Sentiment here is appropriate for a major bottom (no i am not talking about a ST bottom). What a contrast ? It was just 8 months ago when the chinese housewives were buying the Shanghai with both their hands and the Indian housewives went nuts, all plunging into the Reliance IPO when BSE was at 21000.
When S&P cracked 1380 back in January, i posted the LT sell on the S&P with a target of 1170+/-20. There were no talks about the implications of the U.S market breakdown. It was all about how the emerging markets were immune from the U.S developments. BSE was at 20,000+ and SSEC was somewhere around 5500 then. Now that the BSE is close to it's LT objective of 12300 and Shanghai now below 2000, stories about the death of U.S is appearing on the front pages of the asian newspapers, written by journalists who think AIG is an index and S&P a stock ! And mind you, the stories are appearing even on the asain regional newspaper frontpages !
Time to get bearish was 2 weeks back when the trend turned. At the tops and the middle of the trend, there are plenty of trendlines, forks, bollinger bands, fibonanci, pivots, etc to provide support and a slope to slip down on. When all supports are broken and there's nothing to hang on, then the raw fear takes over, like now. The crash topics take center stage. Newsletter writers warn their subscribers of the dangerous volatility and ask them to stay in cash (and you need to pay these newsletters folks to learn to stay in cash. Amazing !). Folks, it's nothing new here. I bet every major IT bottom has felt that way. Most typical of a 9 month cycle bottom.
Now this is neither an advise to bottom pick nor a passage about my knife-catching abilities. Just a sentiment read. I don't trade these bottoms. I am just not interested. I just scalp the volatility, beacuse unless one has the ability to take 50-100 SPX points drawdowns calmly, they have no business trying to establish positions here.
Time, Pattern and Price are ripe here for the completion of the first leg of the bear market. Now let the market speak....
Wednesday, September 17, 2008
Monday, September 15, 2008
9 month cycle update
Since my Aug 23 update, the market has been severely pressured by the 9 month cycle. Given that the cycle is on track, i would expect the lows to come sometime the end of September. Negative breadth climaxed on today's selloff and the volume rose as we broke SPX 1200. We are entering into the selling climax phase of this decline, which should last a couple of days, which means some nasty volatility and wide range bar days. I still expect the market to bottom in my LT bottom projection area of SPX 1170+/- 20 points. If the market puts in the internal bottom in the next couple of days, then we should see a bounce and retest towards the end of this month. That's just a guess at this point. Until the daily trend turns up, think shorting the bounces, not picking some elusive bottoms. Supports mean squat in strongly downtrending markets ! It's "Slipping down the slope of hope". It's gonna be one hectic week. Will post an update, end of this week.
Good luck !
Good luck !
Saturday, August 23, 2008
9 month cycle bottom
I am not a cycles guy and i don't watch short-term cycles. But i do pay attention to the 40 week-cycle, i.e the 9 month cycle. One of the most powerful and reliable cycles IMO.
Ideally the cycle is due the end of Septempber. If it right translates, the way it did the last time, then it's due end of Oct to first week of Nov.
There are wide range of opinions concerning the LT scenario. Opinions range from a dark bear breaking the Oct 02 lows to a LT bull which has already resumed. Some remain in the middle camp which are calling for a cyclical bear. I continue to remain in the middle camp i.e a primary degree wave 2 from the Oct 07 top (Wave 1 being the primary 1 from oct 02 - oct 07).
The coming 9 cycle bottom would give more clues about the intermediate picture. Ideally we should break below SPX 1200 and put the necessary divergences on the weekly to end the primary degree wave A of 2 and start the primary degree wave B of 2.
On the other hand, if the 9 month cycle lows hold above SPX 1200, then it would mean that the primary degree wave A of 2 terminated at SPX 1200 and we are already in a primary degree wave B.
The coming 9 month bottom will provide strong clues about the IT scenario and put to rest all opinions, as the market will once again assert itself, leaving behind all opinions in the dust !
Ideally the cycle is due the end of Septempber. If it right translates, the way it did the last time, then it's due end of Oct to first week of Nov.
There are wide range of opinions concerning the LT scenario. Opinions range from a dark bear breaking the Oct 02 lows to a LT bull which has already resumed. Some remain in the middle camp which are calling for a cyclical bear. I continue to remain in the middle camp i.e a primary degree wave 2 from the Oct 07 top (Wave 1 being the primary 1 from oct 02 - oct 07).
The coming 9 cycle bottom would give more clues about the intermediate picture. Ideally we should break below SPX 1200 and put the necessary divergences on the weekly to end the primary degree wave A of 2 and start the primary degree wave B of 2.
On the other hand, if the 9 month cycle lows hold above SPX 1200, then it would mean that the primary degree wave A of 2 terminated at SPX 1200 and we are already in a primary degree wave B.
The coming 9 month bottom will provide strong clues about the IT scenario and put to rest all opinions, as the market will once again assert itself, leaving behind all opinions in the dust !
Wednesday, August 20, 2008
Weekly Trends - Aug 20, 08
Gold and Dollar - My call on July 27 was spot on. Gold plunged below $800 and Dollar tagged the 77-78 area. Now Gold and Dollar are at key LT pivot points. If the bull market in Gold is alive we should start a screaming rally and take out the March 08 highs. That would be the expectation of a trend follower. However, given the concerted co-ordinated efforts among the central banks across the world to combat inflation (many of the asian bloc countries already in a run-away inflation mode), it's possible that the inflation cycle has peaked and so has the commodity bull cycle. That's just my opinion. I will let the market speak for itself.
SPX
Nothing has changed since my July 21 update. We were at 1260 then and we are around the same levels today. SPX probably topped at 1313. If not, there are two key resitances overhead - 1327, which is the May 06 highs and the 200 SMA, currently around 1365. 1365 also happens to be a key horizontal res (March 07 and Aug 07) bottoms.
As far as the daily charts goes, it's a tough choppy market to trade here. It's the hourly charts where the action is. How do i play this? To me, it's simple. Currently the daily momentum is down. So keep shorting the bounces on the hourly charts. If the daily momentum turns up, keep buying the dips until either 1327 or 1365 is reached.
Good luck.
SPX
Nothing has changed since my July 21 update. We were at 1260 then and we are around the same levels today. SPX probably topped at 1313. If not, there are two key resitances overhead - 1327, which is the May 06 highs and the 200 SMA, currently around 1365. 1365 also happens to be a key horizontal res (March 07 and Aug 07) bottoms.
As far as the daily charts goes, it's a tough choppy market to trade here. It's the hourly charts where the action is. How do i play this? To me, it's simple. Currently the daily momentum is down. So keep shorting the bounces on the hourly charts. If the daily momentum turns up, keep buying the dips until either 1327 or 1365 is reached.
Good luck.
Sunday, July 27, 2008
Weekly trends
SPX - I presented two counts in my LT update last week, one in pink and other in blue. Both the counts are equally probable at this stage. There's not enough information to rule out either scenarios at this stage. A retest of SPX 1200 with either a higher or lower lows with divergence (count in blue) would be intermediate term bullish. If the count in pink materializes, then we should rally to about SPX 1335-40, before the next downleg starts.
Dollar, Gold - The weekly trend on the Gold remains up and the Dollar down. I got a countertrend sell on Gold and coutertrend buy on Dollar on the weekly charts, end of this week. Dollar index should rally to about 77-78 before it peters out. In the meantime Gold should drop to about $800, before the next weekly uptrend starts.
Dollar, Gold - The weekly trend on the Gold remains up and the Dollar down. I got a countertrend sell on Gold and coutertrend buy on Dollar on the weekly charts, end of this week. Dollar index should rally to about 77-78 before it peters out. In the meantime Gold should drop to about $800, before the next weekly uptrend starts.
Monday, July 21, 2008
LT Update
Back in January, i made a case for a bear market
http://nav-ta.blogspot.com/2008/01/big-picture-lt-sell.html
So far the progression of the bear seems in line with the big picture. My LT indicator remains in a deep bear territory, which will take a while before it recovers above zero. As i belong to the confirmation based school of TA, i will wait for that indicator to cross back above zero and a potentially completed wave pattern to call the beginning of the new bull, whenever that happens.
In the LT update i had a projection of SPX 1170+/- 20 points for a bottom. We hit SPX 1200 last week, 10 points above the high end of the projection.
From here the market can take two paths from a wave and internals perspective. If we rally straight up from here to about SPX 1300-1320, without doing a retest, then we are setting up for another failure and i would go with the count in pink. If we were to do a retest of the SPX 1200 area with positive divergences, then we would be making one heck of a bottom and should be good for a multi-month rally (the count in blue).
Blue or Pink Jose ? It's futile to guess. I will let the market speak. Bottomline the bear is far from over, but we are setting up for a major bear market rally here.
http://nav-ta.blogspot.com/2008/01/big-picture-lt-sell.html
So far the progression of the bear seems in line with the big picture. My LT indicator remains in a deep bear territory, which will take a while before it recovers above zero. As i belong to the confirmation based school of TA, i will wait for that indicator to cross back above zero and a potentially completed wave pattern to call the beginning of the new bull, whenever that happens.
In the LT update i had a projection of SPX 1170+/- 20 points for a bottom. We hit SPX 1200 last week, 10 points above the high end of the projection.
From here the market can take two paths from a wave and internals perspective. If we rally straight up from here to about SPX 1300-1320, without doing a retest, then we are setting up for another failure and i would go with the count in pink. If we were to do a retest of the SPX 1200 area with positive divergences, then we would be making one heck of a bottom and should be good for a multi-month rally (the count in blue).
Blue or Pink Jose ? It's futile to guess. I will let the market speak. Bottomline the bear is far from over, but we are setting up for a major bear market rally here.
Tuesday, July 01, 2008
ST buy signal at the close
It was wild volatile action in the markets today, typical of a bottoming market. The market apparently did not go into a selling climax, which many have been anticipating for weeks now. Maybe too many are looking for the climax. Maybe the system is clogged with shorts. Who knows ? What really matters is price, breadth and volume. Today we had a divergent bottom on both NYSE breadth and Vol MCOs. My price momentum system on the hourly also issued a buy signal. These signals are good for anywhere between 20-60 SPX points.
Is this an IT bottom ?. Too premature to even think in that direction. But if we start seeing big volume and breadth spikes, then maybe we are on to something big. One baby step at a time...
P.S - Remember, the mother of all interventions by the Fed in March 2008. That was an engineered bottom and today's retest of that bottom is sort of vindication for those who beleive that in the long run, the markets are on their own and too big to be manipulated by the central banks or any other financial powerhouses.
Is this an IT bottom ?. Too premature to even think in that direction. But if we start seeing big volume and breadth spikes, then maybe we are on to something big. One baby step at a time...
P.S - Remember, the mother of all interventions by the Fed in March 2008. That was an engineered bottom and today's retest of that bottom is sort of vindication for those who beleive that in the long run, the markets are on their own and too big to be manipulated by the central banks or any other financial powerhouses.
Friday, June 27, 2008
Weekly trends - 6/27/08
SPX
As i noted last week, with the break of 1324, the IT trend turned down and i had weekly support target at 1280-90. We tagged that support this week, but there is neither a divergent setup on daily or even the hourly charts for that matter. I told one of the posters on traders-talk, that it's unlikely we get a complex bottom, cuz if we do, we can forget the bear market for a while. The market's on a mission here, a mission to make new bear market lows. That's the reason it's been so persistenty declining and not making any divergent bottoms. Everyday it's the same story. Some silly bounce, the breadth looks good in the morning and gradually deteriorates into 2000+ decliners by mid-to-late day. That's strong instituitional liquidation going on.
The break of 1324 was a disaster for the bulls. Once the market enters a IT downtrend, the reversal ain't gonna happen easily. We need to see complex bottoming action. We need see some 90:10 volume days with a big breadth spike. The only thing that would bring that kind of a buying interest would be either another huge Fed intervention or a market crash of about 100-150 points from here, which would undoubtedly bring an army of bargain hunters. Otherwise, 20-30 point bounces on SPX aside, the IT downtrend should continue.
As for the support, 1380 weekly support has held so far. I am not expecting any big bounces here other than the 20-30 point variety which is again a short in my book. If i get any ST buy signals on the daily charts, i will post an update on this blog.
The Asian markets got slaughtered week, particularly the BSE. BSE dipped below the 14000 mark, closing at 13800. The montetary authorities have started tightening the screws hard, with India in a runaway inflation mode. My LT forecast for BSE, which i posted on this blog a few months back, has it's first support around 12300. I doubt that support will hold either in the LT.
Gold, Silver and Euro
Gold, Silver and Euro continues to remain in a weekly uptrend. Both Gold and Euro issued a continuation buy this week. But it was not confirmed by Silver. Until both Gold and Silver confirms, i am staying out of these markets.
As i noted last week, with the break of 1324, the IT trend turned down and i had weekly support target at 1280-90. We tagged that support this week, but there is neither a divergent setup on daily or even the hourly charts for that matter. I told one of the posters on traders-talk, that it's unlikely we get a complex bottom, cuz if we do, we can forget the bear market for a while. The market's on a mission here, a mission to make new bear market lows. That's the reason it's been so persistenty declining and not making any divergent bottoms. Everyday it's the same story. Some silly bounce, the breadth looks good in the morning and gradually deteriorates into 2000+ decliners by mid-to-late day. That's strong instituitional liquidation going on.
The break of 1324 was a disaster for the bulls. Once the market enters a IT downtrend, the reversal ain't gonna happen easily. We need to see complex bottoming action. We need see some 90:10 volume days with a big breadth spike. The only thing that would bring that kind of a buying interest would be either another huge Fed intervention or a market crash of about 100-150 points from here, which would undoubtedly bring an army of bargain hunters. Otherwise, 20-30 point bounces on SPX aside, the IT downtrend should continue.
As for the support, 1380 weekly support has held so far. I am not expecting any big bounces here other than the 20-30 point variety which is again a short in my book. If i get any ST buy signals on the daily charts, i will post an update on this blog.
The Asian markets got slaughtered week, particularly the BSE. BSE dipped below the 14000 mark, closing at 13800. The montetary authorities have started tightening the screws hard, with India in a runaway inflation mode. My LT forecast for BSE, which i posted on this blog a few months back, has it's first support around 12300. I doubt that support will hold either in the LT.
Gold, Silver and Euro
Gold, Silver and Euro continues to remain in a weekly uptrend. Both Gold and Euro issued a continuation buy this week. But it was not confirmed by Silver. Until both Gold and Silver confirms, i am staying out of these markets.
Sunday, June 22, 2008
Weekly Trends - 6/20/08
SPX
Boy, was i wrong !
I made a call just a day before the May top and projected a target of SPX 1350-60. My targets were met, but got undershot. But the IT trend was up in my book as long as SPX 1324 held. Given that we held SPX 1324 last week and got a divergent buy setup (a 70% odds signal), i thought we had begun the next upleg towards SPX 1500 +/- 20 points. The market action this week clearly proved me wrong. Now that cancels my SPX 1500 +/- 20 points projection.
Now the next support of importance on the weekly charts comes around the 1280-90 area. The 1404 double top has a measured move to SPX 1300 on the daily charts. So it's safe to say we should bottom somewhere in the 1280-1300 region. A bottom here could happen by a basing action, with multiple retests in the 1300 area or a climactic drop into the 1280 area. Which one ? I have no clue. Whenever the next buy signal on my daily charts show up on my trading system, i will post here (right or wrong !).
Gold, Silver and Dollar
As i said last week, there are no easy trades in these markets, as the weekly charts are pretty much neutral i.e sideways action, with the weekly 34 EMA flattening. A trending move is about begin in these markets pretty soon, looking at the basing action in the Gold/Silver on the weekly charts and the rejection of the 34 ema on the Dollar index weekly charts. Essentially the inflation theme continues in these markets.
Inflation is running out of control in the asian bloc. Many countries now have official inflation numbers in double digits. Some of the countries like vietnam have inflaton running above 25%. India's official inflation numbers which were barely 6% a few months back now stand at 11%. Wow, nearly 100% increase in a few months. Gotta beleive these govt numbers. Now how does this play out. Will this enter a runaway inflation mode, furthering the commodity rally or will the central banks tighten real hard and cause a commodity collapse ? Who knows ? That's why i hate fundamentals. Sorry for digressing, but the inflation situation looks alarming !
No positions in any market, but looking to enter soon, based on confirmation.
Good trading !
Boy, was i wrong !
I made a call just a day before the May top and projected a target of SPX 1350-60. My targets were met, but got undershot. But the IT trend was up in my book as long as SPX 1324 held. Given that we held SPX 1324 last week and got a divergent buy setup (a 70% odds signal), i thought we had begun the next upleg towards SPX 1500 +/- 20 points. The market action this week clearly proved me wrong. Now that cancels my SPX 1500 +/- 20 points projection.
Now the next support of importance on the weekly charts comes around the 1280-90 area. The 1404 double top has a measured move to SPX 1300 on the daily charts. So it's safe to say we should bottom somewhere in the 1280-1300 region. A bottom here could happen by a basing action, with multiple retests in the 1300 area or a climactic drop into the 1280 area. Which one ? I have no clue. Whenever the next buy signal on my daily charts show up on my trading system, i will post here (right or wrong !).
Gold, Silver and Dollar
As i said last week, there are no easy trades in these markets, as the weekly charts are pretty much neutral i.e sideways action, with the weekly 34 EMA flattening. A trending move is about begin in these markets pretty soon, looking at the basing action in the Gold/Silver on the weekly charts and the rejection of the 34 ema on the Dollar index weekly charts. Essentially the inflation theme continues in these markets.
Inflation is running out of control in the asian bloc. Many countries now have official inflation numbers in double digits. Some of the countries like vietnam have inflaton running above 25%. India's official inflation numbers which were barely 6% a few months back now stand at 11%. Wow, nearly 100% increase in a few months. Gotta beleive these govt numbers. Now how does this play out. Will this enter a runaway inflation mode, furthering the commodity rally or will the central banks tighten real hard and cause a commodity collapse ? Who knows ? That's why i hate fundamentals. Sorry for digressing, but the inflation situation looks alarming !
No positions in any market, but looking to enter soon, based on confirmation.
Good trading !
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.
Friday, June 06, 2008
Weekly trends - 6/6/08
SPX
Sideways to down it was, as i posted last week. I was expecting 1425 max on the upside, which got undershot. The downside today was pretty dramatic. We are now near my downside target of SPX 1350-60 area. I still beleive that this area will provide the support and we launch a multi-month rally from here. The key here is the NYSE Vol MCO which is putting in a divergent bottom relative to price.
The key is not the divergence itself, but the price reponding to this divergent setup. So we need to see the divergence hold and price confirming by giving a daily buy signal. If that happens then we are on track for a multi-month rally here. Now if the NYSE Vol Osc breaks that blue line in my chart, that's a warning sign that something big on downside is coming. Pricewise, if 1324 cracks then the IT uptrend is over and the next leg of the bear market has begun. That's not what i am expecting here, but something to be open minded about.
I have not seen the indices as broken as it is now, in a long time. NDX and RUT are not even in daily downtrends and yet to break the 5/30 weekly chart lows. But SPX chart looks completely broken from a daily chart perspective and holding on to dear life from a weekly perspective. Who's real...who's faking ? We should know soon.
Gold, Silver
As i noted last week Gold and Silver are in some sort of sideways congestion before we start a trending move up. Many are expecting a big downslide in Gold, which i am not. I will likely take a position in Gold sometime next week. I need to see some more strength before commiting, to avoid whipsaws.
Dollar
Yawn...The weekly downtrend continues.
OIL
The weekly uptrend continues. A very dangerous market here, which appears to be in a blow-off phase.
Sideways to down it was, as i posted last week. I was expecting 1425 max on the upside, which got undershot. The downside today was pretty dramatic. We are now near my downside target of SPX 1350-60 area. I still beleive that this area will provide the support and we launch a multi-month rally from here. The key here is the NYSE Vol MCO which is putting in a divergent bottom relative to price.
The key is not the divergence itself, but the price reponding to this divergent setup. So we need to see the divergence hold and price confirming by giving a daily buy signal. If that happens then we are on track for a multi-month rally here. Now if the NYSE Vol Osc breaks that blue line in my chart, that's a warning sign that something big on downside is coming. Pricewise, if 1324 cracks then the IT uptrend is over and the next leg of the bear market has begun. That's not what i am expecting here, but something to be open minded about.
I have not seen the indices as broken as it is now, in a long time. NDX and RUT are not even in daily downtrends and yet to break the 5/30 weekly chart lows. But SPX chart looks completely broken from a daily chart perspective and holding on to dear life from a weekly perspective. Who's real...who's faking ? We should know soon.
Gold, Silver
As i noted last week Gold and Silver are in some sort of sideways congestion before we start a trending move up. Many are expecting a big downslide in Gold, which i am not. I will likely take a position in Gold sometime next week. I need to see some more strength before commiting, to avoid whipsaws.
Dollar
Yawn...The weekly downtrend continues.
OIL
The weekly uptrend continues. A very dangerous market here, which appears to be in a blow-off phase.
Monday, June 02, 2008
Weekly Trends
SPX
The weekly on SPX remains in an uptrend with an eventual objective of SPX 1500 +/- 20 points. Only a break of SPX 1324 would invalidate the weekly uptrend, and would mean a multi-month decline has started.
The daily on the SPX is currently down and the market should remain rangebound for the next couple of weeks between SPX 1425 and 1350. My hourly model on SPX remains on a buy with a max upside target of 1425 this week, after which i expect a test of the SPX 1350-60 area.
GOLD and Silver
Gold and GDX remains in a weekly uptrend despite all the downside volatility this week. Silver which went to weekly buy last week entered a sell this week. The non-confirmation between the Silver and Gold continues. To me this appears to be a sideways congestion pattern, before the uptrend resumes on the weekly charts. However this is not a easy market to trade with confidence here. Closed my GLD position at breakeven this week and SLV for a 2% loss. Will reasess Gold based on this weeks action. Staying out for now.
Dollar
Dollar index remains in a weekly downtrend. So boring...
OIL
Oil remains in a weekly uptrend. Yawn...
The weekly on SPX remains in an uptrend with an eventual objective of SPX 1500 +/- 20 points. Only a break of SPX 1324 would invalidate the weekly uptrend, and would mean a multi-month decline has started.
The daily on the SPX is currently down and the market should remain rangebound for the next couple of weeks between SPX 1425 and 1350. My hourly model on SPX remains on a buy with a max upside target of 1425 this week, after which i expect a test of the SPX 1350-60 area.
GOLD and Silver
Gold and GDX remains in a weekly uptrend despite all the downside volatility this week. Silver which went to weekly buy last week entered a sell this week. The non-confirmation between the Silver and Gold continues. To me this appears to be a sideways congestion pattern, before the uptrend resumes on the weekly charts. However this is not a easy market to trade with confidence here. Closed my GLD position at breakeven this week and SLV for a 2% loss. Will reasess Gold based on this weeks action. Staying out for now.
Dollar
Dollar index remains in a weekly downtrend. So boring...
OIL
Oil remains in a weekly uptrend. Yawn...
Sunday, May 25, 2008
Weekly trends
Gold
Remains on a weekly continuation buy. Target still remains at 970-980. Still long GLD from 89. Took partial profits this week and bought some silver.
Silver
Issued a fresh weekly continuation buy this week and confirmed Gold's last weeks advance. Bought some Silver using SLV at 80. Will add more if we get to 75.
Dollar
Dollar index went to weekly continuation sell this week. Initial target is about 69-70. No positions here.
Stocks
I was expecting a ST top on Friday last week. But it came a day late on Monday. We are approaching the ST target on SPX around 1360-70 area, where a multi-week rally should begin which should not take out the 5/19 highs. SPX appears to be in a mulit-week sideways to down correction.
Financials
My call on SKF last week was spot on. I had a target of 109-110. But i took profits prematurely at 106. XLF has a downside target of about 24 based on the weekly charts and we are almost there. No positions here.
Remains on a weekly continuation buy. Target still remains at 970-980. Still long GLD from 89. Took partial profits this week and bought some silver.
Silver
Issued a fresh weekly continuation buy this week and confirmed Gold's last weeks advance. Bought some Silver using SLV at 80. Will add more if we get to 75.
Dollar
Dollar index went to weekly continuation sell this week. Initial target is about 69-70. No positions here.
Stocks
I was expecting a ST top on Friday last week. But it came a day late on Monday. We are approaching the ST target on SPX around 1360-70 area, where a multi-week rally should begin which should not take out the 5/19 highs. SPX appears to be in a mulit-week sideways to down correction.
Financials
My call on SKF last week was spot on. I had a target of 109-110. But i took profits prematurely at 106. XLF has a downside target of about 24 based on the weekly charts and we are almost there. No positions here.
Tuesday, May 20, 2008
Not a bear market a la 2000-2002
Back on Jan 19, i posted a LT chart of SPX showing the completion of a 5 wave impulse with a wave 5 extension. That completed the wave 1 of the impulse. That also said a wave 2 bear market was underway with a LT target of SPX 1160.
LT sell
The unfolding structure and the market dynamics at that time called for a quick drop to 1160. But the massive Fed intervention created a temporary bottom around 1250 and we rallied.
I said in that post
So we in a primary degree wave 2 bear trend at this stage, until proven otherwise. The implication is that the Oct 02 bottom was a cycle degree wave 4bottom, which should not be violated for decades to come.
Many bears are expecting a repeat of the 2000-2002 bear market and some expecting the Oct 2002 lows to be taken out. I have to respectfully disagree here on both the counts. 2000-2002 was a cycle degree collapse. Right now we are in a primary degree wave 2 bear trend. Big difference.
The last two of weeks of action has pretty much ruled out a 2000-2002 style collapse. Remember in bull markets the tops are complex and the bottoms are simple. It's the opposite in the bear market, when tops tend to be simple and bottoms are complex. Take a look at the weekly CCI during the entire 2000-2002 bear. As soon as the weekly CCI used to get overbought i.e move above 100, it used to result in a immediate collpase in prices. The weekly CCI never stayed above 100 for more than a week or two. That's a simple top and a classic weekly downtrend in progress from a momentum perspective. Right now we are dealing with a situation where the weekly CCI has been above 100 for the last 6 weeks. That's not a simple top, but a complex top on the CCI. In other words we have started uptrending from a momentum perspective. Although we have the 8 EMA still below the 34 EMA, momentum which leads price is saying we are uptrending on the weekly timeframe. That is not exactly what you would see in a full fledged bear market.
Now whether you call it a bull market correction or a bear market depends on one's definition. To me, it's not a bull market, until we have the weekly MACD above zero and bottoms above bottoms configuration on the weekly charts. So i continue to label it as a bear market.
Now the bull-bear dividing IT pivot comes around 1324. As long as SPX 1324 holds, the path of least resistance on the weekly chart will continue to be upward. For IT traders, long is the right trade. I was expecting a ST top on Friday, but it came on Monday. Now this ST decline will tell the story for the next 6-8 months. If we get a choppy sideways to down decline into SPX 1360-70 area and if daily gets oversold and turns back up around that area, then it's very bullish IT and we could move up to test the SPX 1500-20 area. For the bears to regain control, we need to break the IT pivot at 1324 - Period !. Now i keep asking myself, is there energy in the bear to do that ? Without putting my own bias in the front, i will let this ST decline give me clues.
Now does that mean the bear market ends if we hold the SPX 1360-70 area. A five year bull market is not going to end with a mere 6 month correction. Structurally, it does not make any sense from a e-wave perspective. That means SPX will not make new all time highs, but will do a deep retest of the 2007 highs. Bottomline, if 1360-70 area holds over the next few weeks, there's another 150+ points of potential SPX run to the upside. Bull or bear, i would not want to miss that.
Good luck.
LT sell
The unfolding structure and the market dynamics at that time called for a quick drop to 1160. But the massive Fed intervention created a temporary bottom around 1250 and we rallied.
I said in that post
So we in a primary degree wave 2 bear trend at this stage, until proven otherwise. The implication is that the Oct 02 bottom was a cycle degree wave 4bottom, which should not be violated for decades to come.
Many bears are expecting a repeat of the 2000-2002 bear market and some expecting the Oct 2002 lows to be taken out. I have to respectfully disagree here on both the counts. 2000-2002 was a cycle degree collapse. Right now we are in a primary degree wave 2 bear trend. Big difference.
The last two of weeks of action has pretty much ruled out a 2000-2002 style collapse. Remember in bull markets the tops are complex and the bottoms are simple. It's the opposite in the bear market, when tops tend to be simple and bottoms are complex. Take a look at the weekly CCI during the entire 2000-2002 bear. As soon as the weekly CCI used to get overbought i.e move above 100, it used to result in a immediate collpase in prices. The weekly CCI never stayed above 100 for more than a week or two. That's a simple top and a classic weekly downtrend in progress from a momentum perspective. Right now we are dealing with a situation where the weekly CCI has been above 100 for the last 6 weeks. That's not a simple top, but a complex top on the CCI. In other words we have started uptrending from a momentum perspective. Although we have the 8 EMA still below the 34 EMA, momentum which leads price is saying we are uptrending on the weekly timeframe. That is not exactly what you would see in a full fledged bear market.
Now whether you call it a bull market correction or a bear market depends on one's definition. To me, it's not a bull market, until we have the weekly MACD above zero and bottoms above bottoms configuration on the weekly charts. So i continue to label it as a bear market.
Now the bull-bear dividing IT pivot comes around 1324. As long as SPX 1324 holds, the path of least resistance on the weekly chart will continue to be upward. For IT traders, long is the right trade. I was expecting a ST top on Friday, but it came on Monday. Now this ST decline will tell the story for the next 6-8 months. If we get a choppy sideways to down decline into SPX 1360-70 area and if daily gets oversold and turns back up around that area, then it's very bullish IT and we could move up to test the SPX 1500-20 area. For the bears to regain control, we need to break the IT pivot at 1324 - Period !. Now i keep asking myself, is there energy in the bear to do that ? Without putting my own bias in the front, i will let this ST decline give me clues.
Now does that mean the bear market ends if we hold the SPX 1360-70 area. A five year bull market is not going to end with a mere 6 month correction. Structurally, it does not make any sense from a e-wave perspective. That means SPX will not make new all time highs, but will do a deep retest of the 2007 highs. Bottomline, if 1360-70 area holds over the next few weeks, there's another 150+ points of potential SPX run to the upside. Bull or bear, i would not want to miss that.
Good luck.
Trade update
Closed my SKF position between 106 and 106.30 for about 5% profits. Still holding GLD long.
Friday, May 16, 2008
Weekly trends
I will try to post some weekly trends from my position trading system here going forward, once a week. These are multi-week position trades which require 5-8% stop aiming for 10-15% or higher profits.
Gold
Gold never entered a bear trend on the weekly charts, despite the big correction off of the March 08 highs. The weekly 8 EMA continues to reside above the 34 EMA. Now i have a fresh buy on GOLD as of this week's close. So essentially it's a trend continuation buy. The target for Gold is about 970-980 or higher. I took a position in GLD at 89.
Silver
Silver dissapointed from entering a weekly buy. Missed by a narrow margin. Not sure if that's a red flag for Gold or if it's just lagging behind gold. No positions here.
Euro
The Euro is on a counterend sell i.e a correction on the weekly charts. The 8 EMA continues to resides above the 34 EMA and the weekly trend reamins up. But we marginally failed to get a continuation buy on Euro, thus putting it still in the correction camp. Again whether this non-confirmation remains a red flag for Gold remains to be seen. Interestingly the ETF FXE issued a buy. Maybe the ETF folks are over enthusiastic here. We shall see..
No positions here.
Financials
XLF remains on a weekly continuation sell from last week. XLF needs to take out 28 to invalidate this signal. I remain long SKF from 101 last week.
S&P
The weekly trend continues to remain down on the S&P. 8 EMA below 34 EMA. We are in a large correction in a downtrend. But a couple of more weeks of upside action could turn the weekly trend up. ST continues to confound me. Everyday looks like a top, only to be taken out by a surreptitious slow rally. Typical of a trending market. My system says Friday was a ST top, but again the late day OPEX shenanigan put a damper on that signal. Next weeks things should get clearer.
No positions here. Only daytrading.
OIL
WOW. The strong uptrend on weekly charts continues. DUG seems to be the darling of the masses, just like QID was in 2006, making fresh lows day after day. But the enthusiasm of the OIL bears remains unfazed. It remains to be seen, if finally the OIL bears get the much needed correction or just get blown out by the charging bull. No easy trades in this market at all.
No positions here.
Gold
Gold never entered a bear trend on the weekly charts, despite the big correction off of the March 08 highs. The weekly 8 EMA continues to reside above the 34 EMA. Now i have a fresh buy on GOLD as of this week's close. So essentially it's a trend continuation buy. The target for Gold is about 970-980 or higher. I took a position in GLD at 89.
Silver
Silver dissapointed from entering a weekly buy. Missed by a narrow margin. Not sure if that's a red flag for Gold or if it's just lagging behind gold. No positions here.
Euro
The Euro is on a counterend sell i.e a correction on the weekly charts. The 8 EMA continues to resides above the 34 EMA and the weekly trend reamins up. But we marginally failed to get a continuation buy on Euro, thus putting it still in the correction camp. Again whether this non-confirmation remains a red flag for Gold remains to be seen. Interestingly the ETF FXE issued a buy. Maybe the ETF folks are over enthusiastic here. We shall see..
No positions here.
Financials
XLF remains on a weekly continuation sell from last week. XLF needs to take out 28 to invalidate this signal. I remain long SKF from 101 last week.
S&P
The weekly trend continues to remain down on the S&P. 8 EMA below 34 EMA. We are in a large correction in a downtrend. But a couple of more weeks of upside action could turn the weekly trend up. ST continues to confound me. Everyday looks like a top, only to be taken out by a surreptitious slow rally. Typical of a trending market. My system says Friday was a ST top, but again the late day OPEX shenanigan put a damper on that signal. Next weeks things should get clearer.
No positions here. Only daytrading.
OIL
WOW. The strong uptrend on weekly charts continues. DUG seems to be the darling of the masses, just like QID was in 2006, making fresh lows day after day. But the enthusiasm of the OIL bears remains unfazed. It remains to be seen, if finally the OIL bears get the much needed correction or just get blown out by the charging bull. No easy trades in this market at all.
No positions here.
Sunday, May 11, 2008
IT and ST update
In my IT update on April 12, i was looking for an SPX target in the 1400-1420 range. On April 22, i thought we made a top at 1395. But i was wrong. The market inched higher into 1422 area. Now based on Friday's action, we have cracked the ST uptrend from the 4/15 lows. My ST system (daily) is now on a sell, which means i will be shorting rallies here.
Intermediate term has two scenarios here.
Scenario 1: Now the key IT pivot here is SPX 1324. If 1324 is taken out even on a intraday basis, the IT uptrend is over and we should head down and crack the 3/17/08 lows.
Scenario 2: If the daily charts gets oversold and turns back up without breaking 1324, then we should head higher in another upleg to about 1450-60 area.
LT we remain in a bear market, all this huge rallies not withstanding.
LT - Down
IT - Up
ST - Down
Intermediate term has two scenarios here.
Scenario 1: Now the key IT pivot here is SPX 1324. If 1324 is taken out even on a intraday basis, the IT uptrend is over and we should head down and crack the 3/17/08 lows.
Scenario 2: If the daily charts gets oversold and turns back up without breaking 1324, then we should head higher in another upleg to about 1450-60 area.
LT we remain in a bear market, all this huge rallies not withstanding.
LT - Down
IT - Up
ST - Down
Tuesday, April 22, 2008
IT update
The ST uptrend from March 08 lows likely ended today. Both the NYSE breadth and Vol MCOs have hooked down. The Nasdaq breadth MCO has crossed below the zero line and turned the summation down. The daily momentum on SPX has also turned down. The wave pattern looks complete.
The last rally from 4/15 lows has the signature of a sucker rally. Look at the 10 day SMA of the adv-decl on NYSE. It severely diverged as we made new highs.
Will we go for another high with triple divergence ? Always possible, but i am not betting my money on it. Triple divergences on daily charts happen when the markets are in a strong primary uptrend like last summer. Now we are in a bear market. Be prepared for out of the blue declines.
Good luck
The last rally from 4/15 lows has the signature of a sucker rally. Look at the 10 day SMA of the adv-decl on NYSE. It severely diverged as we made new highs.
Will we go for another high with triple divergence ? Always possible, but i am not betting my money on it. Triple divergences on daily charts happen when the markets are in a strong primary uptrend like last summer. Now we are in a bear market. Be prepared for out of the blue declines.
Good luck
Sunday, April 20, 2008
IT update
In my last update on April 12, i called for an upside target of SPX 1400-1420. I was expecting that target to be tagged in about 2 weeks. But it all happened bloody fast, if you were a bear !. Too far...too fast. Again, feels good to be a technical analyst.
So far there are no technical indications of a top yet. I did get a VST sell at the close on Friday. So expect some weakness come Monday. I don't have any projections for the selloff yet. All big selloffs start with a VST sell. But all VST sells do not necessarily lead to big selloffs.
To call 4/18 as a top, a couple of things need to happen. Firstly the rising NYSE MCOs should hook down and price needs to break below SPX 1357. That selloff should be of a high velocity type. That would be an early indication of the top. Barring that i would still expect the higher end of my projected range which is 1420 to get tagged in the coming days.
Bottomline, hourly is on a sell. Play for what it's worth. Daily uptrend remains intact for now. No need to overanalyze here.
So far there are no technical indications of a top yet. I did get a VST sell at the close on Friday. So expect some weakness come Monday. I don't have any projections for the selloff yet. All big selloffs start with a VST sell. But all VST sells do not necessarily lead to big selloffs.
To call 4/18 as a top, a couple of things need to happen. Firstly the rising NYSE MCOs should hook down and price needs to break below SPX 1357. That selloff should be of a high velocity type. That would be an early indication of the top. Barring that i would still expect the higher end of my projected range which is 1420 to get tagged in the coming days.
Bottomline, hourly is on a sell. Play for what it's worth. Daily uptrend remains intact for now. No need to overanalyze here.
Saturday, April 12, 2008
IT update
In my last IT update on March 24, i noted that the turn in the Weekly CCI above -100 would take us to SPX 1390, the mid-line of the weekly bollinger bands. We tagged the weekly BB which came in around SPX 1386 and got rejected. Feels good as a technical analyst. But the fly in the ointment is that the NYSE MCO spike has not yet displayed negative divergences to call that SPX 1386 as a good top. Also the daily trend as evidenced by the series of higher lows on the daily charts is up. So i would expect another rally here into the SPX 1400-1420 area to finally create the necessary divergences on the MCO and set the stage for the next big decline into the SPX 1160 area.
SPX remains in a very complex corrective wave B correction. This pattern can take myriad of ways to its completion. The wave pattern by itself is totally useless to determine its conclusion. One need to look at the daily price momentum and the internals like the MCOs to determine it's conclusion.
In the end, "Price is king". If we break the 3/31/08 lows, then you can kiss the uptrend a goodbye and start looking to short rallies. For now, the ST remains up and i will be looking to buy dips on oversold conditions. ES could fill the gap at 1321.50, before we begin the next upleg. Or we could also gap-up on Monday and never look back until SPX 1400-20. Either way, i am expecting another upleg.
Good luck all !
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