Pause in the Downtrend - Market Analysis for 30/08/2010 by Singaporeseeds

Daily chart for Dow


Daily chart for S&P


Daily chart for NASDAQ


The market hit a series of important support levels on Wednesday and Friday and bounced. This week we will see whether this bounce will follow through. On the shorter term I believe this bounce should bring us to around 10,250 on the Dow and 1,080 on the S&P. However the market is still on a longer term downtrend with a first target at 980 and a second target at 900 by December 2010 on the S&P. There is nothing to show that the downtrend had ended yet.

Weekly and Monthly Chart Update – Market Analysis for the next few weeks by Singaporeseeds

Monthly chart for Dow


Monthly chart for S&P


Monthly chart for NASDAQ


On monthly charts, it seems that Dow and S&P had failed the 50 month moving average and have just tested support at the 200 month moving average for the last 2 months. (green line) NASDAQ is the most “bullish” of the indexes, as it is did not drop as much as the other 2 indexes. However I feel that the July low is still not it and we should be breaking that low to form a wave 3 down to around 900 on the S&P.


Weekly chart for Dow


Weekly chart for S&P


Weekly chart for NASDAQ


I believe weekly charts are the most bearish of all the time frames. All 3 indexes made a bearish engulfing candlestick pattern in the first 2 weeks of August. This pattern is usually followed by a retracement of not more than 50% which is what happened last week. This candlestick signal together with the breaking of the 50 day moving average is a very bearish signal for the markets. We should be following through this downward movement over the next few weeks. I’m expecting the S&P to drop to 900 by the end of the year.

Preparing for the Worst Month of the Year - Market Analysis for 23rd August 2010 by Singaporeseeds

Daily chart for Dow


Daily chart for S&P


Daily chart for NASDAQ


September is usually the worst month of the year. I do not have the statistics on hand right now (I’m sitting at a quiet café and not at home or at the office) but just pull the index charts and you can see that most Septembers had been bearish.

Anyway the indexes made a bounce in afternoon trade on Friday. I reckon this bounce should follow through to around 1,080 for S&P and 10,250 for Dow but not more. S&P and Dow are now below their lower MOBO bands which indicates downward momentum and with NASDAQ just slightly above it. I probably should also post the weekly charts here because the weekly charts on all 3 indexes had been very bearish at the close on Friday. We may see a small wave 2 bounce (also called failure wave) this week but that’s about all the bullishness I can see on the charts right now.

Discharged from Hospital & all ready for the beginning of Wave 3 – Market Analysis for 20th August 2010 by Singaporeseeds

Daily chart for Dow


Daily chart for S&P


Daily chart for NASDAQ


I spent the past 4 days at SGH recovering from a relapse from Crohn’s disease. Other than the numerous bloody diarrhea episodes and extreme boredom being locked in the hospital room, it gave me some time to rethink my priorities and goals.

Anyway the behavior of the stock market over the past few days had been anything but reassuring. It seems that the indexes are set up for a wave 3 down to 900 on the S&P. On another note, my trading buddy Madscientist came down to the hospital to inform me about the Hindenburg Omen. It seems the first part of the Omen had occurred last week.

Be prepared for some big volatility swings in the market over the next few weeks as the stock market battles between the bulls and bears. Personally i believe we are at the beginning of the 3rd wave down. I am looking at the stock market trending down to test its July low over the next few days.

Divergent Indexes – Market Analysis for 16th August 2010 by Singaporeseeds

Daily chart for Dow


Daily chart for S&P


Daily chart for NASDAQ


I’ve been down with a vein infection most days over the past 2 months so I’ve been unable to have the extra energy to do this market analysis, let alone trade the stock market. However with the illness finally under control, I’m slowly getting my energy back.

As you can see from the charts above, NASDAQ had broke way below the 50 and 200 day moving average. This is very bearish, however S&P and Dow seems to be finding some support at the 50 day moving average. On longer term charts it seems like the down trend is still intact, with all three indexes making a bearish engulfing candlestick pattern on weekly charts.

The recent down move this week began after S&P and Dow failed to rally above some serious resistance levels. This caused a 200 point down move in the Dow and pushed the indexes far away from their MOBO bands. Baring any unexpectedly high unemployment claims on Thursday, we should see the indexes either bounce back up or move in a sideways fashion to the lower MOBO bands this week. I’m still divided as to which direction the market would move after that and I will be keeping most of my funds on the side until I can make a decision.

WMA 15 August 2010 - Market decision point

TIP
The weekly TIP chart is showing growing strength in the bullish rally. Having said that, there appears to be a bearish divergence forming on this weekly chart as well, at least hinted by the indicators, plus a possible evening star candlestick pattern. The daily chart already had its current run stall at mania with price and indicators hinting of a retracement.

JNK
The weekly JNK charts is indicating another attempt of a rally despite the retracement during the last week. If this continues, there should be another 5 weeks of JNK rally. The daily chart had recently made a series of higher lows, and then retraced (over the last week) but still maintaining a higher low. It appears to be making an attempt to reverse and rally again, possibly from midweek next week.
LQD has divergence with JNK and HYG… in that LQD has had an amazing continuous rally and is now looking toppy with obvious bearish divergence. It may be time for LQD to converge with JNK and HYG.
The difference between these corporate bonds are not very much except that LQD is highly speculative, while HYG and JNKis high yield. There is a need for these bonds to sing the same song, and divergence may be an opportunity.

DBB / /HG
Copper registered a lower high possibly and last week closed with a bearish engulfing pattern. Inidcators are still bullish (for now) btu warning signs are blinking for a possible about turn. The daily have had a week of retracements from overbought levels and it appears that the end is not near. Expect this week’s copper prices to keel over and drop < 3.2.

According to the above leading indicators, we are in for another bear week.

/DX
The weekly USD futures chart is again doing another parabolic climb with much gusto clocking almost 3.00 in a week! The USD suffered a deep retracement and bounced off just above the 80 support level. From the weekly chart, the USD has just launched its rally again. The daily chart bounced off the 80 level nicely and almost like clockwork, followed by massive gains late in the week. A very bullish sign for continued rally in the USD.
Also note a repeated pattern in the weekly and daily chart which is denoted between the two cyan time lines in each chart. Both times, the USD was grossly oversold, and then the predictive MACD lines have crossed over with increasing open interest, the STO and RSI also are bullish. IF this pattern plays out, then the USD should run parabolic soon and target just over 87.

SPX / S&P500
The weekly chart posted second lower high and a breakdown of 101 in SPY would confirm a major trend change bias by simple price action. The daily chart has failed the support/resistance and is on its way down, breaking an uptrend line in the process.
Bearish signs if you ask me…

/GC / Gold
The weekly chart shows that Gold is bullish despite the USD rally. This indicates strength itself. Furthermore, the recent retracement in Gold brought it down to the rising trendline and failing to breakdown, but just puncture the trendline has had prices rallying away from the trendline again. Conversely, the weekly chart is showing bearish divergence and this may be the last gold run before it equilibrates. The daily chart confirms the bullish outlook for gold as it crossed above 1200 without being overbought. Gold should be making a new high of over 1300.

/CL / Crude
The Crude oil weekly chart show that the long term bearish divergence may have equilibrated, and the crude rally has stalled this week. The Daily chart has a rising channel but channel support may be tested in the week ahead. Breaking or bouncing off the channel support would be indicative of the next move in crude. For now, it appears more bearish than bullish.

The MadScientist – 15 August 2010

Note: Any material posted here is of my sole opinion, and my opinion may differ from others. It is definitely NOT a solicitation to do anything else as a consequence of reading this material. The material presented here is intended for educational purposes only.

DMA Week of 8 to 14 August 2010

DMA Week of 8 to 14 August 2010

JNK
The Coporate junk bonds (JNK and LQD) weekly charts indicate a continuation of the uptrend. However, the JNK daily chart is showing overbought signals and has already started to retrace. LQD apparently is popping up nicely.
 
TIP
The weekly TIP chart confirms a steady uptrend and has just broken out of a significant resistance at 106.60. Maintaining this for another two weeks would seal the confirmation of a breakout, alternatively, a decisive breakdown would send it much lower. Nonetheless, there is about another 7 weeks of bullishness left in TIP. The daily chart is also bullish and should breakout to the upside within the week. Failure to do so would send it tumbling rather hard. From the indicators, the probability is to the upside.

/HG
The copper weekly chart momentum appears have stalled, but it should have a pop over the next 2 weeks. The daily chart has a bearish divergence, very overbought and has started to retrace.


With Napier’s leading indicators, the outlook is bullish and has been so over the last 2 weeks (during my absence!). While being bullish, the indicators (and thus the equity market) are overbought, hinting of an imminent retracement.


SPX/SPY
The weekly chart for the SPY shows that there is a short term bull rally in place. It should be lasting another 6 weeks into middle of September. This rally is likely to reach about 1180-1200. The daily chart show a slightly overbought index on low volume, which is likely to push futher and then correct in an increasing volatility style. 1150 is a level that the SPX (115 on the SPY) has to break and maintain above. This week is likely to be mostly bearish.

/DX
The USD futures show a very interesting technical situation. The weekly chart look really bearish only for about another 2 weeks bringing the steep drop in USD much further. However, the daily USD futures are very oversold, with a bullish divergence about to break the bear’s back. The Open Interest is also indicating that the USD is bound for a rally which is indicative to be already on.

/CL
Crude weekly chart is bullish and has a good way to go. The daily chart however is overbought although there is a lack of bearish divergence. This is a good sign for crude to continue its rally but not before a retracement especially if there is a technical rally in the USD.


/GC
Gold has a very strong uptrend that has tested the rising trendline 3 times already on the weekly charts. Although it appears to me that Gold can and probably will move further up to test the previous high, it is forming a bearish divergence in the longer run. The daily Gold futures has had a bullish divergence that is equilibrating just now with a little more gusto, especially after bouncing off the trendline.

It is intersting for Wave counters to note Gold as it appears that Gold has completed 5 waves so far and may be consolidating in the interim.


/YI
Silver weekly chart has stalled in its rally and is forming a range. The daily chart had a bullish divergence over the last couple of weeks and has since equilibrated. It is unclear to me if Silver is up to anything except ranging.


US Sector Scans

XBI (SPDR Biotech), XLP (Materials), XLY (Discretionary), XLE, XOP (O&G Exploration), FRI (REIT), IYT
looks bullish on weekly and starting to be overbough in daily although there is more to go.

XLP, XLF (Financial), XLU (Utilities), BJK (Gaming)
Similar to above, except that retracement from overbought is already in place.

XLV(Healthcare), XME (Metal & mining), XES (Oil and Gas Equip), XPH (Pharma), XRT (Retail), XLK, IXN (IT), ITA, PBE (Biotech)
Similar to top, but laggard.

PBJ (F&B)
Bearish divergence on weekly, and ranging on daily.


In summary, looks like retracement week is in place!

Note: Any material posted here is of my sole opinion, and my opinion may differ from others. It is definitely NOT a solicitation to do anything else as a consequence of reading this material. The material presented here is intended for educational purposes only.

The Uptrend Continues – Market Analysis for 4th August 2010 by Singaporeseeds

Daily chart for Dow


Daily chart for S&P


Daily chart for NASDAQ


The breakout happened on Monday and went right through the 200 day moving average for S&P and NASDAQ. This is a very bullish signal for the market.

Over the next few days, I’m expecting the stock market to test support at their 200 day moving average before continuing this rally. My target is still at 1,150 for S&P.