Monday, October 12, 2009

Weekly Review of Stockcharts.com Publishers' Charts

Another excellent week for bulls with bears felling the force of momentum against them.

Anthony Caldaro of Objectiveelliotwave.com looks to have backed down on his bearish 'ABC' count and has taken a more bullish (?) new 5-wave trending phase - wave 2 of 5 about to develop?


Yong Pan of Cobrasmarketview has more bearish than bullish signals for both short and intermediate term, but nothing unusual with this in recent months


But, in the following chart there is still a confirmed trendline break - even with 5 days of gains.


Same broken trendline going back to March


And another resistance line here


However - lovely bullish cup-and-handle breakout on the 5-min SPY:


Richard Lehman has markets pointing upwards once more with the October meltdown unlikely to be significant (if occurring at all!)

10/11 -- The hourly charts are rather clear now in showing the recent uptrend. This removes the scenario of a repeat of the 10% June-July correction -- at least for now. In the longer picture, everyone will be focusing on (if not expecting) new highs for the year here -- a particularly joyous event for bulls who thought we'd see an October rout, and a particularly frustrating event for the bears who felt they would at least have seasonal influences at their back.

One thing I've noticed, despite this recent turn back upward, is that long term momentum is flattening. This would seem only natural as the markets have now clearly built in an exceptionally positive view of the economy and are likely to stall here while we see if the economy can oblige. This would suggest a possible scenario from here as one where markets move essentially sideways, experiencing more frequent, albeit less dramatic, sell-offs rather than one large one as many expected for October. Also, while earnings are expected to be positive for Q3, it is widely acknowledged that this will not provide projectable earnings-driven momentum at the same rate into 2010.

Dr. Joe noted Friday's gains for the semiconductors - perhaps the best news for bulls on the week.


Joes' Bull Head-and-Shoulder reversal for the XLF; target of $17.50 and/or 38% retracement of $17.60


Finally, Matthew Frailey of Breakpointtrades has so far stuck with the confirmed rejection of resistance for the Russell 2000; no reason to be a buyer until 65.00 is breached.


But, even with all the toppy sentiment it is hard not remain a bull. While buying here is risky and selling at a confluence of resistance makes sense, the market has continued to ignore what have in the past been markers for tops. A top will come soon for sure but the case for a move all the way back to March lows is not looking hugely compelling.


Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, stock charts, watchlist, multi-currency portfolio manager and strategy builder website. Forex data available too.

 
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