US Stock Indices

[Guest Condor]

Morning  I'm wondering if the last hour of the US500 yesterday gave the wB it turned around at 2037-ish.  This could be the retrace up to wC .  wC if it occurs could be up at your yellow circles area (short zones) - will be looking for momentum divergence up there to indicate strong move down to follow. C

[Mercury]

Hi Condor,

 

That is my current lead option thinking too, however all the main indices have put in a technical A-B-C (the US and FTSE with Yesterdays high).  I think this could be a messy ending with Oil stumbling in the congestion zone.  If stock markets put in a lower high followed by a lower low, especially breaking below the 7 Apr low (US) then we have to conclude that the turn has already happened.  There is always another entry point so no need to panic, need a lot of patience and nerve just now I feel.

 

Net, I am stalking the turning point I had previously identified but preparing back stop entries in case the markets break lower.

[Guest MrJake]

Well, so much for the market dropping. Thank goodness I took my own advice and did the complete opposite of what I though. In the process earning a nice sum with additional positions in play.

 

I do, of course, have a plan for the sneaky Wall Street for when it does go down  

[Guest Rich88]

Testing resistance again 

[Guest MrJake]

Just short of my target 17790

[Guest Condor]

Reckon S&P500 is heading for that 2070-75 area today....could that be the top there, earnings from JPMorgan today I think. C

[Mercury]

Interesting target, how did you arrive at it?  Near the Fib88.6% level, which is my last ditch turn target, after which...

[Mercury]

That would bring up a double top?  No just short, again the Fib 88%, my last ditch on this one too.  All getting very last ditch everywhere isn't it?  Will the Bulls rule the day or will the Bears regain control, ah that is the question.

[Guest MrJake]

This was part of a longer term strategy that I put in awhile ago. I have been watching it in the red for what appears to be ages.

[Guest Condor]

Exactly, using the Fib. I think lots of people have been wrong on calling the turn for quite a while(outside of this forum) and yesterday I was wrong again on FTSE & Oil.   But I'm persevering as timing might be off but that doesn't mean it isn't coming.  If the price chart says otherwise then I'll have to re-evaluate. C

[Mercury]

Ha!  Inside the forum too, myself included.  I am grappling with confirmation bias because I am Bearish but in addition this has been a very strong rally with few, if any, real dips.  As we have always said, the Bulls may have their way and make all time highs again off the back of central bank tinkering but the economy (and I think the earnings will bear this out) don't support valuation at these levels).  The bear is coming but maybe we will have to wait and be patient.

 

Short & Long term I remain a Bear.  If we breach Nov highs though I will turn Bullish for the medium term and seek to buy dips to higher highs.  You gotta trade what the market deals you and not what you feel ought to happen, this is an important part off getting the trading psychology in good shape and I must admit I still have to cement this into my own trading habit.

 

 

[Guest MrJake]

 

 

Your comments make perfect sense and this has been borne out by my trading in both directions over the last couple of months

 

I look for short and medium term trends and react as I see fit

 

Your point regarding trading psychology is very important to make sure those emotions are kept in check

[Guest Condor]

Agree with you both  on trading psychology - this is what i need to get clear in my head (& fast).  The trend is my friend  - & you can't buck it despite what you might intuitively feel - in my case bearish. C

[Mercury]

Bad economic data from the US just now.  Guess we will see if bad news is still good news for the stock market or whether this quarters results might bring the whole show into question...

[Guest mcdublintrader]

I agree I think short to medium term we may see more highs with the DOW & S&P however the bad news will finally catch up with the US and we will again turn bear and in a big way.

However on the bad news today I have an order in to sell the DOW at 17830 with a SL at 17880 and close the deal at 17710 making my 100+ today.

However it may dip as low as 17665.

Let's see

[Guest Rich88]

The extended rally has gone into overboughtness now. Today might be a green day, but profit takers will come into the mix soon

[Mercury]

Very Overbought Rich88.

 

And now the Dow has hit a very interesting resistance line (the lower line of the congestion zone of the Nov 2015 turn).  This is effectively a double Top if it turns here and so far it has bounced away from the line.  Very strong Neg Mom Div (vs both lower peaks in this rally and the previous turning point making up the double top) and also same on Stochastic and RSI.

 

On the hourly chart something very interesting is happening, The rally up over the past few days has been remarkably steep (just look at the Triangle it is contained within.  Additionally there is negative divergence on all 3 of my indicators AND, just for fun, a Kiss back on the previous Triangle line.  Such sharp rallies are indicative of so-called exhaustion buying (if only we had volume data...)

 

The bounce off the congestion zone, the double Top and the set up on Oil gives me the view that we can expect a serious retrace soon (maybe imminently...)  I have a few positions underwater but will hold them a little longer to see how this plays out with stops above the previous turn highs (Nov 2015 - 17978).

 

Interestingly the S&P is lagging, don't know if that is Bearish or just means it will catch up...

 

Charts:

 

 

Charts:

[Mercury]

Did we just see the Bulls blink?  Top of a possible ending Triangle with a 1-5 completed?  Strong negative indicators and the Dow right at strong resistance line?

[Guest Rich88]

So far we are staying in channel 



 

[Mercury]

Out of the channel now!  With turns at analytically significant levels across the board and bearish indicators everywhere.  As with the FTSE (see other post) this one could drop at least to the Fib 38% level IF the turn is confirmed with an small scale 1-2 move.  That's 900-1000 points IF it happens...

[Mercury]

Are Stock markets finally breaking up with Oil?  The S&P500 hourly chart suggests so, while Oil is charging up the stock markets are sluggish (the Dow is a little more buoyant but then it has more Oil stocks in it).  Also the Russell, a leading indicator in my opinion, is in negative territory today.  A break of the lower Triangle line on both could be a key here...

 

This all needs to be confirmed with candle closes but one to watch for battered Bears.

 



[Mercury]

Bounce off the upper Triangle at a EW5 with strong Neg Mom Div.  If price action breaks the lower Triangle line, and other similar markets do the same then this will be the turn.  And this one could run down a long way.

 



[Guest Rich88]

Seen this 2008 chart. Looks like today's rally



 

[Mercury]

The similarities with 2008 (and indeed with 2000) are striking but I'm not sure we are there yet.  Another leg up to a new all time high cannot yet be ruled out but some other scenarios are emerging on the big picture too.  For now it looks to me like this rally is over, with ending Triangles all over the place.  The move down through the Triangle's lower line is strong and a turn and retrace with a lower high is the key to sealing the end of the rally for me.  At that stage I think we would be on for a significant bear run, at least 1000 points on the Dow but after than we are in multiple scenario land again.  As for me, I'm just focusing on sorting this current move, I'll worry about the bigger picture another day.

 



[Mercury]

That is exactly how I see it, except that I believe we are about to endure another Bear market and it could be much much worse that the other two...  The trick, as always, is to figure out the timing of the final turn down.  Is it now?  Is there one more leg up before it starts?  Who knows but more and more people are coming to the realisation that the Bull glory days are over so even if there is a final run up to new all time highs they will be short lived indeed.

 

Until things clarify swing trading is the only strategy that makes sense to me, now I just need to get better at it, sigh!

[Guest Condor]

US500 about to shoot out of the Wedge?!    right there now it looks like, C

[Mercury]

Wedge?  Can you show it?

[Guest Condor]



seems right at the bottom . C

[Guest Condor]



[Mercury]

Could be, we might get a break and kiss back on the lower line before larger drop.  I fancy price might go sideways with a smallish retrace (maybe back to your wedge line) and then begin a move down.  This could take a day or two to resolve (maybe sometime on Tuesday next at a guess).

 

The problem with the wedge is the length and degree of accuracy of the touches, especially on the bottom line.  I have an alternative that might work as well, a set of parallel tramlines (grey), which are working in conjunction with the ending Triangle (pink).  Just had a break of the lower tram and if we get a little run down further to complete a small wave 1 then a small wave 2 retrace could provide us with a kiss back on the Tramline.