Saturday, June 14, 2008

Weekly trends - 6/13/08

Last week i showed a chart of the NYSE Vol MCO with a potential divergent setup. Now the divergences were blown away and we proceeded towards my longstanding target of 1350 for this correction. We'll the price undershot even more into SPX 1331.

What we had last week was a potential divergent setup. But what we have end of this week is a confirmed diveregent setup on both the NYSE Vol and NYSE breadth MCOs. So i will go out on the limb and call the 6/12 bottom as an important bottom for many months to come. We should begin a multimonth advance here which should take us into the SPX 1500 +/- 20 points area.

Again divergent bottoms can be simple or complex. What we saw in March 17 was a complex bottom. Those kind of bottoms are violent, emotional and glaring. While anyone can spot them, it's difficult to trade them as they tend to occur at major IT bottoms which tend to be hypervolatile affairs. We see retests on the Osc itself in the complex bottoming situations.

Simple bottoms are simple. Hell, how can i describe them ?. 1/23, 4/15 and 6/12 were all simple bottoms, which i have marked on my chart. They don't display the complex retests on the Osc. They tend to occur in the middle of IT trends, usually secondary bottoms. They are more subtle and tend to fool the most. A good example was 4/15 when most were bearish and got fooled. Same siutation here again.

Again, there are tons of fundamental reasons to be bearish here. But the technicals are saying a bottom here. And i will go with the technicals.

Gold, Silver and Euro - They all remain in weekly uptrends, but in a corrective configuration, which is very diffuclt to trade here. So nothing compelling there for me.