Jun 9, 2012

Weekly review / Седмичен преглед

My hard disk went broken..... very nice:) I will need some time to repair my computer and recover the data. Bellow are the charts the comments later!!!!

Short term view - short term bottom, next week more on the upside
Intermediate term view - intermediate term bottom reached higher prices in the next months.

Not surprised of the action this week last Friday was clear exhaustion bar. The market already closed above it which means strength. I expect next to be positive too. The move on the upside is not over.

My thoughts - it looks like scenario 1 which i mentioned last week is playing out and we saw the bottom. The histogram made divergence, the McClellan Oscillator made divergence, we have strong rally and I do not see reversal next week. But my intuition tells me that something is missing. The cycles are missing one small 20 day cycle, Tom Demark sequential is missing lower low, the market breadth indicators compared with the other intermediate term bottoms in 2010 and 2011 are missing the retest of the low with divergence. A lot of news this month and I expect a lot of volatility.
So did we see THE low or not? I have no Idea, but we should trade what we see and not what we feel, that is why my blog's name is "practical":)
I say we saw the bottom, but we will have another buying opportunity - a deep retracement(the second chart). BUT bear in mind that lower low is possible(the third chart cycles). Lower low should not scary you.If we see it will be short living and a great buying opportunity.

Short term - higher prices ahead. I am not sure exactly how. See the open on Monday. If SP500 break above the last top ~1329 next target is the resistance and 50% Fibo ~1340(yellow scenario). If we see weakness probably a-b-c correction ~1300 and then moving higher(red scenario).
The bigger picture - we saw divergence on the MACD Histogram and strong rally. Next I expect move to resistance and 61,8% Fibo ~1360 and deep retracement before moving to the last high ~1420.

Some indicators like McClellan Oscillator and McClellan Summation Index issued buy signal. But I feel like something is missing. If you see the other intermediate term corrections in mid 2010 and 2011 we have a retest of the lows and second through on the market breadth indicators. Now its missing - my interpretation up leg with deep retracement or lower low before the bottom.
McClellan Oscillator - divergence and now above 0.
McClellan Summation Index - issued buy signal.
Weekly Stochastic of the Summation Index - turned up, we have buy signal.
Bullish Percentage - turned up but still no buy signal.
Percent of Stocks above MA50 - turned up and above 25.
Fear Indicator VXO - no useful info - in no mans land ~20.
Put to Call Ratio - no useful info - back to more normal values but still very high.

CYCLES (TD - trading days)
On the weekly chart we have cycle 14 weeks long and with the previous one(23 weeks) longer than the average cycle its Ok to mark a bottom.
But on the daily chart one small cycle is missing - one final low around end of June.

Tom Demark SEQUENTIAL AND COUNTDOWN - this technique spots areas of exhaustion.
On the weekly chart we have already 9 bars and buy setup. On the daily chart the move is looking unfinished. We need one more lower low to finish Combo and bar 13 closing bellow bar 8 to finish Countdown. In both cases we need one more lower low.

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