Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Stock Market Final Thrust Review - 19th Jan 20
Gold Trade Usage & Price Effect - 19th Jan 20
Stock Market Trend Forecast 2020 - Trend Analysis - Video - 19th Jan 20
Stock Trade-of-the-Week: Dorchester Minerals (DMLP) - 19th Jan 20
INTEL (INTC) Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 18th Jan 20
Gold Stocks Wavering - 18th Jan 20
Best Amazon iPhone Case Fits 6s, 7, 8 by Toovren Review - 18th Jan 20
1. GOOGLE (Alphabet) - Primary AI Tech Stock For Investing 2020 - 17th Jan 20
ERY Energy Bear Continues Basing Setup – Breakout Expected Near January 24th - 17th Jan 20
What Expiring Stock and Commodity Market Bubbles Look Like - 17th Jan 20
Platinum Breaks $1000 On Big Rally - What's Next Forecast - 17th Jan 20
Precious Metals Set to Keep Powering Ahead - 17th Jan 20
Stock Market and the US Presidential Election Cycle  - 16th Jan 20
Shifting Undercurrents In The US Stock Market - 16th Jan 20
America 2020 – YEAR OF LIVING DANGEROUSLY (PART TWO) - 16th Jan 20
Yes, China Is a Currency Manipulator – And the U.S. Banking System Is a Metals Manipulator - 16th Jan 20
MICROSOFT Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 15th Jan 20
Silver Traders Big Trend Analysis – Part II - 15th Jan 20
Silver Short-Term Pullback Before Acceleration Higher - 15th Jan 20
Gold Overall Outlook Is 'Strongly Bullish' - 15th Jan 20
AMD is Killing Intel - Best CPU's For 2020! Ryzen 3900x, 3950x, 3960x Budget, to High End Systems - 15th Jan 20
The Importance Of Keeping Invoices Up To Date - 15th Jan 20
Stock Market Elliott Wave Analysis 2020 - 14th Jan 20
Walmart Has Made a Genius Move to Beat Amazon - 14th Jan 20
Deep State 2020 – A Year Of Living Dangerously! - 14th Jan 20
The End of College Is Near - 14th Jan 20
AI Stocks Investing 2020 to Profit from the Machine Intelligence Mega-trend - Video - 14th Jan 20
Stock Market Final Thrust - 14th Jan 20
British Pound GBP Trend Forecast Review - 13th Jan 20
Trumpism Stock Market and the crisis in American social equality - 13th Jan 20
Silver Investors Big Trend Analysis for – Part I - 13th Jan 20
Craig Hemke Gold & Silver 2020 Prediction, Slams Biased Gold Naysayers - 13th Jan 20
AMAZON Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 11th Jan 20
Gold Price Reacting to Global Flash Points - 11th Jan 20
Land Rover Discovery Sport 2020 - What You Need to Know Before Buying - 11th Jan 20
Gold Buying Precarious - 11th Jan 20
The Crazy Stock Market Train to Bull Eternity - 11th Jan 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Stock Market Bulls Remain in Control!

Stock-Markets / Stock Markets 2010 Mar 14, 2010 - 10:59 PM GMT

By: Piazzi

Stock-Markets

Best Financial Markets Analysis ArticleLast week, bulls dominated the market. Keeping the pressure on the shorts, they did not give anything back – not even and intraday pullback.

The trading pattern of last week was quite simple and elegant


Index would go into some king of contraction or range-bound action, and then would expand out of that resolving the range to the upside

 
This type of action is typical as a wave keeps extending, can easily happen in a strong 3rd wave or a drawn out C wave.

Notice that Friday ended with another tight price action.

From a much longer term point of view, Index maintained its positive posture.

Index is still hitting against the mid-line of a channel that I had laid down from the July low. Weekly MACD is yet to cross and, as I have mentioned, a failure to do so can establish a hook and may be a warning for a pullback. Also, the 34EMA is yet to cross 89EMA, a failure to do so can also form a hook and lead to some pullback or correction. Other than that, there is not much to complain about. Index has good support from its weekly MAs, the lower boundary of the channel, and the half range marker that we have had on the chart for a long time.

I have relegated two of the possible 4 wave counts to very low probability. The two more probable counts at this time are one count that regards January peak as a major wave 1 and February low as a wave 2 (or part of a major wave 2), and one count that regards January peak as a major wave A, and February low as major wave B (or part of major wave B).

This coming week, being an OpEx week, has the potential of clearing the wave structure and reveal which one of the remaining two is the one to prefer to the other.

NDX has already made a new high for the year

Notice that NDX has broken above the blue resistance line and is approaching the middle of the purple channel. Also notice that MACD is at a juncture where it may either cross or hook. The outcome of these technicals will set the stage for the next move. Other than that, NDX’s chart looks very bullish at this moment.  NDX has been leading S&P. It is hard to see S&P through an extremely bearish lens when high beta NDX looks charged with bull spirit and clean waves.

This is a daily chart of S&P

To say that short term momentum is overbought is somewhat an understatement. But that’s what a strong uptrend should do, it should get overbought. The next thing it should do is that when it finally pulls back, it should give back little and, if it’s really strong, do not get fully oversold.

Index has been toying with the January high. The overbought levels may stall the index soon and cause a pullback. I think it may not be very prudent to start a brand new position here.

Breadth has also improved a lot over the recent rally. It was showing signs of getting overbought and on Friday it displayed some moderate signs of slowing down.

McClellan Oscillator pulled slightly back while being overbought

ARMS Index rose and may indicate that softness or correction may soon follow

As you can see from the chart below, the rally has had a good breadth, but may be at, or near some sort of a short term top or exhaustion point

From a purely technical point of view, none of this necessarily means that a collapse is imminent. It just means that things look a bit toppy, and shorter term probabilities may not be favoring a brand new position on the long side.  It also means that risk parameters of existing positions may need to be re-evaluated.

This is a 60-min chart of the index

On February 19, I wrote this

“The move from Feb Lows looks very similar to the one from July lows. While future will tell us how similar they will in fact be. I shall remember that the July move destroyed the bears, and also kept a lot of bulls out waiting for a retest or pullback or whatever.”

Not too bad of a call, eh?

From a secondary short term low of Feb 25, index has not given anything back, roasting the shorts alive, and leaving the non-participating bulls in its dust.

We have an active INV H&S shoulder that I talked about on March2. The pattern came to life right after I wrote about it via a strong morning gap, held a small pullback and then went racing on.  The July massacre of the bears also got into gears via a strong gap leaving many behind.

So far, the move off the Feb lows has been very strong and broad-based. Bears keep telling us that volume is absent, but these past few days had decent volume on S&P and the whole move has had decent volume on NDX which has been a leading index.  Also, as I have mentioned before, with a composite, volume may come after price moves for a while as many either join the party later or are squeezed into submission to the move. Regardless, volume is not a trading trigger, it may give warning as to a move being suspect but that’s all there is to it: A potential warning.

Bears also tell us that sentiment is very bullish. My long-time readers know that I regard sentiment reading as a background condition and a warning at best and useless he-said-she-said at worst – definitely not a trade trigger on its lonely own.

Instead of conducting a round-the-clock talk show of complaints about volume and sentiment, how about bears do something destructive about the price and, at the very least, generate a series of short term lower lows and lower highs? I mean: how about actually selling the market down as opposed to talking it down?

I hope bears regard my pokes as a motivational rant and not as any sort of insult because, as much as this is a bulls’ market at this very moment, it would be nothing without the bears ;-)

So, market is overbought and a pullback can happen anytime. I have made no change to my levels. As long as index is above 1110, it is either consolidating or rallying. I would really like 1130 to contain any possible pullback in the hours and days ahead. A move bellow 1130 may be a first warning that 1110 may indeed be tested.

Support is at 1133 and 1107. Resistance is at 1168 and 1179.

Long term trend is up. Mid-term trend is up. Short term trend is up.

This coming week is an OpEx week. We have had a nice, long stretch of a rally. I expect all sorts of price gymnastics.

Have a Nice Week!

By Piazzi

http://markettime.blogspot.com/

I am a self taught market participant with more than 12 years of managing my own money. My main approach is to study macro level conditions affecting the markets, and then use technical analysis to either find opportunities or stay out of trouble. Staying out of trouble (a.k.a Loss) is more important to me than making profits. In addition to my self studies of the markets, I have studied Objective Elliott Wave (OEW) under tutorship of Tony Caldaro.

© 2010 Copyright Piazzi - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules