We are rising in a very steep channel that has not had the chance to form distinct upper and lower trend lines. This is steep and the volume of the rise does not equate to the volume on the downside. This is a bit bearish. We may even be able to argue that price action is wedging in the last 7 sessions or so. This too is bearish.
Bottom line is that we either breach the major resistance at 1147 area or we are rejected. The consolidation today favors a run at the high for sure. It also provides a spot to pause if the first attack fails. The attacks at the high can go on safely for about 2 weeks before we run horizontally into the current lower trend line of the current up channel. At that point, bears will have a chance of taking control again. If however, price action over powers resistance then you can expect a significant rally, turbo charged with short covering. As a rule, we would project price action to extend 38% beyond the high. I calculate somewhere in the neighborhood of 1213.50 on the futures.
As I look at this chart, I see decreasing volume during this attack of the highs - however it is too early to evaluate divergence of the RSI on the daily chart. I would not be surprised to see a failure at resistance on the first attempt. Repeated failures followed by a breach of the lower trend line of the current up channel will call for a test of support at 1113. If we fail to bounce at that level and start to sink lower, it is reasonable to add to short positions. The ultimate short signal would be generated if the 1040 low is breached.
Well, there you have my current outlook.
Good luck trading!
9 comments:
Thanks David. The signals that I utilize suggest a bit more up, but that this upward leg will wimp out soon.
Rational.
Then again didn't we get exhausted on the upward surprises timeand time again?
Hi David,
It is good to see your perspective has not changed in these dangerous times. I am still mainly looking to play the gaps in miners..:) I hope you never let this blog fade away, but I know you are reaping good things from your time away, so good luck, and thanks as always. I am studying for series 7/63, and looking to transition to a career in securities in the next 6 months. How much would TA benefit this endeavor in your opinion? Is it a fundamental requirement for success and growth?
Hey Paulus,
I learned never to be surprised by this market. Of course if has been an expensive lesson!
Hey CBS,
Thanks for your comments and good luck on your Series 7 and 63 exams. You will need a sponsor and I think that is the toughest part.
In terms of the relevance of TA to the exam - very little if any. Remeber, the goal of the series & is to make you an educated financial salesman. Someone who is licensed to buy and sell securities on behalf of others. They want to make sure you have a good solid grounding in the markets, corporate finance, securities, etc.
Regardless, good for you in pursuing your career.
Cheers!
Well well. 1147 still holding.
But a nice flat day for the bulls, they will take gladly over a down one.
Reversed some long hedges for some shorts about 10% of position.
This is it.
It will be 1150 and a continued bull run into thin air for the next (few) session(s) or any kind of reversal.
If 1150 is breached on volume I will reverse 50%-70% most with tight stops.
Add gold, short oil and step aside for a while.
If so this cannot (by me) be traded on TA/EW or fundamentals. It can only be traded by quants, free money and sentiment.
Good luck! in study or trading!
David , nice call last night , try one failed today but we held 1040 , and came back into the channel,
A bit of more divergence , now ,
Paulus this keeps us guessing , I would have like to seen gold break the trend line this am at 1111 , but it bounced off Oil jumps back and forth with ease .
Like the rest of the market , they cant seem to pick a direction
David and All, remember the line in the Terminator , "one possible future" ?
Here is one , Sunday after posing it hit me if the down leg is a 4 there is overlap with one , and we cant have that , ED again came to mind ,
it apears the EWT club is all looking it . ED
http://yelnick.typepad.com/yelnick/
This would be give a double top target to watch for , Rut is already there .
Payline,
Thanks for the link on the ED analysis. Very interesting indeed.
I would like to see a down day today to confirm a swing trade to 1113ish.
Analysis coming.
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