Best of the Week
Most Popular
1.Ukraine Preface, the Emerging Dynamics Of Petro-Yuan Standard - Jim_Willie_CB
2. Speculations Reversed - Gold Price Stealth Rally 2014 - Peter_Schiff
3.Bubbleberg News Drivel Masquerading as Financial Reporting - David A. Stockman
4.Nationwide UK House Prices 9.5% Inflation, Housing Market on Steroids, Help to Buy Anniversary - Nadeem_Walayat
5.How to Profit from Palladium Huge Price Surge… - Peter Krauth
6.UK Home Solar Panel Installations Good or Bad for House Buying and Selling? - Nadeem_Walayat
7.Global Gold Manipulation Update - MAP Wave Analysis - Marc_Horn
8.Ukraine Capital Controls and 200% Inflation But Still In Better Shape Than US! - Jeff_Berwick
9.The Rise of a Euro-Chino-Russian Superpower - Stephan Bogner
10.Across Europe Secession Movements Intensify - BATR
Last 72 Hrs
Silver, Gold, and What Could Go Wrong - 15th Apr 14
How I Intend to Survive the Meltdown of America - 15th Apr 14
France Wakes Up To The Multicultural Multi-Threat - 15th Apr 14
The Real Purpose Of QE - It’s Not Employment - 15th Apr 14
Peak Coal - 15th Apr 14
Flash Crash, Rigged Markets - What’s the Frequency Zenith? - 15th Apr 14
Forecasting U.S. GDP Growth: A Look at WSJ Economists’ Collective Crystal Ball - 15th Apr 14
Stock Market - Is Something Nasty About to Happen? - 15th Apr 14
How to Trade Your Way To Freedom - 15th Apr 14
Understanding (and Ignoring) the Media Bandwagon Against Gold - 15th Apr 14
When Stock Market Bubble Crashes, Take Refuge in Gold Stocks - 15th Apr 14
Bitcoin Price Strong Appreciation to Be Followed by Declines? - 14th Apr 14
Greece, Turkey, We're Shuffling The Cards on Our Europe Investing Play - 14th Apr 14
Silver Price Ultimate Rally: When Paper Assets Collapse - 14th Apr 14
Get Your Share of an Extra Trillion Euros Money Printing - 14th Apr 14
Fourth Reversals in The Gold and Silver Charts - 14th Apr 14
Stock Market Nearing Rally in a Downtrend - 14th Apr 14
London House Prices Bubble, Debt Slavery, Crimea 2.0 - Russia Ukraine Annexation - 14th Apr 14
Four Horsemen - Top Economists Explain the Source of Our Economic Crisis - Video - 13th Apr 14
Peak Oil And Global Warming – A Question Of Culture - 13th Apr 14
The Global Banking Game Is Rigged, and the FDIC Is Suing - 13th Apr 14
College Degree Earnings Propaganda - 13th Apr 14 - Andrew Syrios
Stock Market Potential Diagonal Triangle Pattern Forming - 12th Apr 14
Ukraine Crisis – Military Flash Drive Thinking - 12th Apr 14
Gold And Silver – 2014 Coud Be A Yawner; Be Prepared For A Surprise - 12th Apr 14
Gold Preparing to Launch as U.S. Dollar Drops to Key Support - 12th Apr 14
Manipulated Stocks Markets And The Empty Bag - 12th Apr 14
Stock Market - It’s Not Time to Panic… It’s Time to Buy - 12th Apr 14
Doctor Doom on the Fiat Money Empire Coming Financial Crisis - 12th Apr 14
Sheffield, Rotherham Roma Benefits Plague, Ch5 Documentary Gypsies on Benefits & Proud - 11th Apr 14
This Bitcoin Price Rally Might Be a Fake One - 11th Apr 14
GDX Gold Stocks Benchmark - 11th Apr 14
Silver Price Finally Outperforms – How Bullish Is That? - 11th Apr 14
Limits to Employment Participation, and Societal Change - 11th Apr 14
US Moves To Restrict Travelers Taking International Flights - 11th Apr 14
Bill Gross to El-Erian: 'Come on, Mohamed, Tell Us Why' You Resigned PIMCO - 11th Apr 14
British Pound GBP/USD - Double Top or Further Rally? - 11th Apr 14
Don't Miss the Boat on Big Biotech Catalysts: Keith Markey - 11th Apr 14
Russia Invaded Crimea and These US Energy Companies Made a Killing - 11th Apr 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Trouble Knocking On Stock Bull’s Door, An AAPL A Day?

Companies / Tech Stocks Dec 10, 2012 - 04:59 AM GMT

By: Michael_Noonan

Companies

Trouble appears to be brewing for a weakening bull trend in stocks. Starting with the higher times frames, which are more controlling over daily and intra day, those charts followed by most traders, we see a rising wedge that is indicating a trend running out of demand effort. [A similar "wedge" situation was covered in our post on "10 Year Note and Wheat - How To Find Trades, 2 December 2012, see Commentaries].


As swing highs 1 -4 show, the net upside gains are smaller and smaller, and what is important for the last one, point 4, is WHERE it is struggling. At the end of 2007 and early 2008, price declined precipitously and wiped out enormous amounts of market “value” and equity, much of which has not been recovered. Yes, the market has since rallied, but most of it has come from central bank ramping, the public having abandoned the market in droves, over a year ago.

The decline from the 2007 high to the early 2009 low took 17 months. The current rally is in its 45th month, a high at month 42, taking well over twice as long to recover not quite all gains lost. Ease of movement down, a labored recovery…not a good sign.

Even though price rallied above the March 2012 swing high, the horizontal line from that high is still in current play, as resistance, and the gain to the September high was only 55 points. The 5th, 6th, and 7th bar highs, from the right, are in the area of the March high and now acting as resistance, coming into this next week.

Each of the last three rally bars have been progressively smaller, a sign of demand struggling. The closes are all upper end of each bar, so we at least know that there is little supply, up to this point. That can change next day, next week, we do not know. Until it does change, weak as it is, the trend is chugging higher, of sorts. This is a caveat to longs and buyers, but zero reason to be short, from a risk/reward consideration. That, too, can change quickly in this environment. Be alert!

One more point worth noting. The give-back in this last swing down went deeper into the previous swing high, relative to the lesser give-back in the last up swing. It is another quality of character measure for the market, a weak one.

The synergy in all three time frames remains constant. This makes the read easier and more significant because of the consistency. On a broad overview, the swing lines cut through the daily “noise” to show higher highs and higher lows, the simplest definition of a trend. The current rally is in an up channel, laboring, but still in an up channel, and we always have to go with what is, not what “might” happen.

Getting into a little more detail, what stands out most is the high volume down bar from 7 November, third arrow labeled “Key.” It is. Why? Volume is a measure of effort. Here we have the highest volume that failed in a rally to a resistance area, with ease of movement to the downside, and a poor close. Sellers stampeded over buyers. In fact, this was the largest down bar for the contract. Widest bar down on the heaviest volume? This should grab anyone’s attention. It has ours.

The first market hurdle is rising above last Monday’s high, a smaller version of the 7 November bar, in that it offers resistance, and price closed off the high on Friday, when it neared that high of the week.

You can see from the weekly, above chart, that the close was in the upper part of the bar, but it was barely above the previous week, and the range was smaller, as we have been stating. Once/if it can clear that high, price will then be knocking on the door of the 7 November high.

It is hard to be enthused about the market’s prospects, but we can never sell short the power of central planners’ ability to keep pumping fiat into a weakened market. One day, reality and gravity will take its natural course. A quick look at the Nasdaq does nothing to reassure the up trend.

The NAS has been the relative strength of this bull move, and compared to its weaker sister, SnP, it is flagging. The chart speaks for itself. While in an up trend, it is close to being a trading range situation. It is much closer to the June lows, when compared to the SnP.

Friday’s bar held above the low of the week. If it holds, in the next few days, there is still life in the rally. If it gives way, there is little to justify remaining long in the market. For now, it seems as so goes AAPL, so goes the market.

AAPL is captured in the last paragraph above. The high volume effort last week is either stopping volume, as it was at the mid-November low, or the door to lower prices is about to be swung open.

For as negatively biased as we are on the stock market, we view the NAS and AAPL as offering a glimmer of hope, in the week coming. We can be wrong about that, but we are not long, so do not care. Nor are we short, just yet.

By Michael Noonan

http://edgetraderplus.com

Michael Noonan, mn@edgetraderplus.com, is a Chicago-based trader with over 30 years in the business. His sole approach to analysis is derived from developing market pattern behavior, found in the form of Price, Volume, and Time, and it is generated from the best source possible, the market itself.

© 2012 Copyright Michael Noonan - 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.

Michael Noonan Archive

© 2005-2014 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

Free Report - Financial Markets 2014