First things first... S&P500

Ok I couldn't wait till tomorrow so here is my first chart for all of my fellow traders and trader wannabees. The unprecedented rally on S&P in the last 4 years formed an immaculate channel which I showed with red. The way I trade channels is by anticipating them before they occur. Surely this is a risky way but once you get an eye to capture the channels, you start seeing everything with channels. The last major leg of this 4 years rally started at the beginning of the 4th quarter of 2011 from 1075. Precisely September 1, 2011. We are now at 1517. If you could draw the red channel with the upper boundaries just touching the prices there as I plotted in the picture, you could have made a very sharp shoot right at 1075. I will demonstrate these sorts of "channel potentials" in my future posts.

Very steep channels such as the red channel usually induces some inner channels. In this particular example, I can see the blue channel as one of those. You can immediately notice that I also use some inner support and resistance lines inside each channel. Hence, a channel is not plotted by only upper and lower bands but also with its inner dynamics. Sometimes the middle line of a channel plays an important role and sometimes the rims come forward as in the blue channel. 

Usually and magically, the channels behave like magnets. The markets are so determined as if they "see" the bands of the channels. They have to go and touch the bands before reversing. I have seen it so many thousands of times on every time frame, I don't question this phenomenon anymore. If one day someone proves why and how the channels form so perfectly, that person will make more money than god.  

So here comes my prediction. I think in the short term S&P is topping. 

Considering DOW really wants to make an all time high before reversing, maybe one last push will come to touch the very upper boundary of the blue channel which is around 1545 at the moment. I do not expect an all time high from S&P. Even if it reaches there, it will be a perfect triple top and shorting from there is worth a fortune. When it reverses either now or after reaching 1570s, I expect it to come down real hard and follow what I showed with the green arrows. 

I will keep posting my picks on commodities, gold and FX. Wow I really thought it would be easy but it is not. It takes a lot of time but it's fun. That's all for today.