Mar 14, 2010

Weekly review / Седмичен преглед

The long-term picture remains bullish.
Weekly chart - the prices are above EMA50, MACD is above the zero line, the slope of the Histogram turned upwards.
Daily chart - the prices are above EMA50 and MACD is above the zero line (see bellow).

But the short term picture looks overbought. It is not a good idea to chase the move at this stage, wait for a pullback to jump on.
I expect pullback in the next 1-2 weeks and the indexes to carve out some kind of handle befor they continue higher.
Bellow is shown the bullish view. We should see oscillator reset and the indexes should retrace more time then price without breaking the new trend line. The pullback ideally should end at the new trend line around 5750(support level) for DAX and 10300-10400 for DJ.

For now the trend is bullish and we should follow the trend, but there is always BUT.
We do not know if we will see just a pullback or something else. I have shown the bullish and the bearish view. Let's wait and see what the market want to do - go higher or make some kind of a top.
If the scenario above does not play out, there is a bearish view too:). We could see a Head&Shoulders top (DAX) or double top (DJ).
DJ Transportation, Russell 2000 and Nasdaq are making new highs, but Dow Jones Industrial is bellow its January high. You can see this as a bearish sign too, but its not confirmed.

The short term indicators and the oscillators are sending signals that the market is overbought.
The last three days we have a high volume. I think this is a climax volume. We have distribution bellow the surface and the short-term move is coming to an end. I do not think the big boys are jumping on the move after four weeks rally. I think they are taking profits at resistance levels.
VIX does not make new lows as SP500 makes new highs. McClellan Oscillator is falling the last two days.
Candles - black candles have appeared on the ETFs QQQQ,SPY and grave stone doji on DAX. They are still not confirmed but candles are sending us warning signal. Histogram - we have a divergence on DJ. Slope turned downwards and we have mMm pattern on the DAX and DJ. The histogram is sending warning signal too. On hourly chart we have a MACD divergence.
But be patient - all we have is warning signals. On the hourly charts, the prices are still above EMA50 and MACD above zero.
I expect DJ to break the rising wedge on the hourly chart and carve out a channel next week. After the pullback we should see higher low and Cup with Handle playing out.

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