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 !!!