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!

Longer term view Nasdaq

So although the sell-off at the end of the last week will be blamed on Trump tweets, in reality, news usually doesn't matter in the medium term.  so where next for the markets?

We can't predict this, but we can look at various scenarios, and assign a probability to them.

Nasdaq weekly chart

Technically - the negative divergence between price and RSI (price making new highs - RSI not) - usually a negative sign for the market
The bull market has lasted over 10 years to date

What are the scenarios?

1.  This fall is the start of a correction of the December 208 rally to new highs.  looking at Fib retracements 62 % is quite common but the correction could stop earlier than that.
This is the most BULLISH scenario - supported by uptrend still intact, interest rate outlook conducive to more risk.
2  The recent fall is the start of the Trump rally correction - this would be a deeper fall and targeting the lows in December

3 The bull market is ended and the correction/bear market will correct the rally from 2008

Scenario 1 is more likely at present; low-interest rates, an election year in USA 2020,; however if the falls become more pronounced or a rally fails to exceed the recent ATH - then should be on the look out for deeper corrections.

A quick look at the daily charts also shows the negative divergence.

NASDAQ 100 possible had and shoulders target 5400

Finally a break out to the upside imminent

Are the markets poised to break higher..finally?
The consolidation has been longer than expected BUT
the downside has been limited
the weak longs are probably shaken out
the bears have been given some hope

so NOW the market may be ready for new highs

FTSE  4 hr chart
A break above 6426 and holding should mean a new high for the FTSE.
and eventually possible all time high

DAX

Similar to FTSE long consolidation after rally from November.  Again, despite only giving back max 4% the sentiment has been increasingly bearish.

Next hurdle for DAX is 7865

Euro vs USD

All currencies have been weak vs the USD recently. On the Euro daily chart it looks like some positive divergence creeping in.  Euro may be due for a rally, and conversely the dollar due a fall?

AAPL

still not getting any love and hatred increasing. 406 next support after that 380
Yesterday finally filled a gap
Despite AAPL falling NDX has been holding well, if/when AAPL rallies NDX has a bull flag target of 2900

Quick look at NDX

Consolidation over?

DAX and FTSE have been consolidating after rally from November lows.  Is the consolidation finished?

It's looking increasingly like it.  Markets have given very little back; bears will be getting nervous, and buyers seem to be pressing.  The next rally could be the end of this run, but with quite a lot of bears around it may run further than expected.

FTSE

Looks like it has respected the channel it is in and bounced off the mid point

rally should head towards upper boundary 6426

DAX

seems to have found support at 7570

above 7726 should accelerate as bears give up

target minimum the highs..7860 though probably higher

NDX Nasdaq 100

After the big gap up traded in range 2700 /2760

very dependent on AAPL 

BUT has broken above that range

expect support 2750.2760

rally should carry eventually to 2890 or higher

Use AAPL weakness to buy dips!!

AAPL

Stiff resistance at 500

probably range bound 440 to 500

DJIA

 high level consolidation

everyone "expecting " correction

so probability is it heads higher..

a break above 14200 may accelerate

Week 3 ..CONSOLIDATION

January week 3.

Markets have consolidated the recent gains, most notably the DAX, which had a month of up days with little correction.  FTSE flirting with 6100/6070 as support.  EURO broke through 1.33 and looks to be back testing that level, holding above 1.325.  Cable notable under performer clinging to 1.60 level.

S&P very tight range 1465/1473

Oil, gold and silver have also held their rallies, as copper consolidates

OPEX week so not expecting major change this week. 

AAPL trading dominated by emotions.  $500 key PSYCHOLOGICAL level was broken mid week, and subsequently recovered.  The POSITIVE divergence on the DAILY chart continues and it is possible that the drop below $500 has now cleared out weak hands and "emotional " selling.  AAPL has also caused to NDX to under perform so a turnaround should be reflected many times in the NDX

CHARTS

FTSE Daily

May still be a move down but would not expect 6000 to be reached, more likely 6050 if anything

More likely scenario is a break higher once this consolidation is finished with.  Targeting 6400

DAX daily

DAX also consolidating (pink box) after the strong rally from November low.(light blue arrow)

Also looks like it will be on the way to new highs once this is over.

Possible for a scary move down MAX 7560 (in the scheme of things not that big a fall, but would shake out any weak hands).  More likely we have seen the extent of this consolidation, and a break above 7800 , targets 8000 and maybe higher. 

EURO daily

The EURUSD looks to be headed higher 1.35 first target.  Projected path pull back and then rally further towards 1.40 level, which SHOULD coincide with new highs in equities and a push higher in commodities.

Cable daily chart

1.60 looked to be key level..but like AAPL probably more psychological with a lot of stops just below. More important should be 1,5970

tentative EW labeling ! Maybe we are poised for wave iii up. Target 1.63 and beyond

A drop below 1.5830 changes things

AAPL daily

NDX daily chart

The GAP up has not been filled (BULLISH)

looks to be forming BULL flag between 2710 and 2750

A sustained break above 2750 could target 2890 (measured move)

NDX weekly chart

Chart is pretty self explanatory

a sustained break above the rectangle  and we could see similar move to August 2012

Buy or sell? DAX, FTSE. DOW, NDX

Follow up on previous post  with FTSE DOW and NDX thrown in for good measure
Long? tighten stops
Short? stops are close by, and be ready to reverse on confirmed break higher...

Markets are poised for a break out higher..but will it be after another shake out??
Where's the crystal ball?

Monthly charts for LONG term investors

DAX

OK ! We may be about to break resistance and head to the highs around 8,000 BUT each time we have entered the highlighted area there has been a severe setback for the DOW.  Will history repeat itself ? (or at least rhyme?)

FTSE

Also approaching a resistance band may be quite tough getting through. If it does, then can probability increases for a min test of the highs at 7,000

DOW

Clear up trend.   A break above recent highs should see test of all time high at 14k.  

NDX

Monthly shows clear up trend with recent weakness testing support and rallying.  a rally should go to new highs above 3,000.
Very dependent on AAPL

AAPL DAILY chart


Oversold rally from around 505 level.  Another sell off almost testing the lows.  watch for
either a new low and rally, with RSI diverging (ie no new low in RSI)
or a move from here above 558 for signs that bottom is in.

AAPL

Apple looks like it will conform the negative divergence which has been forming..
watch out for sharp correction

Which will take NDX lower as well

Waiting for the exhaustion rally..

Equity markets have been doing relatively little this week..Likely scenario seems to be an upside break out for most markets which will be received with euphoria on mainstream TV (think CNBC!), and will probably signal the start of the correction (markets do not go up in straight line forever).  The charts below show the case for upside break outs, also some warning signs in the tech sector (NDX, AAPL). I give it 70 % probability?

OR we fail to break out and then correct from here. 30 % probability?




FTSE
Finding support at high levels around 5910 after poking above resistance at 5920. If move gains traction then expect move to 6000/6100.

DAX 
struggling near resistance at 6930.  Possible negative divergence setting up on daily chart.  6930/6950 was support level various times during 2011.

Nasdaq 100 


Overbought under-performing this week.  Negative divergence forming.  Also main component AAPL, possible negative divergence.

APPLE

Negative divergence forming price/RSI.  Warning signal.  may get a new high but if unconfirmed by RSI sell off should be imminent.  

DOW INDUSTRIAL


struggling near 13,000 level.  Rising wedge formation (bearish), 13,00o psychological round number, and break out there could see 13100/13200 quickly, before a significant reversal probably targeting 12500

Leaders

In this rally from March 09 the leading indices have been the NASDAQ (USA) and the DAX (GERMANY)

BOTH of these have broken their rising trends in last few days..KEY now is what happens next...

A.  FALSE BREAK...prices recover enough to "get back" in the uptrend channel

B.  Prices recover and "Test" the underside of the broken trend, and THEN continue fall

C.  NO recovery from here, prices fall until next SUPPORT level

We should know soon enough!!

Decision time!

With the big move on Friday, many markets are poised at the edge of the precipice...
FTSE 100,NDX100, DAX, DOW,and EURO.

FTSE broke minor uptrend within larger wedge, so possible move down to 4850/ 4800 on cards.  Key will be if when we get there DOES it break larger wedge?

EURO poised for a break of the large WEDGE...not YET broken..

NDX 100  has been the leader in the rally since March, and HAS already broken down through the major WEDGE formation...IMPORTANT keep eye on this...

DAX is poised on the edge of the wedge  leading index in EUROPE..very similar to NDX 100

DOW  has NOT broken the wedge yet...looks poised for a test approx 9500.

step back and look from a distance

Just trawling charts...sometimes when the shorter term action is unclear it´s best to step back and look at longer term, ie weekly and monthly charts.. a bit like looking at a painting too closely, step back and it becomes clearer

NDX which has been strong in recent rally...

broken above horizontal resistance at 1234 and now testing next level at 1305..

weekly chart shows 3 waves down, (not an Elliott wave expert) but this shows we could be in wave 4 rally (at least in NDX) which should give choppy trading for a while..ie short term stuff...