Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market S&P Bear Calls Have ALL Missed

Stock-Markets / Stock Markets 2013 Apr 07, 2013 - 06:44 PM GMT

By: Michael_Noonan

Stock-Markets

Salivating Bears have been calling for a market top for over 4 years, now, and none have been right. The sentiment is understood but misplaced. This goes to show how markets are not predictable, but people are. So many want to exercise the FILO inventory premise: First In Last Out. It is so difficult to check egos at the door for there is a huge difference in being right and being profitable.


Those who choose to be right often find themselves on the loosing end. Those who choose to be profitable always have a game plan. Game plans rarely pick tops or bottoms, the most unprofitable areas for trading. The best source for market information comes from the market itself, and from what we can see, there has been no indication that a top has formed. It is possible the market is getting there, but getting there and being there are not the same. Always to stick to a proven game plan.

The message of the market is best viewed from the charts, and we are using the E-Mini.

An associate of ours has observed that market rallies tend to last 15-20 weeks, and the current rally is in week 20. A correction, of some sort, is now due, this week, next week, it cannot be known until it happens, but the Time factor is ever-present.

Last week was an OKR, [Outside Key Reversal], defined by a higher high and lower low from the preceding week, and in this one, a lower close, [the close can higher, lower or unchanged]. The word "Reversal" provides a clue as to near term expectations. Not ours, necessarily, but as in the acronym, OKR.

The one factor outweighing the rest is the trend, and the trend for stocks is up. Trends tend to persist, and it takes time to turn one around. Time equates to patience, and it is patience that is the undoing of a great many traders. There have been so many calling for a top, as we have observed from comments and expectations over the last 4 years.

In an up trend, demand is already a proven factor. It is supply, or sellers who bear the burden of proof for making a change, and that has not yet happened. The groundwork already exists for a correction, but it is impossible to know, in advance, if it will be a normal correction, and lately, they have been 9-10 days in duration, or if it will signal the potential of a topping formation.

Identifying the trend as up does not mean one should not be cautious or unprepared for a market turn, but the caution would be in the form of taking profits and/or using close stops. It does not mean going short. Even the 2008 market top took a few months to develop.

Upside momentum has lost a few steps in the current rally. In the rally leading to swing high 2, note how the bars were steadily higher. In the current rally, the bars have been higher, but mostly overlapping. When bars overlap, it indicates a greater struggle between buyers and sellers, but so far, buyers have prevailed.

The bulk of the rally to swing high 3 began when price broke above swing high 2, at the beginning of March. The high of 2 has been support, seen at arrow 1. Friday's decline is still above that price, 1529 area, and the entire box area is above 2, which is a bullish sign. It may not hold, but until that event occurs, we can only judge the market by the facts as they presently exist.

Friday's sell-off closed above the half-way point of the range, and that tells us buyers are still actively present, even if the buyers are only the Fed. If sellers were in control, the close would have been lower. Based on the trend, we could be looking at an opportunity to buy on Monday.

The 1529.50 low of 15 March is likely to offer support on a future retest, horizontal line extending to the right. This makes Friday's low very interesting. One measure Connie Brown, Aerodynamic Investments, uses is equality between swings. The decline of "A" was 24 points, as was the decline of "B." Based on this, at least a reaction can be expected, at a minimum. [Never forgetting "Anything Can Happen" in markets, it can also fail.]

The highest volume occurred at the low, and that begs the question, who do you think creates volume? The short answer is what we like to call "smart money." The public tends to follow, not lead. The Friday low is above the 15 March support, telling us if sellers were in charge, why couldn't they press the market lower and take advantage of their selling momentum? Maybe because sellers do not have the momentum.

The reaction off the high volume low was immediate and to the upside. If we see a light volume pull-back on Monday, with smaller intra day ranges, it could offer a low-risk buy. As was stated in the opening second paragraph, having a game plan is essential to being profitable. It is not a guarantee for profit on every trade, but the consistency in application is a winning combination.

Developing market activity is always the most reliable source for information and the best guide.


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.

© 2013 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

© 2005-2019 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