Sunday, September 2, 2012

Hesitation at the top

Hi guys, long time not seeing you (I've been in a long vacation), I hope you all did very well on stock market and made a lot of money!

SPX moved up 50-60 points since my last post, not bad, but moved more or less sideways since August 6. With Feds saying that they are not against another round of QE bulls may have the best excuse to push the market above the key 1,420 level. However, this is not a done deal, and SPX barely moved 7 points on Friday after the news. 

Daily chart shows SPX around the same top, 1,420, seen at the beginning of April and the three month uptrend line stands around 1,380. DMI is just barely on green so market looks neutral on this chart.

Weekly chart looks more bullish than the daily chart with weekly DMI now on the green side (yet is moving down right now) after staying in red for a few good months in a row and SPX making a slightly higher high. Also bullish long term is that both SMA 50 and SMA 200 are rising again.

Hourly chart looked very choppy in the last three months not very useful from timing point of view but 2 hours chart looked pretty good with only one minor whip-saw. The two hours chart shows SPX above rising SMa 120 which is bullish but please notice that the two EMAs are very close to each other, almost touching which is neutral on intermediate time frame.

Gold and silver on the other hand reacted strongly at the possibility of a new QE and advanced no less than 2.5% on Friday. Both metals are at their strong momentum since their top at 1,900 for gold and 50 for silver. I say this because gold moved above the major downtrend line for the first time in a year. Also the weekly DMI has turned positive. The "death cross" is still present but GLD managed to move above both SMA 50 (rising) and SMA 200 (flat).

A similar scenario for silver that managed to break outside a very long downtrend channel and has the daily and weekly DMI on the positive side. 

All the best!


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