"The Rising Wedge is a bearish (chart) pattern that begins wide at the bottom and contracts as prices move higher and the trading range narrows. In contrast to symmetrical triangles, which have no definitive slope and no bullish or bearish bias, rising wedges definitely slope up and have a bearish bias...As a reversal pattern, the rising wedge will slope up and with the prevailing trend. Regardless of the type (reversal or continuation), rising wedges are bearish." More discussion at...
http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:chart_patterns:rising_wedge
When the trend is up, a rising wedge indicates the trend is going to fail; and fail it does....about 70% of the time according to Thomas Bulkowski at
http://www.thepatternsite.com/risewedge.html
There is more confidence in the pattern playing out to the down side if volume is falling as the wedge is rising. The falling volume indicates lack of confidence in the up-trend. Volume picks up after the trend is broken, but that is always true when the market is falling quickly. As this rally has proceeded, volume has fallen. It is now 30% below where it was near the bottom in September of 2011 (based on 20-dMA of S&P 500 volume). More recently, volume is about 20% below where it was at the beginning of June 2012 when the market bottomed.
The apex (where the two trend lines meet) is the resolution point and if the trend doesn't fail before the apex is reached, the result is often a strong move down.
The Apex for the S&P 500 looks like it's around the old high - 1560. Coincidence? I don't know.
The pattern indicates we're in for some market disruption, either a correction or at least some sort of pullback in the not too distant future (or now). Whether it is large or small probably depends on the news at the time.
Chart from dshort.com although
the wedge overlay is my analysis.
EMPLOYMENT - WHAT ME WORRY?
"Perhaps we downloaded the wrong pdf file from the Bureau of Labor Statistics (BLS) website. The report we reviewed and studied made us want to have a few stiff drinks and not partake in a celebratory mood. We hardly call a 155,000 increase in non-farm payrolls strong and steady growth. Month-over-month, payroll growth is a scant 0.12%. Year-over-year, growth at 1.39% is hardly more encouraging. Rather, December's report (and, October's and November's) suggest the labor market is at stall speed. What employment growth there is, is barely sufficient to offset civilian labor force growth. If it were not for the long-term unemployed giving up and exiting the labor force, the unemployment rate would be higher than the 7.8% reported for December." - Eric Schaefer of American Independence Financial Services posted at dshort.com Advisor Perspectives. Full story at...
http://advisorperspectives.com/dshort/guest/AI-130122-What-Me-Worry.php
MARKET RECAP
Wednesday, the S&P 500 was up 0.2% to 1495 (rounded). VIX rose 0.2%, to 12.46.
NTSM
The NTSM analysis
remained HOLD Wednesday.
As it has been
for several days, only one indicator, Price, is positive. Volume is very nearly positive. Sentiment and VIX are neutral, but VIX too is
closer to positive than negative.
Breadth is
positive with advancing stocks outpacing decliners over the longer term. New-Highs vs. new-lows are slowing their
advance and may be starting to top out; that would be a short term negative if
it happens.
MY INVESTED
POSITION
Based on a BUY
signal 7 of 9-days, and more importantly, consecutive closes above the prior
high of 1466, I moved into the stock market at 1471 on the S&P 500 on 14
January. I am currently invested in a
range of near 50% invested in stocks. 
