Thursday, October 7, 2010

Mid-week status

I feel we had exciting moments this week.
Checking volumes, Tuesday was a turning-point. On Monday internals became extremely week, I sold a 1 unit of SPX, but seems our helpful invisible hand did not let market down.
Well, we could make profit again. Let's see our status.
As you know, my preferred index is RUA, large volumes, clean oscillator signals make it easier to read market status.

I will start with 3-days RUA now, and make a drill down to 30-mins:

3-days RUA:

In 3-day RUA we have a perfect bull setup. We can observe a nice buy-on weakness activity . Please observe that volume moving average is rising and underlying aggregated volume is bullish.
Histogram value is positive, its a good sign. What is beautiful to see, SBV oscillator could manage to rise, also MV buy volume managed to rise in these hard days. MVO makes us a favor and signals local surge; as per moment surge is rising, so I feel we are before nice rally days. What gives some worry feeling is the momentum. It needs improvement.

2-days RUA:

Two days RUA looks fine as well, histo is still fine (it can be very week during extreme bull rallies, the most improtant thing is to remain 0 or little positive), oscillator shows some weakening, but selling volume is steady zero. MVO suggests further surging.
What is great to see, momentum seems recovering and that will give breath to have a bull rally. Sentiment is fine

1-day RUA:

Here we can see that we still have weak internals. 3 and 2 days chart however suggest recovery. Buy volume is still above critical and sell volume is steady zero.
MVO suggests an upcoming surge. I feel smarts know something about the upcoming earnings period.
Sentiment is fine. While it's above 46, we have nothing to afraid of.

60-min RUA:

We can see an exhausting bear rally started from 4-oct 11.30 till 5-oct 11:30.
As you can see, it was nothing more than an entry to the new quarter. Bear period exhausted quickly and half of that was spent with buy on weakness activity. Smarts fooled everyone again. Scaring monday was followed by a 90% up volume tuesday with a huge bull volume insertion.
On 6th of october we can see a cool-down period. As you can see, histogram shows same dynamics as prior bear but now bears could not make too big price effect. Actually it was a usual mini-dump after the a daily bull rally.
What is suspicious an MVO green/red switch usually means minor trend-change short term. If we check AD sentiment it fell under 50, what is a warning signal as well. What is good in this picture, Longer-period oscilaltor (18) turned back to green again, detecting large probability of bullish continuation today.
Taking 60-mins into a larger picture, I feel this will be a double mirror bull.
Let's drill down a little to see how internals are in smaller timeframe!

30-min RUA:

As we zoom in our microscope, we can see this bear on 30-min is exhausting.
Histogram is closing the bear, oscillator shows bear exhaustion, bearish volume is steady and bull volume turned back from zero. We can see the MVO green/red switch signal as well, but seems it's exhausting and could not manage to make further price drop. Last bearish volume surge could not make damage on momentum oscillator, it's still above critical level.

Other, classical measures:


Unfortunately I have some bad news regarding to NYMO. It had a MA cross in recent days and signals are flatting out. It does not mean market break, but market is not safe anymore. It rather means smarts will start to chase prices but pull money out gradually.We started the end-cycle of this rally. Nothing to worry about, usually it takes weeks till smarts unload their bulls and load puts in small installments. From now on, I'll trade 1 unit of SPX only. If fast signal rises dramatically (what is usually not happen at this stage) then I might invest 1 more SPX if volume internals good.


SPXA50 is above critical signal. Again, nothing to worry about, we did not top yet, and sometimes it takes weeks to have downward fall. If SPXA50 turns back from top and touches critical level, then we might see a correction. Again, one more reason to be cautious.


Dollar is in a terrible status. This bull market rally is nothing more than a financial manipulation, a last attempt to save US economy, also serves good numbers for upcoming mid-term election. This financial intervention is extremely dangerous. It seems smarts always find a new place bubble and devalue. Oil, internet, housing, now treasury and currency.
Of course, they will defend USD later, they already prepare a new attack against euro by dragging Ireland down, but now it seems market is more important. But these signs are clear and tell the story of future to us.
USD is in a freefall-mode. Three weks ago I shown a chart you about my vision of USD, and dollar followed my lines. It broke ichimoku inherited supports (from last cycle) without hesitation. Look, inflation is our friend. More the inflation is, more market rises. I am repeating: other alternative is deflation. That would definitely collapse US economy through it's treasury bill obligations and low export levels. Cheaper dollar results reduction in treasury obligaton, also provocates cheaper prices on export can contribute lower unemployment, better consumer sentiment can result indirect and direct  GDP rise.
Look, Ben and his team is not crazy. They try to escape form a terrible situation.

Let's see USD chart:

My forecast in indicators and trend were pretty good. I feel there will be some further 4-6% rise and then 5-7% of correction on the market, not more than that, makes place to USD to recover. Of course things dont happen that fast in economy, and FED will accelerate the inflation of USD at correction making sure market continues a bull rally. Current rally and further intervention into the financial market with more dollar inflation finally will result great results and will materialize in GDP balance forecasts, will lead finally a further rally up, resulting ATH in SPX.

Let's see a 1,5-month scenario on SPX:

Lower bollinger and 50MA cross is imminent and almost sure. That will fuel a bull rally. Then 50/200 MA cross comes in less than 10 days will rise attention at all techies, and chances the picture dramatically. That will be a mini W shape market recovery, all market participants will turn their machines/trading instructions to bull.
Taking  NYMO and SPXA50 into consideration smarts will be keen to enter upcoming bull market cheap, so they will provoke a correction around end of october, freaking everyone out.
A minor pull-back gives them a nice opportunity to buy and chase market up to the skies.



Gold miners joined to the PM rally and now they above of ATH. If a stock or rather, a whole sector is above ATH, that results hyperbolic rally. I am repeating it since august: PM is before a huge rally. And it's just started. I hope you buy some of it. Personally I have less and less interest in other sectors.

Now all the PM sector is on ATH. Gold made it first, then silver joined and now gold miners made a breakout.
Gold internals are weakening. PM is volatile.Of course smarts play a lot with gold and silver. Please observe: they correct at daytime what freaks out masses of their positions, and they buy cheap premarket.
What we need to do is to buy and ride. Even it corrects 3-5% just hold. It will recover. Be patient.
I will write a dedicated post about PM take-off modes, concentrating to the most volatile family member: silver.



Absolutely strong internals with extreme strong MVO surge


Strengthening signals suggest further rally.

Good luck!

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