Friday, March 16, 2012

Everything looks bullish

After a 20 points whip-saw once again SPX turned bullish and managed to establish a clear higher high 30 points above the April's 2011 high. All 3 major indexes cleared important psychological levels, Dow cleared 13,000, Nasdaq 3,000 and SPX 1,400.

Daily DMI is a very high level but weekly DMI shows that there is room for more gains.

Also the intermediate time frame looks interesting with SPX way above rising SMA 120 but also above both EMAs. As you notice from my previous posts SPX is more or less touching one of the EMAs and as soon as it goes above EMA 25 a small correction towards EMA 50 happens.

The only exception is when the trend changes from bearish to bullish. Judging from the extreme bullishness we are seeing right now it may be very well possible that a new leg up has started. I've seen that only one time in the last 4 years, in November 2010 when we also had a pretty bad whip-saw. So don't be surprised if you are going to see market moving further up before an eventual correction.

The only thing that makes me suspicious of this new leg rally is the extreme value of VIX that has broken the previous low and is now at its lowest value since 2009. Historically, I've seen even lower values such as those around October 2007.

Bonds seem to be in trouble recently. If you look at TBT, the short 20 years treasure bond ETF it looks like is bottoming at the moment.

Take care!


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