There are only three ways a market can move: up, down, or sideways. Trending Markets: Up & Down Uptrends are known as bull markets. In the simplest sense uptrends occur when markets are moving up. The definition, of an uptrend varies depending on your time frame. A day trader tends to look at short intra-day…
Market States & Cycles 04.29.14 The stock market is constantly changing but the one constant throughout history is (has always and will always be ) human nature. The stories, stocks, centuries, asset class, bubbles, busts, change, but people don’t. That is why it is important to understand market cycles not just from a technical level…
Like This Post? SIGN UP FOR OUR FREE NEWSLETTER & GET POWERFUL IDEAS DIRECTLY TO YOUR INBOX Each Week On Thursday we wrote that the S&P 500 (SPX) was about to breakout of a H&S bottom pattern. The correct term should be a H&S continuation pattern. Semantics aside, this is a bullish pattern and the bulls…
Few old headlines that are very similar to recent headlines: It’s a funny old World: 1989-1991: Housing and savings and loan crisis: Fed eases aggressively as economy enters deep recession 1992-1994: Existing financial architecture in Europe (ERM) blows apart 1995-1998: European convergence trade in both FX and Bond spreads keeps European currencies relatively stable vis a vis the…
The S&P 500 is getting stronger, not weaker and this chart illustrates why: It was very healthy to see the S&P 500 break and close above: 1. The downward trendline of its large triangle pattern (shown) 2. Its 50 DMA line (which is now support) 3. The middle of its double bottom pattern. The…
The tech-heavy Nasdaq 100 (NDX) is forming a very bullish two year inverse head and shoulders bottoming pattern. The accompanying annotated graph illustrates all the important events since the financial crisis began in 2007. It is very healthy to see that this index has nearly repaired all the damage of 2008 and is perched just below the neckline of its large base. It is also important to note that April 2010’s highs correspond with the highs in June 2008 which form the neckline of this pattern. Technically, a new buy signal will be triggered if the NDX manages to trade above the neckline (2060) of this very large pattern. Until then, this market is extended and patience is paramount.
The tech-heavy Nasdaq 100 (NDX) is forming a very bullish two year inverse head and shoulders bottoming pattern. The accompanying annotated graph illustrates all the important events since the financial crisis began in 2007. It is very healthy to see that this index has nearly repaired all the damage of 2008 and is perched just below the neckline of its large base. It is also important to note that April 2010’s highs correspond with the highs in June 2008 which form the neckline of this pattern. Technically, a new buy signal will be triggered if the NDX manages to trade above the neckline (2060) of this very large pattern. Until then, this market is extended and patience is paramount.
Fundamentally, the market is trading higher thanks to the ongoing global recovery, quantitative easing (QE 1 & 2), solid earnings, and a weaker dollar. As long as these factors remain at play, higher prices will likely follow. Trade accordingly.
The major averages are tracing out an ominous technical pattern known as a “negative (outside) reversal day” after encountering resistance near their prior chart highs.
Make no mistake about it- this market is strong! Every pullback since the March lows has not exceeded -8% and the bulls have promptly showed up to quell the bearish pressure. The latest correction began on October 28, 2009 and ended today on November 9, 2009 when this rally-attempt was confirmed.
It is also important to note that several of the popular averages encountered resistance near their respective 50 DMA lines before turning lower today (SP500, NYSE, RUT, Nasdaq 100, Nasdaq Comp, & the mid cap S&P 400).