Dec 18, 2010

Weekly review / Седмичен преглед

Hello traders!!!
I expected a little bit higher prices this week and that is what happened. DJIA is 81 points higher for the week. Next week I expect the same action. Look at the first chart - it looks like we have a triangle or a pennant and the price bounces from support and EMA50. MACD is turning UP again at the zero line. Seasonally are the last two week positive too.
But be careful the indicators and the market breadth indicators are bearish. Pay close attention on Monday if DJ open higher or lower than the close on Friday.

The big picture has not changed. I expect a correction but with such extremes at the market breadth indicators and the sentiment I think that now there is high probability for a deeper correction. The two scenarios are shown bellow. The last two charts show how this scenarios look like on the daily chart.
- If we have a deep correction that means, that the market is no so strong as i thought and the next move UP can end up at the first resistance around 11750.
- If the market work out the overbought conditions and stays above ~11000(the November lows) this will be a signs of a strength and the move could reach the next resistance ~12750.
With the divergence on daily chart MACD and RSI,the market breadth indicators and the extreme bullish sentiment, I am leaning more toward the first scenario - a deeper correction, but lets wait and see what the market will tell us.

More shallow correction

Deeper correction

SP500 percent of stocks above MA50
The first divergence warned us about the november correction. Now we have much bigger divergence. That is way I expect a bigger and longer correction.

Dec 11, 2010

Weekly review / Седмичен преглед

Hello traders!!
This week nothing happened... SPX500 made new highs, but DJIA not. I think the alternate scenario, which I have shown last week, will play out.
We are at an intermediate top, and we will see a correction at least 3 to 4 weeks.
Why? Look at the last two charts
- TRIN shows that the market is extremely overbought
- Put to Call Ratio shows that the traders are extremely bullish.
- Bullish percentage at 83%
- McClellan Summation index moving down
That are not indicators pointing to imminent rally. All this indicators are telling us that the risk is very high now. Every trader with common sense should not trade high risk, is not it?

Look at the hourly chart MACD is at the zero line but turning up. A little bit higher prices for a day or two are possible, but that is all.
Even if we see a rise next week, we will have MACD/RSI divergence on the daily chart.(the second chart)
So I think in the next weeks we will see something like that shown on the charts bellow:

Dec 4, 2010

Weekly review / Седмичен преглед

Hello traders!
This week we saw strong rally and as the bigger picture is bullish we should assume that the next leg UP has began.
The first two charts show how it could look short term and long term.

Yes, we should follow the market and see what happens. But be cautious, something feels wrong. The correction does not look right. It is too short in time. Some of the indicators are still in overbought state...
I have the suspicion that something like the shown on the two charts bellow could happen.
If we make new high but not convincing with long bar and high volume, expect the scenario bellow.

Nov 28, 2010

Weekly review / Седмичен преглед

Hello traders!!!!
The long picture has not changed. We have sideways consolidation which will be followed by surge higher. It is difficult to say when. My guess is beginning January.
We are still in a correction. In the last eight sessions is DJ trapped between MA20 and EMA50. Which way will it break UP or DOWN? I have no idea, its toss of a coin...
At this point there is to many scenarios how this correction could play out. It does not make any sense to guess what will happen in the short term.
I expect at least another two weeks correction(the white vertical line 50% time retracement) and ~10900 or 38,2% price retracement.

Oct 31, 2010

Weekly review / Седмичен преглед

Nothing new....
Last week we saw new high but short living as I have expected followed by UP and Down and UP and DOWN... nothing interesting.
This week I expect something similar - thrust up followed by the long overdue correction.

Oct 24, 2010

Weekly review / Седмичен преглед

The wedge was broken and thought we will see back test and the correction... I was wrong.
DJ made new highs and the wedge was broken only a new channel to be formed. I was smart enough and I was not caught on the short side when I saw this two hammers at support:)
The long term picture has not changed. I think next week DJ will stay at this levels. We will see up and down moves and a new high.
The market breadth indicators look awful. So I expect a correction sooner than later, and I would not bet on the long side except day trading.

Oct 19, 2010

Short term update

There we have it:)
Based on the last two candles - Hammers at support, I expect a bounce before we start the correction.

Oct 17, 2010

Hello traders!!!
I was expecting correction but the market wanted to do something different:)
Dow Jones has risen for the last two weeks but the technical picture has not changed a lot, just the divergences are better defined.
Look at the first three charts - I expect to see higher prices on Monday and triple divergence on the Histogram on hourly chart. We have already divergences on the daily chart. NYSE McClellan Oscillator shows multiple divergence too, fewer stocks are participating in the rally.
When I see this charts the long side does not look so attractive, may be day trade Monday but that is all. I expect a correction with a target 38,2% around 10700. If we are in a bullish leg we will find support at this level and continue higher.
The long term picture - the last two charts are looking still bullish no bear signs. So we should stay bullish and expect just a correction, until the market shows us the opposite.
But stay cautious, if we see violent sell off than something else is going on.

Sep 26, 2010

Hello traders!
There is so many scenarios now... it is crazy. If you search in Internet will some guys saying this is a new bull market the bears the bear market has resumed. And you can show evidence for both cases. I think in the next several weeks we will see the market choosing a direction and resolving of the sideway move UP or DOWN.
My goal is to keep it simple and that means stay with the market and follow the signals. Last several weeks I stayed with the market and I was rewarded:) So I will not try to predict just follow the signals. That is the philosophy of this blog.
So the big picture stays bullish until we see something else. The first chart is the weekly chart - MACD is above zero, the Histogram is still rising so intermediate term looks bullish.

But not the short term. We saw another sharp rise on Friday but the end result is better defining the divergences on the hourly chart (see third chart MACD multiple points of divergence). The same story is showing the TRIN and the McClellan Oscillator.

I think this UP move is near to its end(for the short term) and ready for a bigger correction 2 to 3 weeks, which will work out the overbought state and reset the oscillators. It can start on Monday or we can see another rise to ~10950 where a=c. The daily chart (the second chart) and the hourly chart are showing how this pullback could look like - the prices should find support near to the MA50 on the daily chart and we will see correction between 50% and 61,8% shown on the hourly chart. The correction should be followed from a sharp rally and MA50 should cross above MA200.

Elliot waves are not my primary tool, with 5 I mean to expect 5 waves UP.

Expect 50% to 61,8% correction.

We must keep an eye on the bearish counts. The bearish scenario is still not dead. It is shown on the charts bellow.
With the rise this week my A-B-C scenario is dead. If the bears take control, we will see the bear market resuming. How do we know that is happening? The correction which I expect in October will be deep and break the trend line(the first chart and the chart bellow the line connecting the last two lows) from the March 2009 bottom.

Sep 19, 2010

Weekly review / Седмичен преглед

Hello traders,
two weeks ago I have sad, that the momentum on the weekly chart is UP and we should follow the market. Two weeks later we have higher prices but this move looks tired.
The big picture has not changed - the histogram on the weekly chart is rising, now its above the zero line(we have MACD cross) and EMA5 crossed above MA20. So we have still bullish signals.
But as I have sad this move is looking tired we are hitting resistance at MA200(SPX500 is at his old highs) so we should be cautious now. Possible scenarios are shown bellow.

Short term picture(15min chart):
I think next week we will see a correction. It could start on Monday or we can see one last thrust higher before it starts.

Intermediate term picture:
Because the weekly chart is bullish for now we stay with the market and expect that the correction will be short lived 2-3 week retracing more time then price and reseting the daily oscillators before we break above resistance and MA200.
BUT we must be cautious at this point. If we break the lower boundary of the triangle all bets are off. This lower boundary represents the trend line from the march low too(see on the first chart). It connects the last two lows. The bearish scenario will play out, so I represent the alternate scenario - the beginning of a wave C decline and the H&S pattern playing out.

Long term picture:
The bullish picture is shown bellow. If there is no surprise we will reset the daily oscillators and see higher prices into the year end.

If we break the lower boundary of the triangle expect wave C to around ~9100. If the things get ugly even ~8000.

Sep 4, 2010

Weekly review / Седмичен преглед

Hello traders,
this week we had very strong rally and short term momentum has turned UP.
Look at the weekly chart bellow - prices has bounced from the trend line, we have two candles with long shadows(buyers are stepping in), the histogram have higher tower and PpP pattern, Slow stochastic is above 50.
Look at the daily chart (chart three) - we have MACD cross and it has a nice trend line, the histogram is above the zero line.

So with momentum turning UP we must follow the market and be bullish at least for the short term. The bullish scenario is shown on chart two. But the bulls must prove that they are strong. The market has a lot of resistance above this levels, which must be broken. I am skeptical, and I think we will have a correction in September and October. The next 1-2 weeks will show us who is right the bulls or the bears.

I think the scenario shown bellow will play out - an A-B-C correction. But when the market shows bullish signs we must follow the market period. So I will follow the bullish charts shown above until proven wrong. If the prices reverse from the trend line(chart three) and make lower low then I will get bearish again.

Aug 11, 2010

Short term update

Look at this chart, it tells everything. The resistance level has hold, followed by hard sell off.
I love technical analysis:) All you have to do is to be patient.

Aug 8, 2010

Weekly review / Седмичен преглед

Hello traders!!!
this week action has not changed a lot. I will repeat my self from the last week - DJ is following the plan:)
The prices are moving higher in the rising wedge on lower volume. We are nearing the end of this move, but its difficult to say if the wedge will be broken this week or next week. DJ has room for another rise of 100-150 points. We can even overshoot the upper boundary of the wedge and the cluster of resistance, but in the end the next major move will be DOWN...