FX Calendar

Sunday, August 30, 2009

Silver to shine a bit more




It appears that Silver is about to embark on v of (v) after the pre-climax triangle in iv. The immediate direction is break to the upside but that should be a terminal move. After that the downward journey in an impulse or corrective pattern should be a joyride. Even the v of (v) has a modest target.

Buy and sell!

Tuesday, August 25, 2009

S&P 500 and the arcs





SPX daily chart with Fibonacci arcs looks beautiful! It is somewhat subjective as I have tried to curve-fit it :)


The action since March 09 has found resistance at 61.8% level and support at 50% arc. Eventually, the 38.2% arc supported the pullback. Now it is going towards the 78.6% arc.


But wait, is it a tombstone Doji today (actually yesterday since it is past midnight)?
It is. That too after an uptrend. You know what it means : sell the futures.

Plus: momentum is diverging.

Saturday, August 15, 2009

End of the day action on Friday





Sell the futures.


The last 45 minutes of the end of the day action on Friday Aug 14th is highlighted by shaded areas. These are 15 minute charts. Point to keep in mind is that the futures are open till 16:15 hours EST while the stocks have regular trading hours till 16:00 hrs EST.


What does the recovery at the end of the day on a Friday mean?

Short covering or bulls getting back in and want to own positions over the weekend?


The former seems more probable. Bearish chatter has found its audience over the last week or so. People may be short going into the weekend and incoming data but their view was not fruitful; hence the short covering.


The other probability that new bullish positions were put on going into the weekend is less likely but certainly possible. But looking at the very recent strength in US Dollar and the largest bank failure of 2009 on the cards (it actually did happen), putting in new bullish positions will be throwing caution to the winds.

My view is the recovery is short covering. The Breadth (Up Volume - Down Volume) did not improve (it was lower) while the E mini SPX futures went up.

Friday, August 14, 2009

Momentum of SPY


One of the concepts that Connie Brown outlines in her marvellous book, "Technical Analysis for the Trading Professional" is that of Oscillator ranges. In short watch the RSI level (blue line below) of 38.48 on the SPY. If that holds and the RSI bounces from there, the trend of the SPY (and $SPX) will be bullish. But if that level breaks then one can infer that the Bear days are back again for some time.
Now this is not a short term trading tool but do remember to look it up when the time comes. When we will be at that level, the "Experts" will be divided and will be telling their story from their side of the fence and some from the fence. This can add objectivity into the mix and clarify things.

Spotting Divergence

AAPL daily



The chart of AAPL shows a steady uptrend for the last few months and why not? You-gotta-have-them-cool-gadgets they dish out are selling like crazy.

One can notice that the recent price action has bearish divergence when measured against momentum indicator RSI. It implies that the underlying strength is waning. This is rather elementary method of noticing divergence.

Divergence is marked with blue lines and arrows.

Not much of a surprise keeping in view what is happening at the broader market level.

Time for a healthy pull back.


What is surprising is that the ticker with quite handsome volume has plenty of gaps (marked by shaded areas). A gap below $155.03 would create an island reversal top. Caution: there is nothing apparent to warrant that. It is just that the patterns resides in the beholder's eye!

Tuesday, August 11, 2009

Demand and Supply VMW



Back to VMW again. It did test support at $26 range while closing at $26.12 and going as low as $25.75. It did meet up with the demand at that place. The resistance at the $32.50 area is still formidable and it broke down from there after 2 1/2 weeks. The earnings gap up was nice but in the euphoria was short lived it seems. Perhaps some one got an opportunity to sell into strength!


Check out the volume swell of 200-300% after earnings jump. Typical breakout feature? With the benefit of hindsight (which makes one appear so smart), the volume swell appears to be selling into strength.


Hmmm.....


Today's candle is formed like tombstone doji (the body is mere 2 cents). But it is not coming after a sustained uptrend. Today's action was supported at the window of pre-earning.


Testing of support at $26.50 (while the issue stays in a channel) seems likely. Forming a higher low is also possible. The main issue is the overhead supply at $32.50 area. That supply needs to be exhausted for the bulls to advance. But then the road to $40 is relatively clear.


These are my 2 cents!

BTK Biotechnology Index




BTK is equal dollar weighted index of Bio Tech companies. AMGN is the big Kahuna now that DNA is gone.

An interesting double bottom formed between Dec 08 and Apr 09. Currently the tcker is up to a double top. Re balancing aside, it looks like it is ready to drop 150 points!

BTK index is not trade-able directly. Go figure!

Monday, August 10, 2009

The mighty GOOG




Here is my crude (very crude) attempt to put Elliott Wave on the mighty GOOG. Although GOOG does not exemplify "Crowd Behaviour" it is still worth a try to see where it fits in the EW count.

Noting the advance from Mar lows as a 5 wave advance, the primary count is showing the present price action to be in Wave 5 with a target of wave 5 to be $472- $474 range. Since the 3rd wave extended, 5 wave is probably not going to extend. The correction (abc) has a target of $396, lets say $400. It may only be till $406.


Also, note the diverging (bearish) volume in the last couple of weeks. It points to possible weakness in upward momentum, in line with $NDX.

What is the underlying strength?




Now that the market has gone up considerably from significant lows of March, people are opining on the quality of this advance. While the jury is still out, lets look at strength of the momentum indicator itself!

Here we have $NDX daily chart and the RSI (Relative Strength Index created by Welles Wilder which measures the price momentum relative to itself). Further we have 10 period SMA (Simple Moving Average) plotted on the price as well as RSI.
Note (green arrow) that 10 sma is about to cross down below 20 sma (bearish cross over) on the RSI but the same (10 sma) is still up at the price. It is a caution light. Yellow signal; something is going to happen; watch where you are going.
It is good to be back!