AAPL parabolic

Apple - bellwether stock - widely owned by individuals and funds, huge index weighting - so all index-linked funds have to be heavily invested - everyone knows it's a "great" company ;)..so what next?
Below is the quarterly chart, with a parabolic rise laid over the top.  "Parabolic up moves are exciting to ride, but there is the almost certain danger that the rocket will run out of fuel, resulting in a rapid collapse of prices. Trying to pick the final top for this kind of move could be hazardous to one's health, but being aware of the potential danger can be useful in managing positions."

Below the AAPL chart is the weekly silver chart which shows a parabolic move in 2011 and the subsequent collapse.  I'm not saying that the top is in AAPL - but care is needed. 

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)

FTSE 100

Big fall from 7700 - (looks like many shorts stopped out, and bull trap ) with the subsequent collapse.  Now a corrective rally up to the shaded red area and now turning down.

Likely - new lows coming - but watch RSI - could be setting up for positive divergence and a short to medium-term rally before the next leg down.

ALT:  market keeps going lower and medium-term correction underway.

DOW - ending diagonal?

Dow daily chart

The trading recently (a year) has been very volatile - one moment looks like sustained rally, the next looks like a sustained fall.  So looked through books and online charts.
could be we are forming an ending diagonal

So, the fall in December 2018 could have been the end of the larger 4th wave, and now we are in some "ending diagonal" full of 3 wave moves.  This doesn't look complete - which allows for a new high - which also ties in with the lower rates scenario and this in turn, will mean a shift in assets to "risk" - for the wrong reasons - so the latecomers to the 10 years plus bull market.

Bounce back - what next

The bounce-back - now what?
Technically: markets were oversold, the fall overnight, when the Dow futures were down by 600 points, was low participation and by the time Europe opened the relief rally was underway.
2000 points loss on the dow in less than a week.

some charts and possible paths for the rally
WATCH THE VOLUME ON THE BOUNCE - LOW VOLUME WILL BE A WARNING THAT ALL IS NOT RIGHT!!

DOW daily
The fall overnight pierced the 200 DMA - for some that is a KEY LEVEL, so it looks like the PPT may have stepped in to prevent a crash on Tuesday morning
so a stick save - but where to now?
The "managed" fall tagged the lower upper trend line - so if the bull trend is in force then the rally should head to the upper trend line if this rally is only a correction of this fall likely target is 62 % retrace (marked in red)

Nasdaq daily

Looks like the fall also tagged the rising trend line so BULL market still intact

However, the fall was characterised by a few gaps down so it is possible that an attempt to fill the gaps will happen.

marked on chart at 7640

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

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

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

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

Short term relief

End of year buying and oversold conditions contributing to a long awaited bounce - but where does it get to?

DOW daily chart

Pretty much self explanatory
But some key levels:

Bounce target = previous support 24236 - which coincidentally is the 61.8 % Fibonacci retrace of the downtrend from 3/12/18.

May slightly overshoot or undershoot
May take more time

Possible medium term scenario: (very rough !)

1 rally to around  24236
then next leg down to new low (20k)

that should complete 5 waves down for larger wave I

2 Then a rally correcting that 5 waves -
if the 5 waves down starts at 26200  and ends near 20k = 6200 points  then :
62 % retrace = 23844
78 % retrace = 24830 - if this is wave II up can often retrace a large percentage of wave I  - this is where Joe Public believes that the bull market has resumed

3 Then the next decline wave III - this will be the longest

Time frame?  after new low - rally into the spring - with the fall starting in summer

This will indicate if the correction is of 2016 bull trend, 2008 bull trend or even larger 1980 bull trend (worst case)

Other markets - DAX and FTSE still on target for 10k- 10220 and 6300 respectively

Does the 1000 point rally mean the bottom is in?

So a huge points rally on the first day of trading after Christmas day - is it significant?

1000 points IS a big move - BUT when looked at in PERCENTAGE terms - yesterday's move did NOT even make it in to the top 20 moves since 1900 !

For source click here : Percentage moves of Dow Jones Industrial

Now look at the daily chart:
1. after  a down trend of 16 days it is normal to have a reaction rally
2.  can be 4-7 days long
3. some upside targets 23231, 24284 ( Fibonacci levels)
4. Longer term down trend still intact until 26100 breached

So this kind of move will generate a lot of short covering - so volatility will still be a major feature of the markets.

Pick your moments to go long or re-short

What about other markets?
FTSE daily

No break of down trend

DAX daily
Again no break of down trend

Strategy:
Probably range bound until New Year -
Correction which will alleviate oversold conditions
Once this is done - one more move down the real panic wash out

DAX 10220
FTSE 6300 (BUT may be affected by currency moves)
DOW new target 20k

CAVEAT: Watch the down trend and especially the much higher levels for a change in trend

Cable

Cable looks like it is breaking out at 1.60, with some heavy resistance still at 1.6140; however if "everybody" is looking at the breakout we may see a "false" break up.

Strategy seems to be wait and see, a fall back through 1.60 could be a short; Many shorts probably will have covered and new longs initiated on the break above 1.60  = BULL TRAP?

Anyway the next major resistance is at 1.6140 so not far away; Another level one could short at

Looking at the chart we can see going back that between 1,60 and 1.6140 there is heavy congestion.

Also on the bigger picture, we could still be in the process of forming a large HEAD and SHOULDERS formation, significantly above 1,6165 would invalidate this pattern.

We can also see that recent price action seems to be forming a MEGAPHONE or BROADENING WEDGE, usually a BEARISH pattern. 

Dow Transport

Looking at this chart, it looks like the next big move should be down in equity indices, regardless of whether one is a BULL or a BEAR.

The weekly chart shows 5 clear thrusts up, a break of the uptrend. Then 1 move down, and at the moment in a rally.  If this is a correction of the March 09 rally, it seems too shallow, a 38,2 % or even a 50 % retrace would "look" better.  Then if it's a bull, a rally to new highs, if it's a bear we head  much lower..

Yesterday's late rally..and other things

Yesterday's late rally in Dow looked like either PPT or BUY programs...OIL, GOLD and EURO did not follow...so looked like a classic bull trap...again..

Look at DOW chart above...

The KEY seems to be watch the YEN...a strong yen has been signal for continued selling...see JPY chart.

Any turnaround in markets should be signalled by weaker yen, stronger euro, and rising OIL...and other commodities...YES OIL is POSITIVELY correlated with stocks over the long term..ie OIL falls stocks fall, oil rises stocks rise. Look at any long term charts of oil and dow...