In the case of the Triple Top Reversal, an uptrend should precede the formation.
2. Three Highs: All three highs should be reasonably equal, well spaced and mark clear turning points to establish resistance. The highs do not have to be exactly equal, but should be reasonably equivalent to each other.
3. Volume: As the Triple Top Reversal develops, overall volume levels usually decline. Volume sometimes increases near the highs. After the third high, an expansion of volume on the subsequent decline and at the support break greatly reinforces the soundness of the pattern.
4. Support Break: As with many other reversal patterns, the Triple Top Reversal is not complete until a support break. The lowest point of the formation, which would be the lowest of the intermittent lows, marks this key support level.
5. Support Turns Resistance: Broken support becomes potential resistance, and there is sometimes a test of this newfound resistance level with a subsequent reaction rally.
6. Price Target: The distance from the support break to the highs can be measured and subtracted from the support break for a price target. The longer the pattern develops, the more significant the ultimate break. Triple Top Reversals that are 6 or more months old represent major tops and a price target is less likely to be effective.
stockcharts.com
Triple tops are chart patterns with decent performance in a bull market. The failure rate is higher than I like to see, but the average decline is reasonable. Thus, if you own a stock and the triple top confirms ( price closes below the lowest valley in the pattern), then consider selling immediately.
thepatternsite.com
