Ho hum - bull or bear - take your pick!

Nasdaq 100 -

2 scenarios - 1 Bullish - 2 Bearish
Which is more probable?  
probably scenario 1 - low rates here to stay, Fed, ECB and other central banks pumping liquidity into markets - which forces savers to look for returns in riskier assets (stocks, bonds etc)
BUT  there is always a probability for scenario 2 - maybe a, "wake up and smell the coffee moment" i.e.  the "people" finally realise that the Emperor really is wearing nothing!


1 Ascending triangle with a break out at week ending 01119

2 Rising wedge

  

Chop, Chop

The markets are playing with US!

Breakouts to the upside - no follow-through

Breakouts to the downside - no follow-through

WEARING market participants out

Basically, the bus is slowly being emptied -
BOTH buses!

BEAR BUS
if you can trade a bear move and get it RIGHT - it can be exhilarating  - Think rollercoaster ride

 BULL BUS
Bull moves - slow and steady (generally) not as much adrenalin rush

What does this look like on a chart?

Nasdaq weekly
clear rising wedge (usually a bearish formation, although to really clear the bus, typically it will rally above the line  (shorts will run for cover and bulls will load up), before a sharp reversal.

Conversely - if it breaks down, similarly it will fall sharply and then rally to re-test the break - catching many market participants out

With ALGO trading dominating the current market,  the moves will be exaggerated
Step back to see the TREES!

Dow Industrials

still in the throes of a trade war dominated environment - but longer-term NEWS doesn't matter?

Still looks like an ED; In August, it broke the lower uptrend line; and then consolidated for the month, then breaking higher - HOWEVER the rally failed at 27500 (possible DOUBLE TOP?)

Now threatening to test the lower trend line of the ED (wedge).

If the ED has completed - expect a breakdown of the lower trend line - followed by a more prolonged bear move - (correction of 2016 brally  or even the 2008 rally) 

If it HASN'T completed; expect a bounce and a rally to new highs (throw-over), and THEN a rapid retrace of the ED and breakdown as above.

If this is just a consolidation, a sustained break above the top of the wedge (ED) and then more prolonged bull move (pushed by lower rates, China trade deal)

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

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

A look at the DAX

So yesterday was a strong rally day - have markets turned the corner.

All the talking heads were very bullish and still talking about bottoms (market ones!)

- that to me is a warning that it ain't over yet.

After 11 or 12 days down - it is NORMAL to get a counter trend  - 2-3 days or sometimes an extended correction 7 days..

Bear market rallies are VICIOUS - as real buyers step in and short sellers also cover positions

Remember VOLATILITY will continue, there will be wild moves, you have to be NIMBLE.  

Most traders lose money in bear markets - due to the volatility

DAX rising wedge - tends to be a bearish formation

at the moment midday London time, it looks like a failed break out or throw-over..but that could change during the next 3-4 hours.  

Key level - if break to downside 11400 , probability of down trend continuing increases.

Conversely follow through above 11575  favours 11700-11780 (test of neckline of heand and shoulders**)

**  Remember if patterns fail the move can be dramatic in the opposite direction, i.e. if a head and shoulders top fails a sizeable rally would probably occur

Probably/probability/  looking at charts is not predicting moves but working out probabilities of certain events happening - sometimes more than 2 options may be seen