Friday, July 9, 2010

Forth up day

Still more room to the upside or another good entry for your short ETFs? Four up days in a row and 60 points up in a week should make bears very nervous but the ball may still be in their court. I do expect a pull back as soon as the downtrend line is going to be hit (1080 today but on Monday it will be lower. These are visual estimates so they may be 2-3 points off in any direction). For bulls, a sideways consolidation is going to work the best. A small pullback from 1080 but no more than 30-35 points is going to allow them to climb above the downtrend line without too much effort. After that they may try to climb above 1105 and SMA200 one more time. Very bullish is going to be if the daily DMI is going to turn green for the first time since April 26. We are not there yet but keep an eye on this momentum indicator. The third scenario is SPX going down from the downtrend line with no support in the 1045-1050 area. This is going to spell more trouble for bulls since a drop bellow the previous low, around 1022, is going to be possible.

The uptrend this week was very nice. EMA50 did cross EMA100 today giving me another buy signal (although DMI on 60 minutes charts seems to be a better timing indicator lately). The price even climbed above the 5 days SMA. The trouble is that the volume did not confirm the movement! The volume actually went down from Tuesday to Friday. "Only price pays" so don't dismiss price action because the volume is low but is always better to have confirmation from this indicator. From bears' perspective this is exactly what they are expecting, drops on increasing volume and rebounds on decreasing volume. Of course I am talking about bears that are trading on longer time frames. Those trading on short time frames should be out of the market right now. Once again, pick your time frame and stick with it!


P.S. 1) I've got many clicks on the adds displayed on this page this week which make me think that the majority of the people visiting this page are bulls since I barely get any click on the down days :)

    2) Here is the solution for our troubled economy:

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