The 8 MA was about to stab down thru the 34 MA on Friday but the closing bell saved the day. This momo will continue when markets reopen Tuesday morning but the bulls can bring the 8 MA immediately back up if a huge market price move upwards occurs after the opening bell. If the 8 MA falls under the 34 MA, that signals that the market bears are in control of the markets for the hours and days ahead. Price is moving out sideways into a symmetrical triangle where a decision has to be made within the next four candles, thus two hours, so by 11:30 AM Tuesday, price will have picked the direction preferred. The move above 1413 will signal a bull party while a move under 1399 signals a bear party. A move up thru 1413 leads to 1419 in short order, conversely, a move under 1399 leads to 1391 in quick order.
Using the vertical side of the triangle which is about 20 handles, the upside breakout would push price higher to test the important 1427-ish area (1407+20), while the breakdown out of the triangle would target the strong 1385-ish support (1405-20). The tension mounts. Can the markets muster the energy to stay in the 1399-1413 channel for two days until the Draghi ECB decision is known before U.S. markets open on Thursday morning? Sure. No matter, however, since price will respond as per the above description, once it decides to break one way or the other; 1407 for bulls and 1405 for bears will provide an initial hint. The 8 and 34 MA cross will tell you the winner. We should know the answer over the next two days. The current projection, considering the 8 MA should stab down thru the 34 MA come Tuesday's open, is bearish moving forward. 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.
KS, thanks for all the great charts and updates on 30min, daily, weekly, and even monthly scale. It surely puts things in perspective and those are the time frames relevant to many investors that trade intra day to LT. Awesome work!
ReplyDeleteI noticed the triangle as well, this time on the INDU, and I posted my chart here on Friday: http://www.deepwaveanalytics.com/forums/attachment.php?aid=2399
on another forum that tracks EWT. Unfortunately we can't post charts on yours... that would be great and add to the discussion and insights btw! :-).
Anyway, I have a 120point move on the INDU projected (down in this case). The reason for down is based on the setup of the triangle. For those not familiar with a symmetrical triangle, please check out the 2nd chart at the bottom of: http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:chart_patterns:symmetrical_triangle , which explains the symmetrical triangle. It is clear that setup and even wave pattern for each of the 6 legs on the example chart in the link provided is identical to the moves in the INDU (and SPX). Textbook triangle in other words. And the example chart is a real-world example, not an idealized triangle.
what worries me though is the "saved by the bell", which will allow "them" (CBers..lol) to "re-set" and "tune" the clock so to say over this 3-day weekend. But, maybe for once the market will resume where it left off. Wouldn't that be nice!?
Either way, looks like on longer time frames (weeks to months), the markets' upside is limited and that more free money ain't gonna happen, unless the CBers go completely nuts, which would be catastrophically for us all in the long run.
SORRY, the link to my chart was a link to the wrong chart; the right link is here:
ReplyDeletehttp://www.deepwaveanalytics.com/forums/attachment.php?aid=2404
ISM Mfg Index is very important to kick the week off, so a pivot will occur at 10 AM, so if the markets are down big they may flip long at 10 AM or visa versa. Copper has been buoyant on hopes for China stimulus, buoyant copper keeps the bulls in business. Draghi should be feelling some big pressure, by saying "it will be enough" and all that bravado, he has to show up with the bazooka on Thursday morning. It will be a circus again all week long--the markets are a carnival side show and Ma and Pa do not even want to buy tickets anymore.
ReplyDeleteLmao! That last sentence nailed it on the head. People I talk to that are not as engaged in the markets as we are, if at all, now totally find it weird. I get constant questions like "why is the market up when economic reports are bad". I tell them the junkie story and that, as a matter of fact bulls do climb the wall of worry, but that the circus has now permanently stayed in town. Sad as it is. I tell them that serious or total collapse is the only way to purge and clean the junkie. That solution is not often liked so my listeners turn away (who wouldn't... Nobody likes doom and gloom, but IMHO a serious reset of the clock is needed)
DeleteYep, ignorance is bliss, or as the Jack Nicholson movie famous line says, "You can't handle the truth." Folks are smart, going on their merry way, not worrying themselves with global economic collapse, but they will obviously experience a larger shock in the future.
ReplyDeleteKeystone still thinks deflation has to be experienced a la the Great Depression, the stimulus measures have only delayed this outcome. The massive deleveraging must play out to clear the system. The Fed is only extending the pain and agony. Then after a couple or few years or more (rates may stay sideways a few years overall), we will come screaming out of the slump with hyperinflation, where commmodities, gold, and the markets will go thru the roof, likely in concert with the most dependable cycle, the 18-year cycle. 1982 to 2000 was the great bull run, and now we are in the secular bear still yet 2000-2018. Cash is king in deflation which is very interesting from the gold standpoint. The markets may be listless for several years frustrating all market participants, and the inflation that analysts have been looking for since late 2009 may not appear until 2015-2019.
Keystone:
ReplyDeleteYou have the absolute best market analysis! Just awesome ... thank you so much for posting.
Mike
Danke Mike, I will make sure there is a little something extra in your holiday envelope this year for your kind words.
ReplyDelete