Saturday, December 25, 2010

Week-End post

First of all, Merry Christmas for my Christian readers!

I'll update you quickly on the stock-market and PM sector, then, as I promised in recently, I show a simple guide how to build support from ichimoku.

So what happened in the last few days?

Market started cleaning process 5 times, but Ben immediately dumped large amounts of dollar helped bulls to weaken bearish cycle. Please check the 60-mins RUA and USD charta below.

Chart above shows bearish cycles on 60min. 1 was pretty weak, 2 gave MVO signal as well, 3 was weak again, 4 was negated by MVO 5. Slightly started EOD last trading day.

Let's see the USD dumps:

You can see, every time the bull started to hesitate, huge amount of USD was dumped to the market in order to neutralize the bear cycle. I must say, it was pretty successful so far. Slowly USD is getting stronger and market is stagnating. PM sector reacted accordingly: started a healthy correction and it is running it's cleaning process nicely.

RUA 1-day:

Both histos are in negative territory, also oscillator is declining, now it's 1% more than critical level.
These are warning signals, however momentum is still very strong, sentiment gained in the last days.

In summary: situation is a little worse than neutral, negative bull signals give caution, some profit taking is strongly advised..
Last bearish cycle started pretty strong, so account has to be taken for this symptom.

How to build an ichimoku TA?

There is no schoolbook to build an ichimoku TA. I'll show a simple and easy way I usually show my clients to give understanding.

Let's see 1-day SPX:

Step 1: GAP analysis: Make a detailed review and check for uncovered gaps. Give a signal of them.
I signaled GAP found with number 1.

Step 2: Build up dynamic cloud support. This is the medium line of the cloud. If this line is touched, trend change is very possible. Also breaking into or through clouds is a possible trend-changing signal.

Step 3: Find cloud supports and resistances. Clouds are made by short and long averages.
Horizontal cloud edges (senkou spans (A or B)) or  signal support/resistances. Longer the line, signal is stronger, so probablity of it's activation is higher.
Mark supports and resistances. I marked them as possible supports. 3 and 4 is an inherited support from last cycle, 5, 6, 7 and 8 from this, current cycle.
As you see, 1-8 and 3-7 in the same levels, so mark them as a possible target of correction.
2,6 and 4 is just support to remember.

5. 1070 is our hard liquidation zone. One level above, 1110 is our soft liquidation zone. Here we cut our bull stakes to minimum, and watch whether we meet to the hard liquidation level.

Now we are done on 1-day. Between current level and cloud support (2.) we still need to make a plan.

60 min ichimoku:

Step 1: GAP analyisis. Two GAPS found 1.a and 1.b. 60-mins gaps have no that strong magnet power than 1-day gaps, anyway, good to make a mark.

Step 2: Cloud support: 2,3,4. Warning signal: price candle crossed cloud support 2.

Step 3: Find inherited or current cycle supports: Inherited supports are 6, 7 and 8, current levels are 10 11 and 12.

Step 4: Try to sketch a scenario. Based on several factors we suppose that we are in a topping process. topping process in general makes an initial drop and test Tenkan-sen (done), then continues and tests Kijun-sen (red line), then test back it's own top but fails. This is the final step of the topping process, and for this time large volume puts are in play drag market down with huge efficiency.
Senoku span gives some support, but then prices fall. As we have a gap there, for sure, level 12 is a primary target down.
Then second GAP (1a) magnets prices down, fear is the strongest at this fall. As 6,7, and 1.a fall into same territory, prices might hesitate this level, but might fail. At failure, next level is 10. If that fails, next is 9.

Please note it's not a forecast, it's only a possible scenario. Bear correction might happen much faster, some levels simply skipped, and level of correction might be much stronger.

Chance is big for a correction and I count with 7-10% correction at least. However, I warn you again: please dont try to short this market. Ben is here and can change the process at any time. We could see his manipulation in the past, and he has lots of money left. However his only tool is inflation for now and media manipulation. Economy has no real results, but Ben has printing machines. And he is very effective using that.
He manipulates USD heavily. And in trouble he will be more agressive. USD rises in corrections and it will be strong again, Ben will have ammunition again. He will dump, dump and dump dollar to defend economy against deflation. That dump will push PM sector to dream levels. So, instead of concentrating to this 7-10% fall in the next 1 month try to keep your eyes on the main picture: an upcoming bull rally on market and amazing growth (25-40%)of PM sector. I'll try to ride the bull and capture that as quick as possible. Till then I keep our core positions and wait.

Again, Steffan makes excellent daily market posts. I will make 2-3 weekly posts. I welcome any new trainee who opens a VTA blog. I'll link them and help them in their start. My goal for next year is to open a team-blog and continue market analysis together.

Good luck!

No comments:

Post a Comment