Friday, October 29, 2010

Very little action

A lack of confidence from both bears and bulls this week. I think everybody want to see the elections over before making any bold move. Market remains bullish on longer time frames, DMI is green on both daily and weekly charts, all moving averages are pointing up and the "golden cross" looks more obvious today than on Monday when it just happened despite the fact that market stayed pretty much unchanged this week.

On the bearish side we still have a "sell" signal on MACD on all indexes except Nasdaq. We do have a bullish EMAs crossing on SPX and Nasdaq but on DOW the two moving averages are touching each other. The most bearish index is NYSE. I almost never watch this index but I had a look at Blankfiend's website the other night and I notice his chart on NYSE. This is one good reason to read what other traders think no matter how much experience you do have since it's impossible to be aware of all indexes, oscillators and indicators all the time. NYSE has generated a bearish EMAs crossing and daily DMI is pretty much neutral. It looked even more bearish two days ago but today has managed to move a little bit above a flat 5 days SMA and both EMA25 and EMA50. It may be one of those times when my system gives a false sell signal like it did on gold and silver this week but a little loss just to be on the safe it doesn't matter keeping in mind that the "leg" up was still extremely profitable for all of them, silver, gold and NYSE.

All the best!


Thursday, October 28, 2010

A flat week so far

Almost no change this week, SPX moved 10-20 points up and down but at the end of each trading day it remained almost unchanged. We still have a bullish EMAs crossing on hourly chart, DMI is green on both daily and weekly charts but one indicator, MACD, turned slightly negative so I think we should be cautious here and maybe take a little bit of the profit from the table. MACD is usually more sensitive than both EMAs crossing and daily DMI which works both ways, is taking you out of the market or brings into the market faster than EMAs and DMI but also generates more false "buy" and "sell" signals.

Gold is giving mixed signals, bearish EMAs crossing, price bellow flat 5 days SMA but daily DMI is slightly positive one more time. Silver on the other hand turned bullish again, we have a bullish EMAs crossing, price above rising 5 days SMA. In top of this daily and weekly DMI are positive. One should be aware that MACD didn't give a "buy" signal for neither of them

Monday, October 25, 2010

Golden cross

It's official, we do have a "golden cross". A golden cross happens when a "fast" moving average climbs above a "slow" moving average but most of the time when people mention the golden cross they refer to SMA50 crossing above SMA200. Personally, I don't put too much emphasis on this crossing maybe because I don't trust SMA crossings too much, I rather prefer EMAs crossings but this crossing is watched by many technical analysts so I thought you should be aware of the fact that it did happened today.

Otherwise, market remains bullish on all time frames. Bulls are getting a little bit shy lately but they are still pushing market up a little bit. SPX touched a new intra-day high in the morning ("new" in the last 6 months) but it did lose 9 points by the end of the day. We still have a bullish EMAs crossing (a "golden cross" if you want ) on 60 minutes chart and price is above the rising 5 days SMA (1168).

On daily chart notice that DMI is still positive and recovered some lost ground last week. The red line was climbing up pretty fast but now it's pointing down again. Weekly DMI is also green and this together with the fact that SMA200 is rising again suggest a bullish picture on long term time frame. On shorter time frames anything can happen but as long as we do have a bullish EMAs crossing on 60 minutes chart I am going to hold onto my longs.

All the best!


Thursday, October 21, 2010

"Noisy" week

Pretty noisy this week, big moves up and down but SPX barely advanced a few points. It remains to be seen if market is going to end in a positive note tomorrow after traders are going to digest the last round of earnings results.

Not too much changes at the technical level. We still have a bullish EMAs crossing and market is above the rising five days SMA. This level (1163) is going to be very important if market decides to change direction. Bellow 1163 most likely we are also going to see a bearish EMAs crossing. But let's not anticipate! Bulls still seem to be in control after advancing 7 out of the last 8 weeks.

SPX is very close to the "golden crossing" SMA50 crossing SMA200, a crossing watched by many people. Besides 5 days SMA (1163) other potential support levels are around 1150 and 1130.

I am not trading gold but for those who are interested I need to say that I noticed a bearish EMAs crossing. This is, of course, for active traders, gold bugs (the "buy and hold" crew) don't seem to be bothered by the latest weakness most likely due to some strength noticed in the dollar. On longer time frames gold is still extremely bullish (weekly DMI is green, price way above SMA200) but the rally started at the beginning of August seems to take a break here.

In the next few days I may do an analysis on different sectors. As you know some of them are not necessarily trading with the rest of the market.

All the best!


Monday, October 18, 2010

Higher high

A fresh higher high today and virtual no resistance from here to 1220, the April high. Of course we are not going to go in straight line towards 1220 and tomorrow is probably going to be one of those down today judging from the futures drop after IBM and AAPL Q2 results. Needless to say that we still have a bullish EMAs crossing on 60 minutes chart and price is above the rising five days SMA.

On daily chart I think we should keep an eye on the two possible support levels, 1130 and 1150. As I said there is virtually no resistance from here to 1220 except, maybe, the level SPX touched today, 1185, the level where I've got a bearish EMAs crossing on the way down, at the beginning of May. Sometimes these levels where the market made huge turns up or down function as levels of support or resistance. Sometimes!

As usual my eyes are focused on EMAs crossing on 60 minutes chart.


Thursday, October 14, 2010

Weekly DMI turns green

I know what you think! It's odd that I am bringing up a bullish idea on a down day but this is a significant technical aspect on the long term time frame. If it's going to hold, this would technically put an end to the bearish cycle started on April. As you realize weekly DMI is not a good timing indicator, is quite slow from this point of view but rather a confirmation of a long term momentum.

On hourly chart we still have a bullish EMAs crossing. Priced slipped today bellow EMA25 but it finished above this level by the end of the day. Five days SMA is still rising and is now around 1155. This is a pretty important level since a move bellow 5 days SMA most of the time indicate a trend reversal at least on intermediate time frame. This level is usually crossed at the same time when the EMAs give a "sell" signal.

Now some news to cheer up the bears, actually not news but a potentially bearish pattern. It looks like a rising wedge is forming on daily chart. This is something one should have in mind. Last time we saw this pattern it turned out pretty ugly with SPX dropping from 1130 to 1040. However, this time around the technical conditions are not the same. Market is more bullish now, there is virtually no resistance from here to 1220 on any time frame and much more important weekly DMI turned positive. On August, when market climbed to 1130 weekly DMI was deep in the red, right now is positive for the first time since April.


Tuesday, October 12, 2010

Up, Up, Up

Bulls show no sign that they want to take a break here and it's not surprising keeping in mind that Feds are on their side. Again! As usual on days like these I am hearing bears talking about market plunging bellow 2009 lows! I have no idea why people are inclined to make such bold prediction. What's the purpose? The same goes for perma-bulls who are dreaming about SPX at 1,500. The best thing one can do is to think about next step, either up or down not something with such a low probability such as SPX bellow 667 or above 1,500 in the near future.

Anyway, we still have a bullish EMAs crossing on 60 minutes charts and I don't intend to sell unless I am seeing a bearish crossing. Luckily, EMAs did not cross last week. That was one of those situations when I could get "whip-saw" a little bit, a "sell" signal followed by a "buy" signal next day but as I said I was lucky it didn't happen.

On daily chart I am seeing a little bit of resistance around 1172. DMI is still positive but is losing some ground. As expected both SMA50 and SMA200 is rising and we should expect them to cross each other (the so called "golden cross"). It has already happened on DOW but I don't put too much faith on this index since it contains only 30 companies (granted the best ones) but they keep changing these companies so in my opinion this index is artificially kept at a higher level than it should be. Nasdaq contains too many tech companies so I think S&P500 is the most representative index.

Weekly chart doesn't bring too much information. DMI is very close to turn positive but is not there yet.

Keep an eye on EMAs crossing on 60 minutes chart and also on 5 days SMA that is now around 1150. Don't try to anticipate the market, better act as soon as it changes direction. You are getting to miss the bottom or the top but you will always be on the right side.

All the best!


Friday, October 8, 2010

Another bullish week

No mercy for bears this week! After a negative start of the week that almost gave a "sell" signal bulls pushed SPX almost 30 points to end the week around 20 points more than the previous Friday. Once again EMAs crossing on 60 minutes chart saved me a lot of pain.

Daily DMI continues to be bullish but also the weekly DMI is getting very close to turn green. It has already turned green for DOW and Russell2000 but is still lagging for Nasdaq and SPX. Speaking of weekly chart I notice that we climbed above a major downtrend line formed by the 2007 high and April's high. This is bullish on long term time frame.

SMA200 started rising again and is now around 1119. The uptrend line climbed to 1070 on daily chart and to 1100 on weekly chart. There is a little bit of resistance around 1172 but we had little volume there since the level has been touched for only one day.

Have a nice weekend!


Tuesday, October 5, 2010

No "sell" signal

No EMAs crossing so no "sell" signal today, instead we have a higher high on daily chart.

There is little resistance ahead, just a little bit around 1172 but not too great volume at that level. On weekly chart there is no resistance, just a big gap from here to 1220.

Today action is mainly due to Japan's surprising rate cut. Let's see what else could make bulls adventurous at this point. I would still be cautious here since market is overbought on short term.

Monday, October 4, 2010

Close to a "sell" signal

With today's drop SPX moved very close to a "sell" signal according to EMA25 crossing EMA50  on hourly chart. The price moved bellow both EMA25 and EMA50 but it also got very close to the rising 5 days moving average (SMA120 on hourly chart). Even a small drop tomorrow will onset the sell signal. Even if market is going to move down from here I hope you enjoyed the nice ride from 1040 if you were lucky to buy exactly at the bottom or from 1080 when the EMAs did cross.

The negative divergence on MACD histogram I told you about more than week warned us about a potential reversal. Despite the fact SPX moved up from 1124 on September 23rd to 11156 MACD continued to move down after touching its peak on September 15. Right now MACD is also very close to give a "sell" signal.

On longer time frames market still looks bullish. We do have two solid higher lows (1020 and 1040) and two nice higher highs (1127 and 1148). The uptrend line is around 1065 on daily chart or around 1090 on weekly chart. Market may tank from here but if the uptrend line on daily chart is going to resist the pressure the ball is still going to be on bull's side. There are many other levels of potential support SMA200 (1117), June's high (1120), August high (1127), upper edge of the former trading range (1105) but my favorite level of support remains the uptrend line, around 1065 today and most likely 1070 by the time SPX is going to touch it. Also remember 1070 is the level where most of the volume occurred in the last 4-5 month, one more reason this may prove to be a good support level.

Meantime, if EMAs are going to cross tomorrow I am going to sell and go short.

All the best!


P.S. Thanks again to those of you who clicked on the ads

Saturday, October 2, 2010

A flat week

After four weeks on the upside SPX ended up two points down compared to the previous Friday and as expected nothing changed at the technical level. We continue to have a bullish EMAs crossing on 60 minutes chart with SPX above both EMA25 and EMA50 and rising five days SMA around 1132.

On weekly chart DMI advanced a little bit despite this flat week but remains on the negative territory. The uptrend line climbed to 1090 but as I mentioned before the slope is too steep so you better keep an eye on the uptrend line on the daily chart which is now around 1063. Of course bulls don't even want to consider visiting 1060 again but I trust that uptrend line more than that on weekly chart. If bulls manage to keep the market under their control for another couple of weeks even if market is merely advancing a few points we may revisit the uptrend line when it does climb around 1090-1100. This is only a speculation, of course.

Meantime gold continues its rally started at the end of July showing a lot of nervousness present in the market at this point. With Feds determined to do whatever it takes to prop the market dollar is sinking to levels close to the low seen in December last year and it may go further down.