Looking at yesterday's action, if you question the importance of the NYA 40-week MA, you will change your mind. No less than seven interactions (green circles) occurred yesterday alone. The bull-bear fight continues. Bulls win above 7668, bears win below 7668. The price acton in this VST time frame shows a lower trend line that is well defined so watch that to see if price fails. Likewise, on the top side, a downward-sloping trend line is well defined which forms a sideways symmetrical triangle. This triangle only has about four or five candle distances remaining before it is thru the triangle apex, where a decision must be made with direction; this would be about the first 20 or 25 minutes of trading.
Using the vertical side of the triangle (dark vertical line), about 30 handles, that will be the projection for the move out of the triangle. If bulls emerge victorious, and pop out the top rail at 7663, the target is 7693, obviously above the critical 40-week MA line, the bulls will be dancing in the streets since markets are headed far higher. For the bears, a failure at the lower rail at 7657 targets 7627 which happens to be a support level from 10 AM yesterday, providing the lower target some street cred. In addition, the red circles show the indicators making lower lows which hint that price needs to come back down for a test at the 7650-7653 support, from 3 PM yesterday. This hints that the bottom rail will fail leading to the lower downside target. Futures are flat now, the opening bell is over four hours away. Projection is a sideways move towards the Fed tomorrow, with a slight downward bias; NYA perhaps will fail the lower rail and move down towards 7630-ish keeping the market bears in the game. The 7668 line in the sand is uber important in the days ahead. With the sideways triangle patterns, sometimes they continue to skew out sideways so the triangle may morph into a longer triangle as today's trading begns, with intial price movements the first couple hours thru the 7660-7675 area. The price will then decide to exit from the triangle late morning or after lunch time. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
Note Added 6/19/12 at 10:06 AM: NYA popped above the top rail at the opening bell and immediately jumped to 7700 and higher.
Do you really believe that investment decisions involving trillions of dollars revolve around the 40 period MA of the NYA index?
ReplyDeleteIf the fed raises rates tomorrow in a surprise move, will the resulting sell off have anything to do with the 40 period MA on the NYA index?
Hello Anon, of course it does. For one, do not hold your breath for the Fed to raise rates, think the opposite. The Fed will be announcing QE3 in the near future, if not tomorrow. You must read, study and understand what the indicator tells you. It is a cyclical market call. Taking your example on market direction, if the markets sell off tomorrow, then the NYA will be under the 40-wk MA and likely headed lower. This tells you that for an extended period ahead the bears will be in control of the markets. You need to study the information on the Cyclical Signal page. Go ahead and do that, along with studying the NYA chart over the last year, and Keystone can quiz you further.
ReplyDeleteIf in 3 weeks the market is higher you'll claim it's because we crossed above the 40 period MA. If it's lower it will be because we crossed below the MA, :).
ReplyDeleteYes, Anon, now you understand. Once the cross occurs it tells you the direction from that point forward. Good job, you did your homework.
ReplyDeleteI always was a fast learner. What constitutes a cross over the MA. Is it a close above or just trade above. Many times the mkt can violate a MA only to reverse quickly.
ReplyDeleteAs soon as the cross of the moving average occurs it is relevant. Note, however, that on the Turn or Cyclical Signal pages on this site, they are posted corresponding to the time frames they operate in. For the NYA 40-week MA indicator, that is weekly, obviously, since it is a weekly chart and MA, so it takes on even stronger and firm credibility once the week closes on Friday 6/22/12, with the NYA above the 40-week, if, that is the way it wants to stay. If the week closes with price above that is very bullish for markets. If it drops back below and closes the week below, the bears are not finished with the downside.
ReplyDelete