Aug 6
SP500: Update
SUMMARY
|
|
|
To quote myself from last week “I don’t see a quick conclusion coming from the current market”. Hmmm… Well that was a mistake!
However we did see that vitial close beneath the 1260 for losses to take hold, and done with such force that the potential bullish symmetrical and and bullish hammer candle were quite literally obliterated on Monday after opening, despite opening with a promising gap-up.
Monday’s trading saw the 200eMA get tested, but Tuesday rallied straight through this critical support as the markets witnessed the largest declines 2008. In fact losses were so rapid last week that we’re already close to reaching the minimum target from the head and shoulders pattern.
Friday saw a critical 50% fib level tested but we closed the day just above it producing a long legged Doji. This is hardly a bullish sign but represents the markets uncertaintly – personally I think the market is just catching its breath for another drop.
So how long can we expect the bears to remain in control?
The cycles are looking as bearish as ever but hinting a possible retracement. Weekly and Daily RSI have entered the oversold territory, so at best I anticipate a retracement before further losses and will continue to short any pullbacks. I don’t expect any gains to reach the 200eMA any time soon (if at all) but this will provide a solid resistance level, along with the previous swing low of 1260.
If we can break through the fibonacci cluster my eyes will be set on the swing low of 1010.
|
|
CYCLES |
|
|
22.1 Day
Centred SMA
|
 |
MARKET BREADTH |
|
|
McClellan
Summation:
|
 |
SENTIMENT |
|
|
1.23 (up from 1.0) – The highest level since March 2010
30 (Down from 69) – From just under overbought to just over overbought in 5 trading days
Closed at 32 but peak 39 on Friday making it the highest level since July 2010
|
|
|
TREND
|
|
|
Primary
|
 |
SUPPORT & RESISTANCE |
|
|
Fibonacci:
Resistance:
Support: |
 Fib cluster around 1100 – 1108 may provide support – of broken then I’ll look the swing low around 1010 (which is also near the 50% fib line)
1276: Daily 200eMA
1255: Weekly Candle Marabuzo Line
1230: Daily Marabuzo Line
1188:
1170:
1130:
1100 to 1108:
1010:
|
PATTERNS
|
|
|
Reversal
Weekly Candle:
Daily Candle:
|
 Using the distance between the head and neckline projects a minimum target of 1134.5.
Bearish Belthold
Long Legged Doji (Aka Rickshaw Man)
|
***
“Trade what you see, not what you think…”
Jul 31
TRADE: CHFJPY
Risky counter-trend (especially with the ‘flight to Swiss safety’) but to me, a wedge is a wedge!
Bearish Wedge forming with RSI divergence – a break below swing low of 95.33 confirms with a target at the base of the wedge around 90.
***
“Trade what you see, not what you think…”
Jul 31
SP500: Update
|
Outlook
|
2 weeks since my last SP500 post and the market is still undecided as to which way it wants to go.
 So to summarise I still have a very mixed picture. On one hand I have bearish cycles, bearish monthly/weekly candlesticks and decline in stocks above their 5/50/200 eMA’s.
On the other hand I have a bullish symmetrical triangle, no bearish divergences, a neutral balance between put/call options and the dominant trendline and 200eMA which refuses to be broken.
I don’t see a quick conclusion coming from the current market, so I’ll be sticking to short-term trades using support and resistance levels with oscillators and divergences.
|
|
Sentiment
|
BPSPX (Bull/Bear ratio): 60.00 (Down from 69)
VIX: 25.25 – A relatively high reading (compared to recent weeks) implies fear in the market and increases the chance of a subdued market next week.
A low reading represents complacency, which is when most people get ‘caught out’ by the market and a big move can occur.
|
|
Market Breadth
|
All 3 readings have dropped significantly from my past assessment 2 weeks ago.
% Stocks above 200 sMA: 40.49% (down from 63.36%)
% Stocks above 5 sMA: 7.89% (down from 35.22%)
Above 70% is considered overbought and below 30% oversold.
|
|
|
On a personal note it is encouraging to see the cycles have held relatively well, and from a timing perspective that I anticipated the market to remain choppy and indecisive for a minimum of 2 weeks, as has been the case.
Whether this is down to skill or pot luck remains to be seen, but whilst these swings highs remain bearish so will my cycle outlook. With recent swing highs getting lower it fits in with my original analysis that we should have seen a top on the the larger cycle, and for it to bring downward pressure upon the smaller cycles.  |
|
|
|
|
Patterns
|
|
***
“Trade what you see, not what you think…”
Jul 17
TRADE: TNY
I have just posted a trade idea on TradeSecret.co
***
“Trade what you see, not what you think…”
Jun 26
FTSE100: Harmonic Elliot Waves
Harmonic Elliott Waves is a new method of wave counting by Ian Copsey. He’s modified the original impulsive wave structure by using harmonic ratios of the fibonacci sequence to forecast his wave counts.
I’m working my way through his new book Harmonic Elliott Wave: The Case For Modification of R. N. Elliotts Impulsive Wave Structure so naturally keen to take apply this to the FTSE and see if I can get even remotely close.
I am by no means a master of his method yet, but will continue to study it as the calls Ian has made using his method are truly staggering, and at times his price forecasts on Indices and FX are within a pip.. months before the event happens! I won’t reveal his methods as they are in his book, he teaches a course and he now offers an analysis service. There’s a free introduction on his website with a pdf and video, and is definitely worth a look if you like count waves.
Assuming FTSE does continue to decline I feel that the 4971.4 is a crucial swing low, so could prove to be an appropriate target as this is also a 50% retracement level.
Jun 26
FOREX: Relative Strength
A very quick and visual way to choose your potential FX pairs for the week ahead – below is the relative strength of 15 curreny pairs over the past month.
Look for long opportunities on rising pairs and short opportunities for falling pairs.
The strongest performer overall is clearly CHF, so wait for pullbacks to go long on CHF/JPY and short on GBP/CHF
Jun 25
CRB INDEX: Update
Commodities closed beneath resistance and has broken the prior dominant uptrend. Mometum suggests we may see a retracement towards the 50eMA or 200eMA, but overall I expect to see losses over the coming weeks.
Generally speaking declining commodities means a stronger Dollar.
Jun 25
FTSE350: Sector Analysis
Banks has finally broken to the downside of the channel that has been forming since August ’09. The weekly and monthly candle is looking very bearish but I will wait for a retest of 4341 before entering short on this sector.
Jun 25
SP500: Update
Summary
It has been a choppy week to say the least with the bulls and the bears almost playing a game of peek-a-boo with one another. The daily 200eMA is looking tired and fed up and not too far away from becoming completely flat. Although we haven’t seen a close beneath the 200eMA I think it’s only a matter of time – there have been plenty of attempts…
Jun 6
GOLD: Cycles
Still very much an experiment, I am trying to extrapolate the underlying cycles within Gold. The main problem I have at this stage is a severe lack of data, as to properly identify the 9 year Juglar cycle I’m looking for I’d ideally need at least 100 years worth of data. However, I do feel I can pinpoint 2 major swing lows that are 9.1 years apart.
