Market Update

Technically bears have not struck back to the market yet, at least for now.   On the following P&F chart, what we can see is still higher high and higher low, which is not even a major pullback.  After the last Major Distribution Day, the market bounced back a little today, while the volume shows that there are still many people buying dips.  On the SPX daily chart, negative divergence on most technical indicators has been there for several weeks but so far all pullbacks are gifts to bulls.  Take a closer look on the hourly chart, the current pattern is either a flag of consolidation or Header & Shoulders, depending on which side the breakout will be.

SPX P&F Chart SPX hourly

The triangle pattern on XLF was broken at the lower edge (14.54), today it went back above this support/resistance and so negated the previous breakout.  Personally I think 14.54 will become a support in the near future.

XLF hourly FAZ hourly

No update to the US dollar index chart.  Currently there is no sign of the downtrend being ended.  From the following sector candle glance chart, we can also see that the broad market looks healthy, since there is no sign of money flowing into defensive sectors.

In summary the near term and intermediate term outlook are bullish, and personally I think last Friday low will be a significant swing low.

Market Update

EUR/USD daily.  It’s due for a pullback.

SPX hourly.  In consolidation and may breakout at the upside.

Sector overview.  Techs and Industrials are very bullish, so is the market outlook.

XLF hourly.  Looking forward to upside breakout.

FAZ hourly.

EWZ daily (negative divergence, may pullback) EWZ hourly

Crude oil.  looking for more pullback in short term and more upside.

Market Update (2009-11-16)

Today the market has decisively broken the resistance at 1100 and made a new high.  In the previous weeks the volume had been increasing with the rally, however today’s volume was substantially higher.  After the previous major accumulation day, today’s strong market breadth (NYUPV:NYDNV=7.37) has further affirmed the uptrend.  The last three day’s consolidation (a flag pattern) fixed a few overbought conditions on technical indicators.  At the moment the market may revisit the nearest support but large pullback may not be likely.  On the SPX intermediate-term daily chart, negative divergence on several indicators are still there but we have yet to see when it will become a real problem.  On SPY 30-min chart, all indicators show negative divergence which could lead to minor consolidation or pullback.

SPX daily

XLF is quite weak in these days.  On the hourly chart, the trend is up and a bullish flag pattern formed.  The volume increased a little bit but not very significant.  The nearest resistance is 15.38.

XLF hourly

QQQQ broke out from the consolidation today and revisited the nearest support at 44.16.  RSI and MACD have a little bit divergence so further pullback may be expected, but i guess it will be bounced back up again at around 43.75.

QQQQ hourly

As previously mentioned, US dollar more or less indicates where the broad market will go over the intermediate term.  On the daily chart, one can see that there is no sign of downtrend being reverted.

US Dollar index daily

Summary: uptrend has been confirmed.  A pullback (or consolidation in certain sectors) may happen but it would be a buyable dip rather than a short opportunity.

Market Update

Today the market rallied massively and made a Major Accumulation Day.  Major indices went up more than 2%, financials went up by 3.56%, SPX is approaching the previous high at 1101.36.  The ratio between advanced volume and declined volume in NYSE was 18.24, which is the highest in recent four months.  Personally I think the trend over all time frames of the market is back to up again.  In the last week, there were two major distribution days and it seemed that a down leg had started, but today’s strong rally should have negated this – especially if we see another major accumulation day in the short term.

US dollar index – daily

US dollar is turning down again, now it’s at the lowest point since last September.  Looking at the trend in gold, they are very consistent.  Therefore I think this downtrend will not change in the short or intermediate term.  Crude oil is trading in a consolidation range but there is no sign of major pullback at the moment.  Consequently I don’t think the broad market is or will have a down leg very soon.

XLF hourly

XLF seems back to uptrend today after resolving from the symmetric triangle pattern.  It is now approaching to the breakdown level at ~14.85 and may very likely go above it shortly.  However the massively resistance at 15.4 still looks quite strong.

Over the short term, some technical indicators on intraday charts are overbought or will be so if the market goes up again.  The volume in recent weeks were declining, which is also a bearish sign.  A pullback around this level will be necessary and healthy, and it will not be an evidence of hypothesis down leg.

Summary of market outlook: market is bullish, and the trend is still up over all time frames.  However, there may be risk of possible pullback in the short term.

Market update

The market pulled back more today.  The volume increased a little bit, but the volatility spiked up (see VIX daily).  This is the second consecutive down day, the short term trend is obviously down but it is interesting to see how resilient the intermediate term uptrend is.  On the bright side,

• the market is close to overbought in the short term, and there is a few positive divergence on the intraday charts (see SPY 30min and SPY 15min).
• Although the technical indicators on the daily chart start to point down, there is no lower low at the moment on major indices.
• The unusually high TRIN often causes strong bounce back up on the next day.
• CPCE and CPC still look neutral to bullish, at least there is no significant concern.
• The rally on US dollar will meet resistance on MA very soon and we have to see if the big downtrend is really reversed or not.
• The pullback on crude oil is approaching to a support level, we are not sure if this level will break.

However, we should be very cautious to the giant rising wedge, negative divergence, and sell signals on intermediate term trend (see SPX Intermediate-term Trading Signals).  A lower low is made on SPX daily chart will be an evidence that the uptrend is materially changed and the basic strategy should be changed.  At the moment, I doubt if it will happen.

Summary: both intermediate term (in term of technical indicators) and short term trends are confirmed to be down; however in the short term the market may bounce back up.

SPX hourly (my wild guess is to kiss back 1075-1080 at least)

  XLF hourly (unless the resistance is taken, the rally is gone)

XLF daily (more pullback? but it’s still higher high and higher low)

US Dollar daily (see if the magic MA resistance will work again)

Crude oil daily (test the support?)