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Showing posts from October, 2008

New KIVA loans

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Time to recycle repayments back into the system as four new loans come into play. If you would like to contribute please join my newsletter - your first months payment after the free trial period is given to a KIVA project. You can see a complete list of the 83 KIVA loans supported by members here . Get the Fallond Newsletter Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

Bullish Percents positive once more

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Another clean sweep from the Bullish Percents as Nasdaq, S&P and Dow all lie on the bullish side of the fence after the October 22nd bull signals were quickly undone: There was a sharp advance in the Dow bullish percents: With a lesser but still respectable advance for the S&P's: Now it's up to the indices to build on this strength. It will be a long road but seasonally, the worst should be behind. Get the Fallond Newsletter Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

Bear Bounce

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The good news is the huge rally buys the bulls some room for maneuver. The bad news is it didn't change the picture too much with the exception of some MACD trigger 'buys' . The two sectors to watch for recovery are the Transports: Note the new triangle/wedge which closed yesterday on resistance. Can it break? Same for the tangle of resistance in the semiconductors: The job of breaking resistance looks easiest for the Transports, but the degree of work bulls need to build a recovery is clearest in the semicondutors. Get the Fallond Newsletter Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

Much work to do

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The way the declines are shaping up, it is unlikely we will have the double bottom as initially suggested last week . For example, the sharp declining resistance line in the Russell 2000 should be a straightforward break - but the other lurking around 500 will be less so, and even then there is still the additional 75 points needed to mount a challenge on the neckline of a potential bottom. Only when that breaks would there be confirmation bottom. This looks a big ask for an index requiring a 30% rally just to get to the neckline.... More likely is a second scenario bottom with a neckline around 500 and a retracement back to either the lows of today, or whatever low gets tagged over the coming week. Large caps have available support to look too and haven't completely eliminated the double bottom scenario but with stochastics maintaining their bearish divergence and the small caps in freefall it is hard not to see large caps following suit lower. Get the Fallond Newsletter Dr. Decla

D-Day Monday?

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So far the indices have done well considering, but given how the selling has occurred throughout the week the stage has been set for a nasty Monday.... I have a post on Market Opportunities for a Global Panic over on the Zignals Blog . Get the Fallond Newsletter Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

Futures set for tough open

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Assuming another smack down at the open what will this mean for the double (now triple) bottom I was looking for ? It looks like it's a goner... The symmetrical triangles TraderMike talked about are about to set up measured moves down. To add insult to injury, all the Bullish Percents have switched negative after an all positive turn a couple of days ago. The real struggle is in tech. Since the second bullish piercing pattern had me looking for a double bottom the index has struggled to mount any sort of challenge on the neckline at 1,900. An 80-point gap down would make this toast. Watching Summation Indices for a 'Buy' as volatiltiy shapes a triple top: Get the Fallond Newsletter Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website

No New Lows on Lower Close - But...

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The Nasdaq and S&P each made a new lower close, but there were fewer stocks making new lows - implying strength. Although prior reversals were accompanied with spikes in the number of new lows, this association has not necessarily generated meaningful bounces. The double bottom is more tenuous, but it hasn't been thrown out the window. Demand exists at the two prior spike lows; there was a modest fight by bulls into the last hour of trading Wednesday. But one could also call for a break of intraday support of consolidation triangles - certainly a bearish turn (not helped by stochastics and Rate-of-Change at neutral levels). If markets continue their downward slide in the early part of Thursday's trading it will likely kill what chances existed for a bottom based on the double bottom idea. My latest Zignals post on the Variable Moving Average is available here . Get the Fallond Newsletter Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, marke

Bullish Percents sing from the same hymn sheet

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Bulls got another endorsement with all three Bullish Percents generating bullish crosses of their 5-day EMAs. The last of the Bullish Percents to turn was the Dow: What is clear is the distance to resistance; as an upside target I wouldn't look past this resistance until the volume accompanying the next rally is known. Monday's sell off didn't violate support but the nicked breakout of the pennant pattern of the S&P failed which places a question mark over the pattern broadening into a double bottom. The Dow and Nasdaq remain on course to create a double bottom. HeadlineCharts published an excellent chart showing the relationship between treasury yields, commodities and the S&P; this is playing to form. I drew a 4-year cycle chart of the relationship below with the textbook gaps between tops for each sector: Look for yields to rise first, then the stock market, then commodity prices. Get the Fallond Newsletter Dr. Declan Fallon, Senior Market Technician, Zignals.c

One order of a Double Bottom coming up....

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We are not there yet but markets are doing their best to shape one. Short term traders have an opportunity to trade long side to the neckline of a double bottom. Long term traders will want a neckline break to switch all trading within the double bottom pattern as a mix of supply and demand into all demand (i.e. anyone who traded through the double bottom pattern is now a happy long, or an unhappy short looking to cover/buy). Should(When) the Nasdaq make it to 1,900 I would watch for a gap open; this gap will turn the double bottom into a stronger island reversal. Large caps looking good too: Transports have additional support from the broadenig wedge with bear trap (good news for early recovery sector leaders): Vix has made a neckline double top (on a closing basis). Note bearish divergence in stochastics: Still fear of worse to come from the Hedge Funds which will keep the doubters sidelined until it is to late (or the bounce will be sharp enough to allow Hedge Funds to hang on bef

Weekly review of Stock Charts

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Last week wasn't almost a quiet week considering what had gone before. What had the Stockchart.com ers had to say about it? Yong Pan at Cobra's Market View is looking for the possible symmetrical triangle in the S&P (there is a similar one in the Dow) to break downwards: Note the Pan divergences: SPY at the 60-min shows the pattern development: With the 5-min giving the potential support levels for longs: Maurice Walker sees the symmetrical triangle patterns as bullish. His description of last week: When interpreting price behavior you must become an armchair psychologist. Price patterns form as emotional investors have mood swings that take them from state of being dispirited and depressed, and believing that the seventh seal has been broken and that the Apocalypse is now here. Then to a state of euphoric tranquility about the massive gains that traders have been making right now, being almost in a state of denial. This time of turbulence has taken traders from a gut-wr

Lovely bullish action

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Good volume with long tail bullish patterns helped support the long tail day from last Friday. Best example is from small caps (another positive omen to see strength in this index). Note Fib retracement levels are unchanged from last week; given the correction off the 38% line I suspect we will see a break and push to the 61.8% zone which is conveniently located around the July lows and likely the 50-day MA. In a recent Zignals blog article I talked about the trouble with gold ; gold took a technical hit yesterday; breaking a sideways congestion and its 50-day MA: Note the two distribution days in the GLD ETF (another tick in the negative column). The VIX created it's second spike top. Now it needs to run to (and below) its neckline as I suggested yesterday : There's a good 'feel' for a bottom here. Howard Lindzon has a more proactive approach based on the views of the dishevelled one. Get the Fallond Newsletter Dr. Declan Fallon, Senior Market Technician, Zignals.com

Volatility double top forming

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Yesterday was the action we needed to complete a double top in the VIX. Confirmation won't come until the 'neckline' is breached, but when this happens it will likely coincide with the start of the "Santa rally". One such indicator of a market bottom from the VIX was in the ZigZag peak: Bill's VIX:VXV ratio is "off the charts"; note the bearish divergence in supporting stochastics: I have drawn in two necklines for VIX double top confirmation. If I was to make a guesstimate on what will happen I expect a gap up in the market (gap down in the VIX) which is faded during the first part of the day. This fade pushes the VIX towards 72-75. Late afternoon buying brings the indices back to yesterday's close and creates a second spike high in the VIX. On Friday it will be the reverse situation, market will gap lower / VIX will gap higher. Markets will rally in strength all Friday / VIX will fall producing a bearish cover candlestick to complete the secon

Monday gap tests important

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There is a guest post at Investment Postcards from Cape Town by Bennet Sedacca entitled " What it would take for me to become bullish " which is worth a read. On the more technical front Headline Charts has good charts on US dollar/Bonds/Equities/Commodities showing where the bull and bear markets are ; if you look at what happened to bond prices in '87/'88 when they started their bull market and reflect that on the commodity correction today there is reason for optimism. As for yesterday's action, none of the selling could have been considered surprising. The morning gap was never going to hold after the low volume gains of the prior day. What was more surprising was the late day rally in large caps which put a slightly more bullish gloss on what looked to be a straightforward profit take from short term traders. Tech markets closed weak, but have put some distance from their withering declines of before; a retest of the 1,652 gap in the Nasdaq looks too inviti

Nice rally on the outside, but all hollow inside

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The media got its rally, but it was one driven by the shorts rather than the buyers which firm up a bottom. It was interesting to see the Dow bullish percents fail to register a single point-n-figure 'buy' signal. The only bullish percents to register a 'buy' signal was the S&P: The one day gain was enough to bring many of the indices very near to the 38% Fib retracement. The Dow made it over the line intraday before retreating a little into the close. The Nasdaq has room to run before it gets to its 38% Fib retracement: But the real problem with Monday was the lack of volume. Perhaps Friday took much of the wind out of the sails, but given we had clawed back close to two days of heavy volume losses it would have ben better to have seen some confirmation from the part of buyers to show demand. The good news was the wiggle room it gives on the downside, with the lower Fib retracements and/or the morning breakout gap as opportunities for buyers to enter the market on

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