US Overall Market Pre-market Review

12Nov09 - Pre-Market Review

I was looking for clues on any possible exhaustion of this rally...who isn't, right? And decided to check out almost all of the industry sectors' ETFs. This means, i looked at Agri, Industrial, Transport, Telecom, Financials, Biotech/Healthcare, Retail, Precious Metals, Oil&Gas, Construction, Consumer, Builders, Energy, Alternate Energy, Technology, etc...

Technically, a few of them did look like they rolled over about 2 weeks ago. But along with the rise in main indexes over the last 8 sessions, most of these charts now look much stronger. By that, I mean, most have either surfaced above the MA50 or made new year highs. Where a few once cut below the head&shoulder neckline, they now re-emerged above it. It was difficult to locate any particular ETF that gave an assured negative bias.

Among the major indexes, brief technical readings are :

a) $INDU - new year high formed last night
b) $SPX - continues to challenge most recent year high
c) $COMPQ - near year high
d) $RUT - hit MA50 resistance as of last night (this is thus the only party pooper)

MACD - all indexes show increased momentum as prices increase

Obviously, this does not mean that the rally will continue without impediments. There are clear and near resistances for all them. It merely highlights that the internals across the board, technically at least, are supportive of the rally of this last 8 days.

So, then, how should we play this market? Your thoughts are most welcome....

MacroView of Market Strength

10 Oct 09 - MacroView of Market Strength

As we head into the last quarter of 2009, one outstandingly clear pattern is seen across almost all major ETFs representing all industry sectors including financials, transportation, mining, O&G, consumer, industrial, basic materials, biotech/pharma and with the exception of alternate energy and technology sectors... and that is, none of their rallies since Mar09 was accompanied by significant increase in trade volume....

In fact, these last 7 months of increasing prices have been at constant reduction in volume. This is a point that has been highlighted on several occasions and it is my opinion that we must constantly remind ourselves that without the necessary high octane purchasing by institutional investors, almost all rallies will eventually lose steam and crumble under its own weight.

Of cos, if we have stayed inflexible and maintain this age old system of not trading/investing under such circumstance, many would have failed to capture substantial profits in the last 7 months.

We simply have to be acutely aware that when and should indexes start relinquishing its strength, it can do so very swiftly. It is thus critical that we adhere to methodical money management as we continue to tread in thin ice environment.

As with my earlier suggestions, I have no other reason to see an immediate turn of events given present technicals. However, from henceforth, I am increasingly vigilant of turning points.

7Feb09 Where Do We Go From Here ?

7feb09 - Post Market Review

SPX rose above 850 immediate resistance region to 869 and promptly stopped at MA50 resistance at the same value. Volume was slightly thinner than Thurs' session but was still 2nd highest registered for last week's session. Both RSI and MACD suggest a possible continuation.

Naz also registered a nice upward punch to a trendline resistance at ~1590-1600 region. What is significant, was that Fri's rally took out Jan28's high rather convincingly, lending some strength to the surge yesterday. Volume was also thinner compared to Thur but overall higher than the average of the week. MACD is gaining rally momentum but daily RSI is suggesting reaching an over bought region. Watch this trendline resistance at ~1590-1600 region carefully; any breakout can cause market participants to possibly fuel rally further. Naz index has been coiling tighter into a triangle pattern...
However, given both an over bought situation and the immediate resistance, it may not be surprising that index may be retarded in the short term.

DOW ended the week at 8281 and is still considered to be in a short term bear trend, since Jan09. The volume increased over Thur's session and is considered an "accumulation" day.
It needs to go higher than 8375 to technically "kill" this short term down trend. This ~8375 hence is now the next immediate resistance that DOW must convincingly clear to attempt the next resistance at ~8450....and the next at 9050, the first of several fibo retracement resistances. Frankly, all indexes will have many obstacles ahead... DOW will need alot of redbull, and really sexed up to possess the energy to clear the SOC (standard obstacle course) ahead....

Overall, as indexes climb higher, the upside risks will increase. Some quarters will suggest buying after resistances are broken, which technically, is not a wrong advice. However, given we have a very contentious economy to worry about, I'd rather sneer at this technique for the moment. If I should be bullish after now, my entry would be at relevant supports. Remember, we make money with bullish positions by buying LOW, not higher prices (something, which I do not agree with CANSLIM approach)

Good luck and HUat HUat !!!!

Are The Bears Retreating?

15Jan2009 - PostMarket Review

my take on the US indexes for Fri... whilst clearly, spx and dji have both crossed below some important support, the situation is really oversold (on the hourly basis), which is poised for some rebound. and this was what happened last night. after mid day, all indexes staged a very powerful rally...i say powerful because that rally that started around 1pm was relentless in the upward surge.. it was very clear and decisive. some short term resistances found on the hourly, were easily subdued...again a sign that bears retreated to the woods... this means, the sellers were exhausted...and the buyers took reign (see below)

SPX - 15 Mins Chart


what is critical here is that, for the SPX, my TA indicates an important resistance of ~850 that needs to be cleared..

if today, we get to clear this....then momentarily, the ominous cloud will disperse paving way for some clear blue skies for next week...

a quick review of DJIA also shows a long term support holding up indexes from free diving further, at least this happened on Thurs session. this is good news for the bulls.

DJIA - Daily Chart


and finally, it might surprise that the VIX coincidentally reached MA50 and fibo 50% retracement resistance at ~54 and promptly retarded to close at ~51....all this is saying, is that panic and fear may be contained.

if you compare the VIX reading when spx and djia were at this level last year, VIX was ~70. today it is ~50....same index level, less fear...this is what VIX is telling us of this market even with a week's worth of negative index readings.

VIX - Daily Chart


so, i really, will not want to be too bearish at this stage...not unless, i am betting that last night's rebound is purely a short covering... but really, not likely, market short covers from 1pm until close...
in fact, given last night's performance and the above indicators, i am more inclined towards being neutral to bullish bias.
of cos, the deciding factor will be tonight's performance. this is terrific timing for me. options will expire today.
so, next week, i can look back and trade alongside the market direction.

good luck and i wish you all HUat HUat !!!!

Kennynah (Singapore)

DJIA - Testing Long Term Support !!!

15Jan2009 - Intraday Review

Tonight, we turn our attention to DJIA.

See annotation within Chart.... what happens can make a difference, a big difference in trading strategy going forward...

DJIA needs to hold up at ~8010

DJIA - Weekly Chart

15Jan09 - PreMarket Review (SPX ~850 Support Broken !!!)

15Jan2009 - PreMarket Review

SPX crossed below my TA target support of ~850 and stayed below. To make things worst, volume picked up. Does it mean that SPX will continue to tank further ??

I have little choice but to be bearish bias now, since technically, the rally that started in Nov 2008, has finally ENDED !!!

However, it has happened before that "fake" break outs or downs occur, the most recent being late Nov08. Don't mistake this for not accepting what is written on the wall so far. The intention is more to confirm the situation. Afterall, the last thing anyone of us wants happening is to be whipsawed..ie., entering a Bearish position only to see Index starts rebounding.


SPX 15 Mins Chart


It is therefore, necessary to be cautious about jumping the gun to start entering bearish positions. Let the index confirm itself for another session or two. But of cos, if you were an aggressive trader/investor and willing to stomache the risks, it is no better time than soon, to begin shooting pool and guzzling beers with the bears...

For me, I wont yet bet the ranch on being too short now, well, at least not yet

Good luck and Huat Huat !!!!

Where's SPX Heading in Short Term ?

Over the last 5 trading sessions, SPX trended downwards.
This gives rise to the "feeling" that major US indexes should continue with this trend. It might, or it might not. Frankly, I don't know, but if you know, please tell me :)

Let's then review the TA of SPX daily chart below....



There are 3 signals of particularly interests to me :

a) SPX index dipped below the trend support trend line. There's no argument here that this is a pretty bearish signal. If that support had held up, my TA view would be bullish bias, undoubtedly.

b) However, life is not so simple and so is TA. Trendline supports/resistances are just but ONE indicator. And in this case, there's a second support that must be breached, before I begin to be a whole lot bearish. This is the support at ~850 region, established by in Dec 2008. If you scrutinize the chart, you will notice that on 2 occasions, this low was tested and index held up. Everyone and everyone who is a TA practitioner, will be looking at this level, and determine the next course of action.
So, if we soon test and fail to break this ~850 region support, lorryloads of traders, may decide to go Long for the short term.

c) Giving some indication on the strength of the downward movement over the last 5 sessions, we turn to MACD. Clearly, this daily MACD shows that momentum is just beginning to build along the downward thrust. BUT, it is not if you again look under the magnifying glass, RSI tipped just ever so slightly upwards. This helps mitigate MACD's suggestion for a further downswing. Overall, we must respect that MACD is suggesting some continuation on the downside.

Overall, I would need to see how 850 region holds up or not. But for now, I wont be surprised if SPX will trend toward 850 region in the very short term.

If it successfully supports SPX from falling, I will begin looking at bullish bias positions for Feb, while keeping in mind the limited upside potential, given murky outlook on economy.

If SPX breaks support at 850 with authority, which means, i will need at least 2 - 3 continuous downside sessions to confirm this, obviously, I will turn rather bearish and strategize my trade accordingly.

I welcome you TA comments, especially, if you disagree with any of my comments above.

I wish all HUat HUat !!!!

Kennynah

Weakness in US Indexes ?

10Jan09 - Weekend Review

What was obvious in last week's trading, was that both SPX and DJIA indexes reached some technical resistances and promptly retarded downwards.

However, the volumes on the down days last week, did not suggest any panic, even though 4 out of 5 days, these indexes lost grounds.

In fact, VIX remained ~40, give and take. 40 for VIX might have been considered as a "buy" signal in the few years prior to 2008, but now, it would be misguided to think VIX is aggressively indicating Long positions. To me, it is not.

When you review the 2 charts below, I hope to receive your TA reviews as well.

For the following week, I will be more bearish than I would be bullish biased. However, I am also mindful that the upside risks is more imminent than downside ones; to restate it, i mean i expect indexes to stay range bound and go lower....but beyond 1 week...who knows...we will just need to see the price/volume action again next week.

Good luck and HUat HUat !!!



DJIA - Daily Chart



SP500 - Daily Chart

Fibonacci is Alive !!!!! DJIA Repelled at ~9040

6Jan09 - Market Preview

Just when some of us think Fibonacci is masak masak....

Here's just some proof, of its usefulness...


DJIA Daily Chart

5Jan09 - Intraday Review

There's only ONE indicator, which's telling me tonight, that we might not be seeing very large wild swings on prices like in 4Q 2008.

That indicator is none other than VIX. Right now, it has come down to a decent level of ~38. Technically, VIX's chart can be read just like any equity charts. And technically, the next support level is at ~35...

what does this mean? it means, that the market is comparatively calmer now than 3 months ago. it also means, that option premiums are now relatively cheaper and traders have less incentive to Write options. it means that lesser people are buying Puts to protect their stock portfolio.

contrary to popular folklore that when VIX gets lower, market will rally. it is not an accurate way to define VIX indicator nor a correct usage of this indicator. many have argued that VIX is a better used as a temporary market "bottom" index, and i tend to agree. this means, that VIX is more informative when it is very high, like when it hit 90 recently. that signaled a temporary bottom, of cos, this is all in hindsight.

now that it is ~38, does it bear meaning that US Indexes will rally onwards, maybe and maybe not. i dont want to use VIX in this manner. it makes no sense to me. rather, i simply read current VIX level as being indicative that sellers are not panicking and lelonging. with no aggressive and panic selling, price should stabilize some what.

however, for markets to swing upwards, buyers must come en mass... otherwise, indexes will have a hard time climbing further.... and VIX does not give us any clue here... only Price/Volume action will tell us this....

so..... i'd be focusing on Volume for the rest of this month.....

good luck all....happy trading !!!