The Market seems to be in an indecisive state during the close of the last day of the week. All 3 Indices formed a small doji in a pretty small trading range.
The SPY has done a very great job holding strong on the 138 support level. However, it really needs a more stronger move if we were to witness a major uptrend. Price needs to break above the 142 resistance level next week. If it can't manage to achieve that, and pullback on the 142 level, then the Head and Shoulder pattern will be pretty obvious. This is a very bearish sign having it on the top of the chart.
The Nasdaq on the other hand, has indeed helped the other 2 indices in holding strong in their supports. 4 consecutive up days in the past has pulled the other markets up, preventing them from a catastrofic breakdown. However, the NASDAQ is currently in a trading range of 48-50. With the Doji forming right at the immediate resistance at the range, I wouldn't be surprise to see a pullback next week despite all the good earnings recently reported by the tech sectors.
GOLD has recently returned to it's original down trend with it's pullback on the Bearish Engulfing that occured right on the Resistance trend line. Notice the 2 pink lines? Pretty obvious, the Ascending Triangle is slowly forming. Before there is any breakout, I will expect to see the GOLD trading between the range of 880-930 in the near future.
OIL finally made some pullback, which undoubtedly is one of the main factor why the market has performed quite well in the previous week. However, the hammer which just formed last Friday right on the immediate support right around 126/127 will be the thing to watch out for. I wouldn't bet against the trend and bet on SHORTING the OIL right now, but that is something that I will be looking closely into, and it the OIL really did break below the support at 126/127, then I believe, the market will go into a serious uptrend.
The USD index finally managed to bounce back into it's original trading range of 72.5-74.0 Expect to see the USD to trade within the Yellow Box range in the next week, unless there is an obvious weakness shown in the Crude Oil.
Summary Overall, I still maintain my bullishness on the U.S. market. Oil has been dropping, Gold has been dropping, The USD has managed to get back on track. Tech stocks (QQQQ) has been the main performing sector recently. The only thing to really watch out for is the SPY and OIL. I will focus on Tech Stock in the next week, and might still look for some Oil counters to trade on.
This week is a very terrible week for me. Got stopped out on all my trades, and seems like the market is starting to show some significant signs of weakness.
With oil trading higher each day, everyone is so concern about the economy , and there's no doubt why the market shows sign of weaknesses.
Just look at the rate of increase in price. From $85 since Feb, all the way up to the current high of $135. That's a whooooping $50 increase in 3 short months. If that doesn't sound scarry to you, maybe let's say it in another way:- That's a 58% increased within 3months (90days) period. Or in other words, a 232% increase per year. Now how does that sound to you? :P
With that kind of momentum in the Crude Oil, I don't see any help with the Piercing Pattern + Oversold. There's no way to rationally predict what is gonna happen next to this craziness. The only thing that I would say is, the signs will only help in a very short term temporary pullback, and that's it. Oil will still get higher and higher.
On the other hand, gold is also starting to show some signs of recovery, but is met with an immediate resistance.
From the look of it, there isn't enough buyer to sustain the previous week's rally, as Gold is already at the overbought region now. I can foresee that Gold it going to resume it's downtrend in the week to come. Just look at how the Bearish Engulfing formed right exactly at the resistance level.
The US Dollar Index finally broke out from it's trading range after 3 weeks.
The US Dollar is currently having in indecision on whether to break or not to break. It is still not a very clear sign of downwards breakout. If the buyer comes back, this might push the USD back into the $72-$74 trading range, and put the short selling to cover back their shorts, thus, staging a immediate rally. But ..... if all else fail, then we should see an immediate support at $71 level. Breaking that level will mean disaster to the USD.
Really breaks my heart. That's where I got stopped out. Betting on a short pullback 2 days ago, and the pullback doesn't stop, but followed thru and penetrated the support line, which I got stopped out on all of my trades last week. Sad ........
There isn't enough POWER to push thru the 200MA. Both attempts to break thru the 200MA was negated by more sellers. And finally, the buyers gave up, and sell their position, which made the breakdown of the market. Seems like 138 will be the last line of defence. Once that is broken, I believe that will be the end of the rally which started on March. They say hoping is a very dangerous thing when you are in the market, and I'm still hoping that the market will be able to recover from this short term weakness. Of course, I have my hopes which comes with some other facts that back me up, and hopefully I'm right this time.
The 1st that backs me up is the Volatility Index.
The $VIX has been staying very obediently within a 10% range of its 10MA. See how during the past few weeks, the price is kept well within the 2 blue envelopes? Well, it is now touching the upper band, and I'm buying that it will stay as obedient as in the pass, and pull back. The other fact that backs me up is the QQQQ, which is the technology sector.
Despite the obvious weaknesses shown in the Standard & Poor and the Dow Jones, there is still one major index that track the market's breath that stands above the rest, my last hope, the QQQQ Nasdaq .
So far, this is the only index that trades above the 200MA for so long. Technology has been staging a huge comeback lately. See the 2 small doji that formed for the past 2 days around the resistance area? Despite the HUGE down days on the SPY and DJIA, the QQQQ only shows sign of indecision with 2 small doji, without any significant sellers. This shows that buyers still have faith in the Technology sector, and I'm buying on that.
This will be my last wild card. If next week sees a rebound on the $48, then this might be able to save the market, and pull the index of SPY / DJIA back to their original uptrend. But if next week the QQQQ also show weakness and break down thru the $48 support, then I believe, we will be seeing a new change of trend, a beginning of a Down Trend.
(I'm still holding my AAPL, and am looking tightly on these few stocks, which shows strength despite the week market yesterday. PNRA, BUCY, FRED)
Seems like the Malaysia Market is having some difficulties breaking thru its 1300 level.
The 1st attempt to break thru the 1300 level has failed, obviously. There might be more attempts to come. I predict that it will pull back a bit, the buyers will step in again, to retest the 1300 level again.
It just so happened that the 1300 level resistance is currently defensed by the 200MA as well. This could create some problem for the bulls, as most people will stay away from buying during this period.
But, if ...... if it manages to penetrates the 1300 level, we might be able to see a target of 1425 (the width of the triangle from the breakout point).
Overall, I'm still a bit bullish on the entire market.
UP up and away ........ No no .... I'm not talking about the market. It that darn @$%#@#$%@#$% oil.
The reports on auto sales came down. Fundamentally, the demand for oil should be theoretically reduced. But ...... this thing is still going up. when is this thing gonna stop? God knows.
Gold, as expected, rallied to 900. That little close above the trend line, is just a test. It is not YET considered a breakout. We will see how it works out the next few days. And if it really doesn't continue moving up from 900 with strong signs, then 950 will be the next immediate resistance. Else, the downtrend will continue.
US Dollar has been trading in the $72-$74 trading range for the past 3 weeks. All traders seems to be sitting at the side line while waiting for more confirmation on the direction of this currency.
As a side point, an Iron Condor would be very cool. Write a 74/75 call Credit Spread + 72/71 put Credit Spread, and so long as the USD stays within $72-$74 till expiration, you get to keep all the credits received. :)
Noticed something different?
Well, I've decided to use the SPY instead of the DJIA index as my market gauge. Actually both charts look the same, but since SPY is a much broader market, I've decided to use it. One of the reason for using this is that I can use the $VIX (volatility index) to add into my study on the market's sentiment, as the $VIX measures the volatility of the Market, or to be more precise, the SPY in actual.
The YELLOW up sloping trend line has been intact since March. The PINK horizontal trend line has just been broken in early May, and has recently being tested for it's support last week. (see the 2nd pink circle)
The past 5 days has been up days, making higher highs and higher lows. Everyone is sooooo eager to get into the market in order not to miss out any piece of their share. Green is pilling everywhere.
Last Friday formed a hanging man right at the 200MA resistance area (see blue circle). With Oil and Gold trading higher, and the stochastic showing signs of overbought, I have strong reasons to believe that the market is going to stage a pullback next week. There's one more reason that supports my believe ...... and it is ........
The Volatility index.
It is already extending itself beyond 10% of the 10MA. When that happens, there's a high possibility that the market will snap back, which in this case, a pullback is highly possible on the SPY.
Action plan for next week? Stay on the side line. Be patient. I believe the market is going to pullback somehow. Once that does happen, then it will be a good chance to hunt for counters which produces nice signals for entry and nice setups. Entries will be taken once the entry signals are generated.
Here are some stocks that are in my watchlist that I'm going to pay attention for possible entry:- LCM, LG, GCI, PBR, SINT, SJT, SIM, EMC, RCH, PWAV, DELL.
I couldn't seem to find the updates for WW18?? I didn't blog about it last week? Hmmm ..... strange. I guess age is catching up and starting to play tricks on me.
GOLD
I want to talk about gold first this week. Let's keep the interesting ones towards the end :)
Gold, is having a short rally. Immediate resistance is to be seen at the 900 area, and the down trend is predicted to resume it's course. No excitement here. (Unless of course it really breaksthru the 900 resistance, which I doubt so.)
USD
Dollar, as expected, has been trading in the $74-$72 range. An evening star just formed, especially at an oversold region. Expecting a pull back. Maybe to around $72.
If the resistance holds strong, it will attract more buyers, and hopefully, the US Dollar will stage a steady rally from then.
We really need the US Dollar to get back in shape, which is the main reason why oil price has been getting on steroids lately .....
OIL
GOSH. Don't you wish that you were in this counter ? And GOSH, don't you wish that your business doesn't revolve around oil? :P
Yes. Oil has been going on steroids lately. With the fact that all the happenings in Nigeria, which further fuels it's speed.
As expected, what worries me last week on the Morning Star has indeed become true. OIL indeed breaks thru the $120 resistance. It not only did so, but with strong momentum !!!
I really have no idea where it will stage a pull back, as there's no sign of it. The only thing I would say is that, if it does pullback now, $120 might be the immediate support.
And I would really hope that OIL will break the $120 support so that the market can stage a stronger rally. Afterall, I believe oil is the only reason the Market hasn't been staging a rally FREELY until now. (there's nothing wrong in hoping, right? :P)
Dow Jones
Dow Jones has pulled back on recent days, all thanks to the OIL which kept making high highs on the past few days.
It is very important for all the traders to keep believing in the market, and bidding up the price when DJ hits the resistance area around 12700. That support is what holds the majority traders' believe in the bullishness of the market. Once that is broken, I will change my view on the market. Right now, I still remain bullishness in the Dow Jones.
13000 now acts as a very important point to be broken, as it represents the tug-of-war between the bulls and the bears.
KLCI
KLCI is currently trading in an up sloping range. It's fate looks almost the same as the Dow's. Either it breaks out above the 1320 resistance, and stage a full rally, or, it gets hammered down to earth once it breaks below the ~1270 resistance.
As we can see that, the up sloping wedge is starting to get smaller and smaller, this means that the volatility is getting lower and lower. People are all waiting. Be prepared for the BIG MOVE in the next few days/weeks. I predict that it is gonna be an explosive one.
Market has been doing very well last week, especially after the lower unemployment rate, and the highly expected 25point rate cut by the FED.
Clearly by looking at the chart of Dow Jones, it is already in a short term Up Trend. There are a lot of other ingredients that support this which i will come to it later. As for now, there are something that we should be concern of.
The Dow Jones has been in the Over Bought range for quite some time. And there is a high chance for me to believe that it will pull back soon, especially when the price is currently toying at the SMA200.
I'm expecting the trading range between 12750-13050 in the near term.
Let's talk about the things that help Dow Jones in it's bullishness look.
I would say the GOLD and US DOLLAR helps a lot here.
GOLD ..... is a ........ goner. Immediate resistance has been penetrated at 875.
The only thing is, it is currently oversold, and might stage a temporary dip.
I'm not sure where it's next support will be, as there isn't a clear line. Am expecting the SMA200 will be the next support..... though it's a bit far away.
US Dollar is the other main factor that helps the US market in its current bullish trend. US Dollar index has just break to the upside from a Descending Triangle.
Immediate support of the trend line is created from the pass 5 trading days, whereby price holding pretty strong and rebounded at every instance when it tries to break at the $72.50. Furthermore, this region marks the current 30SMA and 50SMA.
My Prediction? Seeing that the height of the Triangle is $2, this will be the expected price target from the breakout($72), which is $72 + $2 ==> $74. Thus, am expecting a trading range between $72.50-$74.00.
The only thing which I'm afraid of, is the OIL
Yupe. The oil has been toying around at the Resistance at $120 (sorry about the picture. It's not century resistance at $200. Typo.), when it is extremely overbought, and I predicted that it will pull back last week, and it does.
Now that the pull back has been done, and the over bought is over, what worries me is the current Morning Star formation, which is a very strong bullish sign. Will it breakout the $120 resistance this time? I hope not.
Well, if it does, be prepared to take profit on any LONGS that you are holding.
Let's get back to Malaysia for a moment :)
We can see a clear up slope trend line supporting the price movement. That should be able to act as the immediate resistance around the 1250. Coupled with the SMA20 and the SMA50 around that region, I believe this 1250 resistance should be pretty solid.
And if KLCI were to move upwards, Immediate resistance is seen at the 1350 area. The horizontal trend line and the 200SMA clearly shows this.
Expecting a swing between 1250-1350 in the near future. Good to buy the dips when price touches 1250, and sell on the peak when price hit around 1350.
There's no doubt the Market is now at a bull session (at least that's what the chart shows in the short term).
The BigFat Yellow downslope trendline has been penetrated weeks ago. Normally, a breakout from this strong of downtrend (The bunch of blue MA lines widely spreaded gives the clue that the investors are strongly selling) could be a fake one most of the time. That's why we need more confirmation from the indicators to make sure the the current breakout is a real one, and that the new trend could continue.
During the breakout week, the LongTerm MAs (bunch of blue MAs) has slowly shown sign of congestion, though they are still spreaded apart at a considerable width.
Now, last week's indicator has shown prove that this newly formed bullish trend should be able to last. Let's see the light blue circled area. The ShortTerm MA (white bunch of MAs) is now above the LongTerm MAs (bunch of blue MAs), and is now moving away from the LongTerm MAs, detonating that the Short Term traders are buying into current momentum. The Long Term MAs, which represents the Long Term investors, has been showing signs of strong buying lately, which is clearly shown in congestion of the bunch of blue MAs. They are now so congested that the buyers from the Investors are going to outnumber the sellers soon.
Even with all the strong bullish signals, (the 30MA, which has been staying below the 50MA for so long, has crossed over above it), we might be seeing a temporary pull back in the next few weeks towards the 12250-12500 region, due to the short term oversold indicator shown in the Stochastics.
Yupe. Buying calls will be the way to go for me. Buy into CALLS when the stock pull back.
Something extra from this week onwards. Would like to talk about Oil and GOLD, since these to components strongly affects how the market goes.
Whenever GOLD / OIL rise, Stock Drops, and vice versa.
Let's take a look at the light crude oil.
Oil has been toying around at the $120 region for quite some time. Although signs of overbought is shown at the Stochastics, the up trend still shows a low of power. If it couldn't make past the 120 resistance, be sure that the market will be very happy with is, and the bulls will have 1 less item to worry about.
Gold, on the other hand, has been well contained. The 30MA has been acting as a solid resistance to it. The breakout at the 1000 level didn't make it (the long shadow candle bar at 1033.90), and that was when the Market started the bull rally a few weeks ago. If this same thing happens to the OIL at the 120 level, how do you think the market will react? :)
This week I started looking into KLCI, hoping to get myself familiar with it before fully committing to it.
Well, seems like KLCI too has formed a Double Bottom, just like the Dow Jones. Double Bottoms are a bullish sign, normally. Last week shows that the MAs are starting to cross above. Is this the end of the downtrend and a start of a new trend? Hmmmm ........ Let's give it another week to see how it performs on the pullback, then only we will decide on the call.
Yeah. Finally, Mr. Market has finally done something which everyone has been long anticipating for, a Forceful penetration of the 12750 resistance point, with high volume.
Everyone has been anticipating for bulls to come. No one dares to take the first step. Just like working in Altera any company, whereby no one wants to take the lead of responsibility, but everyone wants to get a piece of the credit when award is given. It's the same everywhere, even with Mr. Market.
The encouragement came from a couple of good earnings report from some huge company, to name a few, Google(GOOG), IBM(IBM), Caterpilla(CAT), Intel(INTC), etc. With all those big gunners being the leader, everyone else follows and thus, the BREAKOUT.
The next following few weeks will see the 12750 turned from resistance to the immediate support. I wouldn't bet on there are still more bears trying to stop this rally, but the action from profit taking need to be considered. This might create a test on how solid the resistance-turned-support line at 12750 will be, and if the support holds solid (which i believe it will), then the next rally will begin...... again (just like the drawn gold line)
Mr. Market: BREAKOUT !!! BREAKOUT !!! BREAKOUT !!!
Wow. Just look at that congestion of more than a week at around 12500 - 12750. Finally the indecision of the market traders has 'temporary' ended with a final decision that the bears have a 'temporary' edge.
12750 still stand as the ultimate barrier for the bull if they were to stand out in this market. Without penetrating that level of resistance, there's no way the bulls are going to stage a show.
The immediate up-slope-ascending support is now penetrated, showing signs of weaknesses of the bulls to continue further.
From my point of view, I believe that the bulls have been trying to hold hard on their positions for the past few days, hoping that the 12750 resistance could be penetrated seeing the uptrend momentum is slowly building up. That's why we see a bunch of doji (white circle) congested around that area.
Slowly, everyone is getting impatient, and the market doesn't seem to be doing what they really want. Finally, everyone decided to take profit yesterday, and that's what the long red candle that we saw.
Next immediate resistance will be ~12150??? Hopefully. And if that happens, we would see a consolidation again around that trading range of 12150 - 12750 for another couple of days/weeks to come. That would be a great trading opportunity for the swing traders to buy the dips and sell the highs, vice versa.
The market is repeating history, The Blue Ascending Triangle is twin as the previous Red Ascending Triangle, and now, it is again testing the resistance at 12750.
Will it break thru the resistance this time and stage a huge bull? I'm not sure.
The market is telling us that it is still very uncertain to as what it wanna do based on the past 3 days of uncertainties looking at the clues given by the 3 doji.
From my personal point of view, the market might pullback to the recent blue ascending support at around 12400, and if it does, then it all depends on how the market will perform from then on.
If the blue ascending support line manage to hold as a strong support and bounce the market up again, we can then hope for the market to penetrate thru the 12750 and a bull will be waiting for us, but if all fails, and the support can't hold, then I'll be very worry about it. I don't know. 2 failure to breakthru on 2 consecutive occasion on 2 ascending triangle, doesn't look optimistic to me.
The Dows is moving towards a price channel trading range, between it's immediate resistance ~12750 and it's immediate support ~11750.
At least, the market is not as bearish as before anymore. Although whenever the Dows reached it's immediate resistance, it shows signs of overbought and form peaks (see the purple circle), the last pull back during the past 4 days doesn't seem very strong, as their volume isn't really that convincing for a bear market.
I would say, the market is currently more Bullish than Bearish. All it needs is a few good reports and numbers to help push it over it's resistance ~ 12750. Once that happens, we will be able to see a full force towards the upper direction.
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