Saturday, September 10, 2011

I can see the bear market

Market has technically entered the bear market according to my timing indicators. SPX is bellow SMA 75 on weekly chart for a month by now but EMA 20 has also starting to cross EMA 40. The crossing is not that obvious unless you zoom in but the long term bulls better stay with the fingers on the "sell" button. Remember that SMA 75 funtion as an excellent long term support/resistance level in the last 20 years. It has only one small whipsaw in the '90s. At the same time EMA 20-EMA 40 (EMA 100-EMA200 on daily chart) crossing was absolutely flawless in the last 20 years and even before that. 

Of course the technicals are influenced these days by the Feds who can decide another round of QE any time. However, Ben did not mention anything about QE3 on two occasions in a row. 

On shorter time frame, on daily chart, it looks like the market is undecided and continues trading in the 1120-1220 range. For how long? It remains to be seen, I find almost impossible to predict when market is going to exit a trading range. Maybe other people have clues about these "signs", and I want to hear about them. 

The problem these days is that I cannot make money these days with my EMAs crossing since I am getting whip-saws no matter if I am using hourly or two hours charts. Maybe two hour chart is still OK, since even if I've got a few whip-saws generated by EMAs crossing I didn't get any confirmation from SMA 120 (that was briefly crossed once, indeed) that was descending all the time.

This week was particularly wild with SPX moving up or down 20-35 points every day. Let's see if the support around 1120 is going to hold this time. Bears unsuccessfully tied to bring market bellow this level three times since the beginning of August.

Take care!


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