Monday, December 31, 2012

Saved by the bell

The fiscal cliff drama continued until the last minute today. As expected market was very nervous this week. Yesterday was a particularly bad day for bulls with EMAs giving a "sell" signal and making lower lows on both daily and weekly charts. 

The reason I din't wrote yesterday is because I expected a surprise today and indeed Democrats and Republicans finally made a deal. As far as I understand the battle is not over despite today's last minute agreement, and if the fiscal limit is not raised by late February or early March, the U.S. would default on its debt!!! 

Both daily and weekly charts showed lower lows yesterday but today's action pretty much cancelled yesterday bearishness. SPX slipped bellow SMA 50 yesterday but recovered the lost ground today. 

I wish you a great trading year!

Happy New Year!


Saturday, December 22, 2012

Positive weekly DMI

SPX is still affected by the "cliff" drama but managed to gain a few good points this week. What is noticeable on weekly chart is that the DMI has turned positive. This is a pretty good indication that the long term has turned, once again, bullish. Occasionally, weekly DMI can give a "whip-saw" but let's hope is not going to be the case here.

Daily chart shows pretty convincing higher highs and higher lows. Also notice that SPX is now above a flat SMA 50 and also above rising SMA 200. A "death cross" seems unlikely at this point. 

The two hour chart also looks bullish despite Friday's move down. We have a bullish EMAs crossing and SMA 120 started rising. The most "damage" bears managed to do is pushing SPX slightly bellow EMA 50 but SMA 120 was not challenged since SPX moved above it (1,410). 

Precious metals went down this week and the DMI has turned negative, both daily and weekly. Gold seems to be stuck in the 152-172 range for over one year. A break on either side is going to be significant but for now I expect the lower edge (152) to hold once again.


Sunday, December 16, 2012

No clear direction

Market turned bullish (intermediate time frame) after climbing above 1,410 but the fiscal cliff debate seems to hold SPX back and doesn't allow it to establish a healthy uptrend. SPX is very close to revisiting the break out point, 1,410. Bulls need to defend this level in order to conserve the slim advantage they have at the moment. The good news is that SPX is making higher highs and higher lows on 2 hour chart. The bad news is that SMA 120 is flat instead of rising.

Weekly DMI is neutral after being negative for a few good weeks. Most of the time, in a bull market, once the DMI+ starts rising nothing can stop it. 

The last time weekly DMI+ started to move up then snapped back into the negative territory was in May 2008, a few moths before the big plunge.

Daily chart also shows higher highs and higher lows.

In conclusion, market is bullish on intermediate time frame but the trend doesn't look too healthy at the moment, it definitely needs to move up this week, to defend the 1,410 level. On long term market looks neutral to bullish judging by two indicators, SMA 200 and weekly DMI. 

I talked last time about a potential "head and shoulder" on AAPL. Well, AAPL moved bellow the "neck" and now the HS enthusiasts expect that AAPL is going to lose another 170 points, towards the 360 level. This seems very harsh but it may happen. However, around 470 AAPL has a very good support, its 4 years uptrend line. Let's see if it's going to hold.

Have a nice trading week!


Wednesday, December 5, 2012

Very bad day for Apple

AAPL went down 6.4% today in one of its worst day in years. Technically AAPL doesn't look very good. It is bellow a flat SMA 200, weekly DMI continues to be negative and today I noticed what I was afraid a few weeks ago, the "death cross", SMA 50 crossing SMA 200 from above. Last "death cross" was in November 2008. AAPL gave a "golden cross" three and a half years ago at ... $125 and stayed bullish until today.

What I also notice from the weekly chart is a possible "head and shoulder pattern. If AAPL goes bellow 528 we will probably see the stock plunging to ... 350. At least that what HS pattern predicts. It may not go so low since there is a very strong support around 460, the 4 years uptrend line.

The reason I keep mentioning AAPL is not because I own it or short it but because the market cap of this stock is so big that it could potentially move the whole market down! 

"In other news", SPX remains slightly bullish on intermediate time frame but I worry that daily DMI refuses to go positive despite the 60 points gain from the temporary bottom at 1,348. Also EMAs look flat at the moment and SPX is barely above still declining SMA 120. On a healthy uptrend SPX was supposed to be 30-40 points above SMA 120 immediately after EMAs crossing.