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Look back over the past, with its changing empires that rose and fell, and you can foresee the future too.

— Marcus Aurelius

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Thursday, March 28, 2019

short term - battle grounds galore

2 hour charts for DAX, FTSE and NDX 100

Battle in all markets between sellers and buyers
(S&P 2830, 2785 - key levels)

waiting for breaks of up or down for next direction
Or trade the range - but getting smaller so should resolve soon




Friday, March 22, 2019

Long 3 months...

The move off the lows in December caught a lot off guard by the strength and relentlessness of the rally, me included. 
So pretty much watching this the last couple of months.

Some interesting things to watch and to note now the rally seems to be lng in the tooth (FLW)  - with the Nasdaq 29 % up from the lows in December.

Reasons:  Fed has reversed course - after jaw-boning about raising rates this year - it looks like they have succumbed to the Trump "pressure".

The trade deal with China (though the reality is that it will only be a band aid on a BIGGER problem)

European Central bank also looks to be on course to keeping the easy money flowing.

BUT will it help?  - Think Japan..

Interesting Europe has underperformed the US, Germany up only about 12 %

Nasdaq daily chart

Looks like a rising wedge , and a classic throwover
overbought (but can remain like that)

After such an extended move - the probabilities increase that the next multi-day (multi-week) move will be down.

BIG question : will it just correct this move up, and then rally to new highs?
OR will it be the start of the next down leg and break to new lows?

watch this space..

What about behaviour?
Well this rally has definitely got everyone talking about new highs and that the bull market is back.  TV pundits declared that the bear market has finished.

So this is the longest bull market in history (2008) - is a three month bear market really it?
Are companies forecasts at the end of 2018  of slowing sales and difficult conditions , already improved?  (FED EX)
If not then valuations especially in the US market look rich.
The market has been led higher by increasingly smaller group of stocks FAANG and Boeing, while banks are struggling

So the BEAR market scenario

In a bear market the classic scenario is a wave 2 rally that sucks in the crowd amid declarations that the initial fall is over and good times are back - CHECK

Bear market rallies are violent and sharp - CHECK



What about the alternative scenario? BULLISH

The rally from December is a Wave 1
A wave 2 down will do the opposite of the bearish scenario i.e. suck in the bears and may look like the start of a new leg down..
BUT if bullish and wave count correct, the next move up would be a WAVE 3
which SHOULD take the market to new HIGHS.

other markets in the next post

Nasdaq monthly chart  - similarities with 1999/2000
March 2000 -May 2000 37 % fall
May to Sept 36 % rally

2018 -2019   fall of 25 % , followed by rally of 29%



Markets don't necessarily repeat themselves over time but they do rhyme
Human behaviour doesn't change - emotions are still the same

Tuesday, February 12, 2019

Calm before the storm? Or blue skies ahead?

After a strong rally from December lows markets are in a "wait and see mode " - STILL !
Waiting for : trade deal with China (probably priced in - bar the pop on the new)
Waiting for Trump to reach deal with Dems on Border Security (i.e. THE WALL)

Quick look at DAX :

Daily chart from the 7th
Looks like a breakdown from a bear flag
Relative weakness vs other major markets
Look left  - 11550 level if breached might signal change in short term trend - until then medium term downtrend still in force.




DAX 2 hour from today

This shows the break of the recent uptrend
And a rally from oversold levels
could be a test of the broken trend line and then resumption of downtrend  OR
that fall was a fake out and now rallying to test 11550 level




Finally look at weekly DAX
testing the 200 week MA
rally has relieved oversold





Wednesday, January 30, 2019

January almost finished - no real change

So the market maintains its rally since New Year, and now in wait mode;

1. Fed
2. China - Trade

Market sentiment (use CNBC!)
Kramer declared bear market over
Bulls are back, supported by view that Fed will not raise or only raise once


but...  even cyclical bear markets last 12-18 months - so far 3 months

Obviously markets don't go straight down, and classic bear market rallies suck in shorts and bulls to believe that the BULL is back..

Charts don't lie
A lot of damage done technically in the autumn fall..

Look at the DOW charts for various time frames


Dow monthly

No real change but updated view with recent price action
still see that the rally has not recovered the broken trend line (rally from 2016)
coincidence? 
the 61.8 % retrace of the 2016 rally coincides with the 38.2 % retrace of the 2008 rally , which coincides with the up trend line from 2008
TOO many coincidences?
IF the market trades towards these "coincidences" looking at DOW around 19k -20k



The weekly and daily are self explanatory.
Bumping against the down trend.
Weekly RSI show clearly the "wait mode"

DOW weekly 




DOW daily



Friday, January 18, 2019

CNBC says it's "SAFE" to buy the market

Jim Cramer declared that the bear market finished on Christmas Eve - criterion?  That the market was down about 20 %.

Yesterday they said that it was now safe to "BUY" the market after this 12 % rally from the recent lows;

However if this was just the beginning of a bear market (which tend to last anywhere between 12-24 months) - we have only seen it for 3 months (so far) - what does it say about the rally - strong as it seems - is this a sign the BULL is back?

Well the last significant bear move was 2008.

Dow chart from 2008
1. can see the initial fall from the topping pattern was about 18% (2018 - 20%)
2. Rally from that first low was 12% (2019 -12%)

3.  Market then fell 18% and made a lower low - 
4 Market rallied 9 % (weaker)
5 Finally 27 % fall 
6 small rally 
7 final fall and capitulation



Target areas reached - what next?

So the DOW has reached the target area posted on 28/12/2018 .  The chart of the DOW on that date is shown below:


DOW today :

So  reached and surpassed the target 24280 (ish) -
Wedges typically have a throw over so could trade up to around 24600
Options expiration may be affecting this move up

So what next?
a few scenarios
1 a pullback from here and rally resumes
2 rally carries on to 24600 to form a throw over and then a sharp drop.

Remember in bear markets -  rallies like this will give investors reason to believe the bull market is back;
Bear markets on average last 10-15 months




Tuesday, January 15, 2019

Still waiting for resolution

Bulls are cheering and the talking heads have declared the bear market has ended.  read Jim Cramer article here.

Has it?

Well admittedly the rally has lasted about 12 days...

does that mean a BULL market has started?

look at some charts

DOW daily

So far down trend is still intact
clear classic rising wedge  (usually bearish) shows - more often than not there is a throw over (a rally above the upper boundary) which is quickly retraced




Nasdaq daily

bearish wedge
short term trend is up
but down trend still intact
could target 6750-6800

would need a break above 6880-6900 and follow through to start trend change


DAX and FTSE similar

DAX key upside level 11520
FTSE 7131  - Brexit vote  may have an effect


Thursday, January 10, 2019

No change - except Euro break out

No real change
Market rally has continued now 4 days long
still no break of the  downtrend (October - December)

if this is correction of that down trend and the trend is STILL down - could be close to finishing this move up - and next leg down

Small short probes on strength

No news on Trump trade deal - well actual definitive news - however the "positive" spin has contributed to the rally  - and markets are discounting mechanisms so a "Trade deal " news would more than likely boost prices but likelihood is a "pop n drop"  - keep cool!

Euro breaking out targeting 1.18 - 1.20
this is saucer formation
already broken out




DOW 4  hour chart

Looks like CLASSIC bearish wedge
Resistance at 24300
Could overshoot on a "trade deal"
A break down of the wedge - new lows ahead - 20k? possible 18500


Sunday, January 6, 2019

Finally - a rally - but is it a trend change?

Finally Friday's action looks like seller stepped back and markets had a decent rally.  Is this a change of trend?  Or just a correction?

Last post looked at the monthly charts, now zooming in to look at the weekly charts.

First the headline index  Dow Jones Industrial
Remember the downtrend on the monthly shows it in perspective - the odds favour a deeper correction.

1.  Bear market rallies are usually very strong rallies
2. The chart shows the down trend within a channel - prices reached the lower boundary - so the market was ripe for a reversal
3.  The action (so far) is still contained within that channel
5. There is still room to the upside to reach the top of the channel.
6 if this is just a short term bear market rally then I would expect prices to turn down again NEAR the top channel
7 A significant break above that channel and we may visit 24236 (see previous post)

May have been premature in discarding the 24236 target
Stopped out of all short positions on Friday - for profits
flat and watching 
expect rally to continue to at least top of channel and possible larger correction in which case 24236 on the cards


What about the other markets? 
DAX weekly

Similar channel
DAX has been showing relative strength vs US markets - has come close to the 10220 target (10275 low)
shaded areas show potential Fibonacci targets for a correction of down trend
Elliott wave - could be starting a wave 4 (up/sideways )  4's can be very difficult to trade - lots of whipsaw




FTSE weekly

Also in a channel
last post highlighted that it was reaching obvious trend line support


Nasdaq 100 weekly

Also in a down trend - but nearer to breaking out
if it does targets next trend line 6750 ish
a turn back down here likely sees new lows



CONCLUSIONS

Markets still in down trends but all rallied near bottom of the channels
May be a sign of short term trend change  to up (6-7 days)
Anything larger may mean bigger upward move
Be nimble and don't get married to short side
Volatility will still be present

Thursday, January 3, 2019

2019 !

So a new year begins

looking at 2 long term charts - the DOW (headline index ) and the DAX (Germany - Europe's largest economy)

DOW JONES INDUSTRIAL monthly

!. This shows the decline at the end of 2018 and puts it into perspective related to the 2 rallies; from 2016 (Trump rally) and the 2008 rally.
2.  The rally on 2/1/19 failed to reach the 24200 target
3.  at the moment it looks like it can test the long term up trend (blue line) and there is horizontal support (look left)

will look at shorter time frames over the next dew days
Market view can change - but it seems that unless we get a trade deal out of Trump and China (and this may end up being a few days of euphoria before reality sets in ) then likelihood is DOW can head to 20k and possibly 18500




DAX monthly

Break of the up trend since 2011
Up trend from 2009  - trend line support 9100 and rising
LONG term trend line support 5900 and rising
horizontal support 10050 and 8066
Head and shoulders target minimum 10220


So 2 major markets seem to be in sync
 A trade deal with Trump (USA) and China would more than likely have a sharp rally so be wary - if short -
HOWEVER - in TA NEWS doesn't matter and if the primary trend is now down - this will re-assert itself

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