A strong finish to a strong week!
I am still looking for a site, any site that would tell me what conditions can clear the Hindenburg Omen indicator. Hindenburg aficionados tell us what conditions flag the doom but not the conditions that might flag the all-clear. That in my mind is worse than flipping a coin because each flip of a coin is a discrete event with specific odds of failure and success. Hindenburg not having an exit criteria is not very useful. It can go into an outdated state of being perpetually wrong. If anyone is aware of any place that talks about what clears the Hindenburg Omen, please let me know.
Here and there, I hear that after the weekend, big boys of Wall Street shall come back and sell the market hard. Do those who say this think that a manager of a multi-million-or-billion dollar account leaves it to some dumbo and goes on vacation without proper instructions and adult supervision? Even if so, the dumbos have done a great job of rounding up the shorts and squeezing them en masse. I don’t think those who played the market these past two weeks were any dumbos ;-)
Also, haven’t the perma bears been telling us that the market is not really participated by humans and it’s all robots and algo-traders doing the buying and selling. If so they believe, then who is supposed to come from vacation and sell the market hard?
Don’t get me wrong! I am not saying that market will not sell hard on Monday. I do not know that with any certainty. Just that, if market sells, it will not be because all senior managers came back from vacation together at the same time on Monday to sell the market.
I also hear the usual argument of volume from the bears. Yes, volume has not been above average, but, as I have mentioned many times, this has been a market led up by breadth and not by volume on many occasions. I am not arguing whether this move up will fail or not, but rather saying that lacking volume may only be a warning sign. I take my cue mainly from price action. Volume, as reported by the exchange, is an item on a check list.
Let’s talk price.
This is a weekly chart
I had said that as long as index would stay between the blue line and the purple line, I would regard the technical posture of the index as neutral. Notice how the purple line has performed. It has held the index for 4 weeks. As a result, index never lapsed into a negative posture on a weekly basis. Now, with bears unable, or unwilling to break the index, it has moved back above the MAs, to the middle of the space between the two lines and has reaffirmed its neutral status.
Index needs a weekly higher high to shift the posture towards positive. For that to happen, with many short positions roasted this week, either bulls put good money to work to keep on the momentum or they consolidate to get enough shorts in to squeeze higher.
This is a daily
Bulls wasted no time this week to get the index above short and mid-term MAs. That is very impressive. It is the kind of ram job that one sees when there are a lot of shorts in the system. Rallies have to start somehow. Squeezing shorts is as good a fuel as any, maybe even the best fuel. But rallies need further buying on balance to carry on higher. We are about to see how well capitalized bulls really are.
I wonder if they can maintain momentum and push it for a test of the 200 MA.
If bulls need some sort of lateral consolidation, I would rather they did it above 1085-1090.
Daily volume shrank and came below average. Daily breadth was excellent again.
Net new highs has improved very nicely.
We have a buy signal on BPSPX
There has been noticeable improvement on the chart above. I would like the bulls not to let the breath measures lapse on pullbacks.
McClellan group of oscillators pushed it higher
We now have the oscillators in the positive territory. Bulls should be able to either advance, or consolidate first and then advance.
Notice that index is hitting the underside of a trend line. So, a pullback may soon materialize
One of our astute readers, saleen899, commented on a potential Inv H&S. I had also mentioned it in the post of August 30
“There is a potential Inv H&S with very symmetrical shoulders that is quite obvious on the daily frame.”
A break above the neck line shall give us a higher high and target the April peak
In the same post of August 30, I also said:
“as we know, you can take the bull to the fallen matador, but you can’t force it to kill.” ;-D
Both of my daily and weekly momentum cycle curves (CCurve) have turned up from below zero
Notice that the daily CCurve has been setting higher lows since the May-June time frame
Moving average differential momentum has set in a higher low and is now above zero.
One pointer: don’t try to match the peaks and valleys of the weekly CCurve on the pricechart above it to the peaks and valley of the price because the price is displayed in a daily time frame, and weekly CCurve is in weekly time frame, and more compressed, just use the weekly as a reference for its direction
This is what I mean: if I change the price time frame to weekly, then you’ll see the CCurve aligning with the price
Over all, I think the picture is one of stabilization and neutrality.
The setup is there for further advance, we’ll see if bulls can do something with it or not.
Index has been getting overbought
60-min chart is quite overbought
As I mentioned yesterday, if index opens gap after gap on the way down, perma bear wavers would say that it is the point of recognition of some 3 of 3 of 3 of whatever wave down that they dream night after night.
Here we have a clean wave structure with back to back gaps on the way up. Well, I guess a perma bull waver can say that this is a 3 of 3 of whatever up. Regardless of what permas say, this is a very momentous situation and very probable to either continue, or consolidate first and then continue.
Short term breadth is overbought. 60-min chart is overbought. So, if bears are serious, they should attack and short pretty soon, failing to capitalize on overbought condition may be interpreted as an indication of weakness on the part of bears.
I thought Friday’s spike was good enough to reduce/hedge/insure. I have a level around 1085-1090 that I would like bulls to hold on any pullback. I have another level around 1065-1070. The objective, as usual, is to book some profit, have multiple levels and let the market decide what to do with a position. The hard part is to get into position correctly. Managing a position to profit should not be as hard.
OEW pivot support at 1090 and 1058. Pivot resistance at 1107 and 1136.
Long term trend is up. Mid-term trend is up. short term trend is up.
Have a Nice Weekend!
S&P 500 – May 15, 2012 - Bottom Line: Long term trend is up. Mid-term trend is down. Short-term trend is down Weekly S&P stage is Late Advance (2-C) Daily S&P stage is Strong Decli...
1 year ago