Monday, January 30, 2012

Some bearish action

Another small pullback today but long term remains bullish. "Golden cross" already happened on weekly chart but not on daily chart. On daily, the two SMAs are touching and they are probably going to cross each other by the end of the week. The next support level on this time frame is around 1,288.

The intermediate time frame was challenged today for the first time since December 20. SPX moved bellow EMA 50 on hourly chart, touched SMA 120 (1,300) then immediately moved up 12 points to end just a little bit above EMA 50. The intermediate time frame switched to neutral. Another move down tomorrow and we are going to see the EMAs crossing each other. On intermediate time frame the best support is around SMa 120 (1,300).

Gold and silver also moved down today. Silver still looks weak to me on long term but gold has made huge progress lately as evidenced by the weekly DMI that once again is positive. Also notice that gold has moved above the main downtrend line.

Tomorrow is an important day technically speaking. If SPX moves bellow SMA 120 and EMAs give a bearish crossing we may see an end of the current intermediate time frame bullish momentum. However, long term bulls still look good.  Let's see what is going to happen.


Thursday, January 26, 2012

Small pullback

SPX suffered a small pullback today but the long term view remains bullish. Yesterday decision to keep the rate interest low until late 2014 pushed the market and commodities up. Gold also moved up today despite general market losing a few points.

On short and intermediate time frames market remains bullish. Looking at the hourly chart you can see that SPX barely touched EMA 25 today but SMA 120 that, when crossed, usually function as an indicator of a trend change stays comfortable around 1298.

Daily chart also looks bullish. Notice the positive DMI but also that the "golden cross" is imminent at this point. It is probably going to happen next week.

Weekly chart shows an EMAs bullish crossing. This pair of EMA worked really well in the last 20 years but gave us a 100 points whip-saw lately. The fact is that market was in really trouble just a few months ago (worse than last year) and without intervention we were going to see a full scale bear market.

On the upside watch the next resistance level. It is actually a whole resistance area between 1,340 and 1,370. As I mentioned before it is very important to see a new high, above 1,370 before a significant pullback. That will reassure bulls that the bullish momentum remains intact.

All the best!


Wednesday, January 18, 2012

Long term has turned bullish

SPX added another 14 points today confirming the break out of the "symmetrical triangle" not so long time ago. After months and months of indecision the market has turned positive once again. I base this conclusion on two indicators that have turned bullish, weekly DMI and EMA20/EMA40 on weekly chart that just turned bullish.

As I mentioned in the previous post I started watching the EMA25/EMA50 pair on hourly chart once again since it seems that we are not going to have as much volatility as before. EMAs are bullish but also notice that SPX is above rising SMA 120.  A little drop is possible in the next few days since I see SPX 10 points above rising EMA 25 but remember it can get as much as 20-30 points before a downside day.

As a resistance level I don't see anything significant from here to 1,350-1,370. It is important to see market above 1,370 before an eventual correction to confirm the bullish action started a few weeks ago. A serious drop before touching 1,370 is going to cancel the current bullish momentum. However, a correction after SPX moves above 1,370 is not going to be as significant.    

All the best!


Tuesday, January 10, 2012

Good start

Market started pretty well this year, with SPX moving above the downtrend line and making a fresh higher high today. Even better the weekly DMI is almost positive for the first time since July. EMA 20 is also almost crossing EMA 40 from bellow on weekly chart. In the end the whole drop seemed to be only a big scare.

Daily DMI continues to stay positive but long term players still need to wait for the "golden cross" to happen  (SMA50 crossing SMA200)

From now on I am expecting less volatility, maybe we are going to have a nice leg up so we can all make money in a easy way (if there is such thing as easy way in stock market). Keeping this in mind I am coming back to the hourly chart, that didn't give good entries and exits last year but I have great expectations this year.

I am sorry I couldn't write a message at the right time to suggest a good entry, either at 1250 when EMAs crossed on hourly chart or most recently when SPX moved outside of the "symmetrical triangle". However, if weekly DMI turns positive as I am expecting, then a multi-months rally has probably started and will be enough time for everybody to make money.

On Market Watch I even heard speculations about QE3. If this happens soon then the stock market is going to fly on the upside together with gold and (maybe) silver. At the moment gold is also in a "symmetrical triangle" formation. Any break outside this formation most likely is going to trigger a big move.