SPX closed at 735.09 which is above 720 +/- support which I signaled during the last week. SPX action during the last week was disappointing as the month closed one of the works in 12 years low.
Markets are showing positive divergences on weekly and daily charts as well as on breadth indicators. I commented on that markets could form double bottoms after retesting Nov 2008 bottoms will signal positive divergences. Therefore I think we could be markets provide a decent rally onto SPX 900 because of oversold markets and extremely bad sentiment will change sooner or later even b the negative pessimism is continuing. I think that the pessimistic sentiment will stop at a reasonable price as we have seen that most of bears are brutal to crush stocks such as FNM, FNM, AIG, C, LEH, etc.
Markets are made of traders who are emotional and greedy, therefore we often see price extreme in our markets creating bubbles and crashes. Unfortunately, we have seen economic crisis and due to greed and to primitive group psychology
The SPX monthly chart shows times serious model series model which I developed to show strength of trend which is overlayed on the SPX price actions.
Based on my trend strength and time analysis, I can gain in in-depth understanding of market direction, forces, and rhythm of the markets.
In like to include MACD indicator because it is traditional trend following indicator which is commonly used. In addition, the indicator can come in handy when it is used to confirm other indicator signals. I have tested thousands of indicators using back testing programs, and concluded that a trade need only a few preferred indicators to trade successfully. To trade successfully, one needs to intimately know the indicator behavior in relation to market price movement. Each market has its own personality and histories; so, in order to be effective traders, it is a must to study markets before feeling comfortable with any markets.
The lower indicators is oscillator indicator which is identifying OB/OS and also trend. There are hundred indicators which I tested; and I came to a conclusion that I need only a preferred dozen to be included in market analysis.
DOW has broken down below support areas and markets sentiment is quite bearish with uncertainly on banking industry. Maybe are waiting for the Gov and the Fed actions to provide stability - such as holding off Mark-to-Market accounting. I think that it will be sound decision to hold the Mark-to-Market until markets are settle down to provide stability in the market.
In conclusion, while DOW has broken below the support 7850 closing at 7062.93, 7000 is a strong support -- comparatively SPX 720 +/-.
Markets are bearish, but with the financial news, we could see continued volatility. As commented before LT market analysis that we are in pivotal markets supports with quite negative market sentiment; however, weekly and breadth markets are showing positive divergences -- a potential double bottom retest scenario.
No comments:
Post a Comment