May 12, 2012

Weekly review / Седмичен преглед

Short term view - indexes are bottoming and relief rally is expected
Intermediate term view - we are in an intermediate term correction lasting till the second half June

Next week a relief rally should start. The prices are at support, 23,6% Fibonacci retracement and the histogram is showing divergence.
On the weekly chart the histogram continue moving lower so the momentum is still on the downside and any move higher should be just a pause before the next sell off into the second half of June.
For the short term - I am not sure if we already hit the bottom. We have a triangle which does not look nice for a bottom. Looking at the indicators move on the downside has higher probability. Probably the indexes will break support to mislead most of the traders and reverse.
The size of the triangle is 21 points so break on the downside points to 1332.

Mixed picture and supports the technical charts - short term bottom but intermediate term is still negative.
McClellan Oscillator - shows divergence we are near to a short term bottom
McClellan Summation Index - still weak no sign of a reversal probably bottoming before relief rally
Weekly Stochastic of the Summation Index - buy signal, but I am not buying it:)
Bullish Percentage - says the bigger picture is still negative
Percent of Stocks above MA50 - nearing bottom
Fear Indicator VXO - hit 21.60 as expected
Put to Call Ratio - at extremes we are near to a short term bottom

CYCLES (TD - trading days)
The 55TD(blue) and 28TD(yellow) nominal Hurst cycles have bottomed or will hit bottom next week Monday/Tuesday.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
Currently there is buy Sequential at 7 so two more down days are necessary to finish it. That fits perfect with the hourly chart - fake move on the downside and reversal.

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