Up, Up, Up

Bulls show no sign that they want to take a break here and it's not surprising keeping in mind that Feds are on their side. Again! As usual on days like these I am hearing bears talking about market plunging bellow 2009 lows! I have no idea why people are inclined to make such bold prediction. What's the purpose? The same goes for perma-bulls who are dreaming about SPX at 1,500. The best thing one can do is to think about next step, either up or down not something with such a low probability such as SPX bellow 667 or above 1,500 in the near future.

Anyway, we still have a bullish EMAs crossing on 60 minutes charts and I don't intend to sell unless I am seeing a bearish crossing. Luckily, EMAs did not cross last week. That was one of those situations when I could get "whip-saw" a little bit, a "sell" signal followed by a "buy" signal next day but as I said I was lucky it didn't happen.

On daily chart I am seeing a little bit of resistance around 1172. DMI is still positive but is losing some ground. As expected both SMA50 and SMA200 is rising and we should expect them to cross each other (the so called "golden cross"). It has already happened on DOW but I don't put too much faith on this index since it contains only 30 companies (granted the best ones) but they keep changing these companies so in my opinion this index is artificially kept at a higher level than it should be. Nasdaq contains too many tech companies so I think S&P500 is the most representative index.

Weekly chart doesn't bring too much information. DMI is very close to turn positive but is not there yet.

Keep an eye on EMAs crossing on 60 minutes chart and also on 5 days SMA that is now around 1150. Don't try to anticipate the market, better act as soon as it changes direction. You are getting to miss the bottom or the top but you will always be on the right side.

All the best!

babaro

Another bullish week

No mercy for bears this week! After a negative start of the week that almost gave a "sell" signal bulls pushed SPX almost 30 points to end the week around 20 points more than the previous Friday. Once again EMAs crossing on 60 minutes chart saved me a lot of pain.

Daily DMI continues to be bullish but also the weekly DMI is getting very close to turn green. It has already turned green for DOW and Russell2000 but is still lagging for Nasdaq and SPX. Speaking of weekly chart I notice that we climbed above a major downtrend line formed by the 2007 high and April's high. This is bullish on long term time frame.

SMA200 started rising again and is now around 1119. The uptrend line climbed to 1070 on daily chart and to 1100 on weekly chart. There is a little bit of resistance around 1172 but we had little volume there since the level has been touched for only one day.

Have a nice weekend!


babaro

No "sell" signal

No EMAs crossing so no "sell" signal today, instead we have a higher high on daily chart.

There is little resistance ahead, just a little bit around 1172 but not too great volume at that level. On weekly chart there is no resistance, just a big gap from here to 1220.

Today action is mainly due to Japan's surprising rate cut. Let's see what else could make bulls adventurous at this point. I would still be cautious here since market is overbought on short term.

Close to a "sell" signal

With today's drop SPX moved very close to a "sell" signal according to EMA25 crossing EMA50  on hourly chart. The price moved bellow both EMA25 and EMA50 but it also got very close to the rising 5 days moving average (SMA120 on hourly chart). Even a small drop tomorrow will onset the sell signal. Even if market is going to move down from here I hope you enjoyed the nice ride from 1040 if you were lucky to buy exactly at the bottom or from 1080 when the EMAs did cross.

The negative divergence on MACD histogram I told you about more than week warned us about a potential reversal. Despite the fact SPX moved up from 1124 on September 23rd to 11156 MACD continued to move down after touching its peak on September 15. Right now MACD is also very close to give a "sell" signal.

On longer time frames market still looks bullish. We do have two solid higher lows (1020 and 1040) and two nice higher highs (1127 and 1148). The uptrend line is around 1065 on daily chart or around 1090 on weekly chart. Market may tank from here but if the uptrend line on daily chart is going to resist the pressure the ball is still going to be on bull's side. There are many other levels of potential support SMA200 (1117), June's high (1120), August high (1127), upper edge of the former trading range (1105) but my favorite level of support remains the uptrend line, around 1065 today and most likely 1070 by the time SPX is going to touch it. Also remember 1070 is the level where most of the volume occurred in the last 4-5 month, one more reason this may prove to be a good support level.

Meantime, if EMAs are going to cross tomorrow I am going to sell and go short.

All the best!

babaro

P.S. Thanks again to those of you who clicked on the ads

A flat week

After four weeks on the upside SPX ended up two points down compared to the previous Friday and as expected nothing changed at the technical level. We continue to have a bullish EMAs crossing on 60 minutes chart with SPX above both EMA25 and EMA50 and rising five days SMA around 1132.

On weekly chart DMI advanced a little bit despite this flat week but remains on the negative territory. The uptrend line climbed to 1090 but as I mentioned before the slope is too steep so you better keep an eye on the uptrend line on the daily chart which is now around 1063. Of course bulls don't even want to consider visiting 1060 again but I trust that uptrend line more than that on weekly chart. If bulls manage to keep the market under their control for another couple of weeks even if market is merely advancing a few points we may revisit the uptrend line when it does climb around 1090-1100. This is only a speculation, of course.

Meantime gold continues its rally started at the end of July showing a lot of nervousness present in the market at this point. With Feds determined to do whatever it takes to prop the market dollar is sinking to levels close to the low seen in December last year and it may go further down.