Best of the Week
Most Popular
1.The Gallery of Crowd Behavior: Goodbye Stock Market All Time Highs - Doug_Wakefieldth
2.Tesco Meltdown Debt Default Risk Could Trigger a Financial Crisis in Early 2015 - Nadeem_Walayat
3.The Trend Every Nation on Earth Is Pouring Money Into - Keith Fitz-Gerald
4.Do Tumbling Buybacks Signal Another Stock Market Crash? - 26Mike_Whitney
5.Could Tesco Go Bust? How to Save Tesco from Debt Bankruptcy Risk - Nadeem_Walayat
6.Gold And Silver Price - Respect The Trend But Prepare For A Reversal - Michael_Noonan
7.U.S. Economy Faltering Momentum, Debt and Asset Bubbles - Lacy Hunt
8.Bullish Silver Stealth Buying - Zeal_LLC
9.Euro, USD, Gold and Stocks According to Chartology - Rambus_Chartology
10.Evidence of Another Even More Sweeping U.S. Housing Market Bust Already Starting to Appear - EWI
Last 5 days
Pretium - Canadian Golden Elephant - 31st Oct 14
What USA Today Got Wrong About the Stock Market Fear Gauge - 31st Oct 14
Election Result - Labour Wins South Yorkshire Police and Crime Commissioner - 31st Oct 14
Gold Price Falls, Stocks Record Highs as Japan Goes ‘Weimar’ - 31st Oct 14
EUR/USD - Double Bottom Or New Lows? - 31st Oct 14
More Downside Ahead for Gold and Silver - 31st Oct 14
QE Is Dead, Now You Tell Me What You Know - 31st Oct 14
Welcome to the World of Volatility - 31st Oct 14
Stocks Bear Market Crash Towards New All Time Highs as QE3 End Awaits QE4 Start - 31st Oct 14
US Mortgages, Risky Bisiness "Easy Money" - 30th Oct 14
Gold, Silver and Currency Wars - 30th Oct 14
How to Recognize a Stock Market “Bear Raid” on Wall Street - 30th Oct 14
U.S. Midterm Elections: Would a Republican Win Be Bullish for the Stock Market? - 30th Oct 14
Stock Market S&P Index MAP Wave Analysis Forecast - 30th Oct 14
Gold Price Declines Once Again As Expected - 30th Oct 14
Depression and the Economy of a Country - 30th Oct 14
Fed Ends QE? Greenspan Says Gold “Measurably” “Higher” In 5 Years - 30th Oct 14
Apocalypse Now Or Nirvana Next Week? - 30th Oct 14
Understanding Gold's Massive Impact on Fed Maneuvering - 30th Oct 14
Europe: Building a Banking Union - 30th Oct 14
The Colder War: How the Global Energy Trade Slipped From America's Grasp - 30th Oct 14
Don't Get Ruined by These 10 Popular Investment Myths (Part VIII) - 29th Oct 14
Flock of Black Swans Points to Imminent Stock Market Crash - 29th Oct 14
Bank of America's Mortgage Headaches - 29th Oct 14
Risk Management - Why I Run “Ultimate Trailing Stops” on All My Investments - 29th Oct 14
As the Eurozone Economy Stalls, China Cuts the Red Tape - 29th Oct 14
Stock Market Bubble Goes Pop - 29th Oct 14
Gold's Obituary - 29th Oct 14
A Medical Breakthrough Creating Stock Profits - 29th Oct 14
Greenspan: Gold Price Will Rise - 29th Oct 14
The Most Important Stock Market Chart on the Planet - 29th Oct 14
Mysterious Death od CEO Who Went Against the Petrodollar - 29th Oct 14
Hillary Clinton Could Be One of the Best U.S. Presidents Ever - 29th Oct 14
The Worst Advice Wall Street Ever Gave - 29th Oct 14
Bitcoin Price Narrow Range, Might Not Be for Long - 29th Oct 14
UKIP South Yorkshire PCC Election Win is Just Not Going to Happen - 29th Oct 14
Evidence of New U.S. Housing Market Real Estate Bust Starting to Appear - 28th Oct 14
Principle, Rigor and Execution Matter in U.S. Foreign Policy - 28th Oct 14
This Little Piggy Bent The Market - 28th Oct 14
Global Housing Markets - Don’t Buy A Home, You’ll Get Burned! - 28th Oct 14
U.S. Economic Snapshot - Strong Dollar Eating into corporate Profits - 28th Oct 14
Oliver Gross Says Peak Gold Is Here to Stay - 28th Oct 14
The Hedge Fund Rich List Infographic - 28th Oct 14
Does Gold Price Always Respond to Real Interest Rates? - 28th Oct 14
When Will Central Bank Morons Ever Learn? asks Albert Edwards at Societe General - 28th Oct 14
Functional Economics - Getting Your House in Order - 28th Oct 14
Humanity Accelerating to What Exactly? - 27th Oct 14
A Scary Story for Emerging Markets - 27th Oct 14
Could Tesco Go Bust? How to Save Tesco from Debt Bankruptcy Risk - 27th Oct 14
Europe Redefines Bank Stress Tests - 27th Oct 14
Stock Market Intermediate Correction Underway - 27th Oct 14
Why Do Banks Want Our Deposits? Hint: It’s Not to Make Loans - 26th Oct 14
Obamacare Is Not a Revolution, It Is Mere Evolution - 26th Oct 14
Do Tumbling Buybacks Signal Another Stock Market Crash? - 26th Oct 14
Has the FTSE Stock Market Index Put in a Major Top? - 26th Oct 14
Christmas In October – Desperate Measures - 26th Oct 14
Stock Market Primary IV Continues - 26th Oct 14
Gold And Silver Price - Respect The Trend But Prepare For A Reversal - 25th Oct 14
Ebola Has Nothing To Do With The Stock Market - 25th Oct 14
The Gallery of Crowd Behavior: Goodbye Stock Market All Time Highs - 25th Oct 14
Japanese Style Deflation Coming? Where? Fed Falling Behind the Curve? Which Way? - 25th Oct 14
Gold Price Rebounds but Gold Miners Struggle - 25th Oct 14
Stock Market Buy the Dip or Sell the Rally - 25th Oct 14
Get Ready for “Stupid Cheap” Stock Prices - 25th Oct 14
The Trend Every Nation on Earth Is Pouring Money Into - 25th Oct 14 - Keith Fitz-Gerald
Bitcoin Price Decline Stopped, Possibly Temporarily - 25th Oct 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Stocks Epic Bear Market

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