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.