Browse Articles by Section : *Technical Analysis*
Technical Analysis : Week 4/10
January 27, 2010
The S&P500 Index closed at 1091 last week. This indicates a lost of 45 points from the previous week’s close.
The market had a nightmare in last short trading week. The market tumbled down due to plenty of bad news and uncertainties surrounding the market.
Technically, S&P500 Index had plunge below the 20 and 50 days moving average and 1100 level convincingly, indicate that the bearish momentum is forming. The S&P500 will likely to test 1100 again. Failure to establish above the 1100 level will bring S&P500 down to 1050. S&P500 will likely to have further weakness in the coming week as it broke below the 50 days moving average.
The Plunge Protection Team (PPT) went missing in action on both Thursday and Friday when the market experience heavy selling pressure. Trading volumes were recorded a few times higher than most of the day.
Looking at weekly candles, the S&P500 Index is suggest a negative week. The weekly candle shows a solid fat candle pattern that indicates a further weakness in the coming week. The 1050 levels will be a key support level to watch.
Looking at daily candles, we have 2 huge red candles that punch through 2 major supporting moving average. This indicates that a 3rd red candle is very likely in the coming day.
The immediate support levels are S1: 1050, S2: 1025 and S3: 1000.
The immediate resistance levels are R1: 1100, R2: 1125 and R3: 1150.
In conclusion, the market this coming week is likely to go down again due to the fear in the market. Furthermore, the market will unlikely be able to keep up with the high expectation of earnings from the streets. Overall the market does not look very good in the coming weeks. So once again stay alert and trade carefully.
Lawrence Chua
Patterntradertools.com
Technical Analysis : Week 3/10
January 19, 2010
The S&P500 Index closed at 1136 last week. This indicates a lost of 9 points from the previous week’s close.
The market had started the week looking good until the earnings results came out to spoil the market on Friday. Early of the week, earnings results from Alcoa had already starting to warn the market of potentially weak earnings in Q4 2009.
Technically, S&P500 Index had manage to stay above the 20 days moving average and 1130 level convincingly, indicated that the bullish momentum is still intact. The S&P500 will likely to be tested in the coming week. If the S&P500 break below the 1130 level and 20 days moving average, it will likely to move down towards the area of 1110 and 1120 levels.
The streets will be extremely cautious if S&P500 index break below the 20 days moving average and threaten to break the 50 days moving average. If the 50 days moving average is broken in the coming week or next, a correction of 20% will likely to occurs.
Looking at weekly candles, the S&P500 Index is suggesting a negative week. The weekly candle shows a rather fat shooting star that indicates a reversal or pause in the coming week. The 1,130 levels will be a key support level to watch.
Looking at daily candles, we have a huge red candle that bounce off the key support level 1,130. We need another candle to confirm the movement of the market. A red candle the following day will likely to mean a negative week ahead.
The immediate support levels are S1: 1130, S2: 1110 and S3: 1000.
The immediate resistance levels are R1: 1150, R2: 1175 and R3: 1200.
In conclusion, the market this coming week is likely to go down, as the market will unlikely to be able to keep up with the tepid earnings from Q4. Furthermore, the chart shows that the market had a difficulty in challenging the resistant week after week. All in all the market does not look very good in the coming weeks. So stay cool and trade carefully.
Technical Analysis : Week 2/10
January 11, 2010
The S&P500 Index closed at 1145 last week. This indicates a gain of 30 points from the previous week’s close.
The market started the week and the year 2010 positively as traders and investors betting that the major economy will have positive strong growth in this year. Furthermore, positive comments from the Fed members regarding the low interest rate environment has also fuel the rise of the stock market. This had also confirmed by the lousy job data (-84k) from December.
Technically, S&P500 Index had manage to stay above the 20 days moving average and 1120 level convincingly, indicated that the bullish momentum is still very strong. Furthermore, the consecutives 5 positive day in the New Year seems to set the stage for a powerful rally in 2010. This week the market will likely to test 1200 level, with the objective of establishing itself above the psychological level of 1200. The catalyst might just be the retail sales figures.
This year 2010 seems to be the roaring years for the market. The extremely positive market’s action says a lot on the high level of the street’s optimism and confidence in this year. Traditionally, if the first five days of the trading days is positive, the rest of the January will be positive. Positive January will likely to means positive year for the market.
Looking at weekly candles, the S&P500 Index is suggesting a rally. The weekly candle shows a bullish Marabozu pattern that indicates a continuous strength in the coming week. However the psychological level 1200 will likely to be a hinder for the market.
Looking at daily candles, we have positive candles that establish a higher high, signaling that the S&P500 Index looks like it might be starting the week positively.
The immediate support levels are S1: 1125, S2: 1100 and S3: 1075.
The immediate resistance levels are R1: 1200, R2: 1250 and R3: 1300.
In conclusion, the market this coming week is likely to be quite bullish. The market will be looking at the result of the retail sales, consumer sentiment and Beige book for direction. The market will also continue to look out for the Fed action. The market will continue to rally as long as the Fed continues to delay the timing on raising the interest rate. Be carefully as the 2nd part of this year will likely be a tough environment for investors.
Technical Analysis : Week 49/09
November 30, 2009
The S&P500 Index closed at 1091 last week. This indicates a gain of 0.1 points from the previous week’s close.
The market had started the week positively from the help of the better than expected economic data. However, the market gives back all the gain on the short trading day of Friday, as the U.S. market playing catch up following the news from Dubai.
Technically, S&P500 Index had managed to stay above the 20 days moving average and 1075 level convincingly, indicated that the bullish momentum is still very strong. However, S&P500 Index fail to establish itself above the 1100 level for 3 consecutive weeks, will cap the movement of the bull. This week the market will likely to test 1100 level again, with the objective of establishing itself above the psychological level of 1100. The catalyst might just be the holiday season sales.
The market seems to have recover very fast after the shocking news from Dubai. The market’s action says a lot on the high level of the street’s optimism and confidence. It seems that the bullishness in the market will not be shaken by anything till the end of the year.
Looking at weekly candles, the S&P500 Index is suggesting a pause. The weekly candle shows a shooting star that indicates a reversal or pause in the coming week. The psychological level 1100 will likely to act as a very strong resistant for the market.
Looking at daily candles, we have a huge red candle off its low, signaling that the S&P500 Index looks like it might be starting the week slightly to the downside. The market will likely to be flat.
The immediate support levels are S1: 1075, S2: 1050 and S3: 1025.
The immediate resistance levels are R1: 1100, R2: 1125 and R3: 1150.
In conclusion, the market this coming week is likely to be very volatile, as the market will be looking at the Non-Farm Payroll, Holiday Season Sales and the development of Dubai. The market will not be looking good especially when the weekly candles shows 2 consecutive shooting stars. This coming Monday will be the key day for the market as traders and investors will be coming back to assess the situation in Dubai and Black Friday Sales. So stay cool and trade carefully.
Technical Analysis : Week 47/09
November 16, 2009
The S&P 500 Index closed at 1093 last week. This indicated a gain of 24 points (2.4%) from the previous week’s close.
The market had to thanks the Dollar for another great run for the week. The dollar weakens on Monday after the negative comments from the official. Traders and investors gladly took it on stride as it bid the market furiously on Monday.
The market continues to ignore the bad economic data such as consumer sentiment and IBD/TIPP Economic Optimism. The market look set to close higher for the year of 2009.
Technically, S&P 500 Index had blast through the 20 moving average and the 1075 level convincingly, indicated that the bullish momentum is still very strong. However, S&P 500 Index fail to establish itself above the 1100 level, will cap the movement of the bull. This week the market will likely to test 1100 level again, with the objective of establishing itself above the psychological level of 1100. Looking at the chart, S&P 500 Index failed to close above the red color trend line on Friday, might indicate that the bull have exhausted from the great run off the March low.
The street’s optimism and confidence in the market remain high after the officials stated that the Dollar is still slightly overvalued in the world. Throughout the week, most of the articles have pointed a weaker dollar for the next couple of months.
Looking at weekly candles, the S&P 500 Index is suggesting a pause. The weekly candle shows an ugly shooting star that indicates a reversal or pause in the coming week. The psychological level 1100 will likely to act as a strong resistant for the market.
Looking at daily candles, we also have an ugly shooting star candle signaling that the S&P 500 Index looks like it might be starting the week slightly to the downside. The market will likely to be flat.
The immediate support levels are S1: 1075, S2: 1050 and S3: 1025.
The immediate resistance levels are R1: 1100, R2: 1125 and R3: 1150.
In conclusion, the market this coming week is likely to be very volatile as there are many economic data that are schedule for releases. The market sentiment remain bullish and this likely means that the market will test the psychological level 1100. If the market able to establish itself above the psychological level in the coming week, it will be able to surge higher for the end of the year. The market will have to find support from the weak dollar as it propels itself higher in year 2009. Therefore, the weakness of the Dollar will be the key towards the bullishness of the market.
From,
Lawrence Chua
Technical Analysis : Week 46/09
November 10, 2009
The S&P 500 Index closed at 1069 last week. This indicates a gain of 33 points (3.2%) from the previous week’s close.
The market had a great week with the support from the Fed Policy that ended up positive. 4 out of 5 days were trading in the green last week as investors and traders were glad to see that the cheap credits are still in place.
The market had completely overlooked the economic data such as the shocking jobless data. The market continues to look for good news as it swipes away the bad news.
Technically, it seems that the market is going to test the high in October. Currently, the 20 moving average and the 1075 resistant level are still containing the market. However, if the market breaks above the 1075 level, it will likely to test the 1100 level. Once again, if the market plays out the way it did in October, then we will likely to see the market hitting the 1125 level in the 3rd week of November.
The street’s optimism and confidence in the market grow strongly after the assurance from the Fed to keep the Fed Fund Rate at a record low level for an extended period.
Looking at weekly candles, the S&P 500 Index is suggesting an upside movement if it can break above the 1075 level. The weekly candle shows bullish harami candle formations that indicate a bullish week ahead.
Looking at daily candles, we have an ugly spinning top candle signaling that the S&P 500 Index looks like it might be starting the week either slightly to the upside or downside. The market will likely to be flat.
The immediate support levels are S1: 1050, S2: 1025 and S3: 1000.
The immediate resistance levels are R1: 1075, R2: 1100 and R3: 1125.
In conclusion, the market this coming week is likely to be bullish if it breaks above the 1075 level. If the market fails to break above the 1075 level, it will likely to revisit the 1025 level. The market will likely to take the cue from the Dollar Index as the economic and earnings are light in the coming week. Therefore, the weakness of the Dollar will spur the “Risk On” trade in the market.
From,
Lawrence Chua
Technical Analysis : Week 45/09
November 2, 2009
The S&P500 Index closed at 1036 last week. This indicates a drop of 44 points (4%) from the previous week’s close.
The market had experienced the most fun roller coaster ride towards the end of the week which ended up extremely negative. 4 out of 5 days were trading in the red last week as investors and traders were seen locking in profit for the year.
The market had looked past the recent earnings reports. Instead, the market had been looking at economic reports to estimate the health of the economy in the coming months.
Technically, it seems that the market is going to be bearish in the near future as it broke through the 20 and 50 day moving average on last week. Furthermore, the market broke below the uptrend line from March low.
Meanwhile, the street’s optimism and confidence in the market took a beating. However, many folks are still looking to buy on dips which worked so well for the past 7 months.
Goldman Sachs changed its view recently as they revised down the GDP estimate before the release last week. Goldman Sachs also revised down the upcoming Non-Farm Payroll to -200K. The top-earnings bank, starting to feel the strain, serves as a clear warning to the street.
Looking at monthly candles, the S&P500 Index is pointing to some downside as the monthly candle shows a “Shooting Star” candle formation that might translate into further weakness in the coming month.
Looking at weekly candles, the S&P500 Index is suggesting a downside movement if it can break below the 1025 level. The weekly candle shows a big bearish candle after the ugly inverted hammer in the previous week. This will further enhance this bearishness in the market for the coming week.
Looking at daily candles, we have an ugly Marubozu bearish pattern signaling that the S&P500 Index looks like it might be starting the week on the negative side. It has to break below the 1025 level in order to wake the bears up.
The immediate support levels are S1: 1025, S2: 1000 and S3: 950.
The immediate resistance levels are R1: 1040, R2: 1060 and R3: 1080.
In conclusion, the market this coming week is likely to be bearish if it breaks below the 1025 level. The Non-Farm Payroll numbers and the FOMC statement will have a major bearing on the broader market. Oil and the U.S. dollar will also be in the spotlight. Technically, the market faces an upheaval as daily, weekly and monthly charts all point to bearishness.
Recap from last week …
“History tends to repeat as Human Beings never change.”
“Also note that the NASDAQ is on its Eighth Candle now with one week left to go. Remembering what happened in February 2007 on that fateful “Shanghai Surprise” that ended the last two days of February in an Eighth Monthly Candle Reversal on the Dow and S&P500, I am not going to mess with the possibility of a major reversal on Tech this week.”
Technical Analysis : Week 44/09
October 26, 2009
The S&P500 Index closed at 1080 last week. This indicates a drop of 7 points (0.7%) from the previous week’s close.
The market had experienced a roller coaster ride for the week, which ended up slightly negative. 3 out of 5 were trading in the red last week despite the fact that earnings were better-than-expected for most of the reported companies. The S&P500 Index tested the 1100 level twice for the week without successfully closing above this significant level. The market traded sideways for the week in a range of 25 points between 1100 and 1075.
Technically, it seems that the market is uncertain of the near future, as it cannot break through the significant 1100 resistance level and the immediate support level of 1075.
Looking at the chart, the price action in October looks eerily similar to the price action in September. Both of them had encountered a decline on the first two days of the month and the reversal on the third day of the month. Both of them had nine consecutive positive days starting on the reversal day following a negative day on the 10th day. After the pause, both of them experienced a sideways trend for the next 5 days. During the sideway trend, both tested the high of the year twice. If history does repeat itself, the market will be testing 1050 for the rest of the October.
Meanwhile, the street’s optimism and confidence in the market remains strong. However, some of the professionals are looking for a healthy correction of 5% to 10% in the coming week. Many folks are still looking to buy on dips, which worked so well for the past 6 months.
Short-U.S dollar trade is still very popular, as many people believe that the Dollar is heading into the direction of Zimbabwean dollar. Analysts are calling for a 25% downside before any pull back can be considered. However a major short squeeze can be expected in the near term as the short-dollar trade is extremely overcrowded.
Looking at weekly candles, the S&P500 Index is suggesting a downside movement if it can break below the 1075 level. The weekly candle shows an inverted hammer that might translate into further weakness in the coming week.
Looking at daily candles, we have a Bearish Engulfing pattern indicating that the S&P500 Index looks like it might be starting the week on the negative side. It has to break below the 1075 level in order for the bears to come alive again.
The immediate support levels are S1: 1075, S2: 1060 and S3: 1040.
The immediate resistance levels are R1: 1100, R2: 1150 and R3: 1200.
Also note that the NASDAQ is on its Eighth Candle now with one week left to go. Remembering what happened in February 2007 on that fateful “Shanghai Surprise” that ended the last two days of February in an Eighth Monthly Candle Reversal on the Dow and S&P500, I am not going to mess with the possibility of a major reversal on Tech this week.
In conclusion, the market this coming week is likely to be bearish if it breaks below the 1075 level. The GDP numbers will have a major bearing (pun not intended) on the broader market. U.S. Dollar and Oil will also be in focus.
The market will be facing extreme volatility as the street debates whether to take profit or take more risk. Once again it is too early to call the top as the market can stay irrationally long as long as you can stay solvent.
Happy and Safe Hunting Always.
Technical Analysis : Week 43/09
October 19, 2009
The S&P500 Index closed at 1087 last week. This indicates a gain of 16 points (1.5%) from the previous week’s close.
The market had a run of 4 consecutive positive days in this week. The push on Thursday was fueled by the euphoria of getting above the 10,000 mark on the Dow Jones Industrial Average.
Technically, there are no signs of slowing down the bull after such a great run since March and July. The market had managed to close above the 50 Day Moving Average since 15th of July. Apparently, the market always seems to be able to find a buyer to bid up the price from the dip of the 50 MA level.
Looking at the daily chart, the market is going higher amid a slower pace as compared to the early stage of the bullish surge. The S&P500 Index will face a tough job to climb above the 1,200 mark for the end of this year.
Meanwhile, the street’s optimism and confidence in the market continues to push higher after the Dow Jones Industrial Average managed to establish a close above the 10,000 mark.
Many folks are likely to be more comfortable in putting their money in the market now as the fear of a double dip seems to have disappeared recently from the news. Furthermore, the media has been creating a lot of fear with regard to the depreciating value in the purchasing power of the U.S. Dollar.
Many people believe that the Dollar is going to fall further and are trying their best to safeguard their Dollar through investing in Gold, Oil, base metals and even good quality stocks.
Looking at weekly candles, the S&P500 Index is suggesting some upside movement if it can break above 1100 in the coming week. The weekly chart shows a healthy bullish candle that might translate into further gain in the coming week.
Looking at daily candles, the S&P500 Index looks like it might be starting the week slightly towards the positive side. The candle formation, a “hammer” on the rising trend tends to point toward a consolidation over the next few days.
The immediate support levels are S1: 1080, S2: 1060 and S3: 1040.
The immediate resistance levels are R1: 1100, R2: 1150 and R3: 1200.
In conclusion, the market this coming week is likely to be bullish if it can break above the 1100 level. Earnings will play a big part in deciding the fate of the market. The U.S. Dollar will also play another big part towards the growth in the equity market. Overall market sentiment remains bullish but the economic view is still bearish. Thus, the strategy in this market is go with the bullish flow but maintain a clear mind ahead of the economy situation.
It would be wise to not commit more than 50% of your cash to trading now. Buying yourself some insurance in the form of cheap Puts may not be a bad idea should the market decide that it has had enough of this bull-run.
It is October, after all.
Technical Analysis : Week 42/09
October 12, 2009
The S&P500 Index closed at 1071 last week. This indicates a gain of 46 points (4.5%) from the previous week’s close.
The market had 5 consecutives positive days in this week. The market had gained it bullish momentum after the major indexes hitting the 50 Moving Average line on last Friday. The market had play out this strategy for the past few months. Investors and traders had been buying from every single dip that the market present itself. Frenzy buying had been spotted at 20 MA and 50 MA levels. As long as there are no major shocking news, the street will likely to benefit from buying at every major support level of the moving average.
The optimism and confidence in the market are growing stronger with every better than expected earnings reports from major industry leader. Further evident of growing optimism can be found in the short interest data, VIX and VXN.
Amid the strong confidence in the market, there are several famous people warning the street on the health of the economy and the overrun in the stock market price. Fed Bullard warns over inflation and cautions unemployment is headed to double digits.
Looking at weekly candles, the S&P500 Index is suggesting a upside movement if it can break above this year high of 1080 in the coming week. The weekly chart shows a bullish ‘marabozu’ candle that indicates a positive ahead. Furthermore, the weekly chart also seems like a continuous pattern of the bullish trend.
Looking at daily candles, the S&P500 Index looks like it might be starting the week with a positive Monday. This is because the market ends up high at the last trading day.
The immediate support levels are S1: 1025, S2: 1000 and S3: 990.
The immediate resistance levels are R1: 1040, R2: 1060 and R3: 1080.
In conclusion, the market this coming week is likely to be bullish if it can break above the 1080 level. Earnings will once again be in the focus. All eyes will be on the big boys such as Bank of America, JP Morgan, Citigroup and Goldman Sachs. Traders had been shorting the Dollar, buying Gold, Oil, Stocks and even Bond. On a caution note, all the investment markets had been overcrowded recently. Any reversal or shocking news will turn the tide that will likely to be fast and furious.
“Market always make the majority look like a fool”
By,
Lawrence Chua
