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Friday, September 10, 2010

Friday Weekly Charts

Yesterday gave us a little bit of a fakeout, as the failure to close above 1105 might have caused some bears to jump the gun, but spending most of the day above it showed it was vulnerable. Today it fell pretty easily, and it appears the next level of resistance is around 1110. Today, I put up a chart without resistance and support lines so the moving averages could clearly be seen. It does appear that both simple and exponential 200dmas are coming into play, as the two have diverged farther apart than at any time in the last 6 months. It does appear that those two averages are going to be the key levels in the next week or so, and we are ight in the middle.

I introduced the Elder Impulse System on the daily charts a couple of days ago, and today I thought I would take a look at the weekly. Since the Elder sysem is designed more for short term trades, it's probably not as reliable on a weekly chart (although does use a weekly chart in their examples). One thing I notice s that the blue bars are not as reliable here in indicating a trend change. However, the first weekly green bar has been a decent buy signal, and we are now on thee second green week. Stochastics are also indicating strong upward momentum, and MACD is showing signs of reversing.

The Nasdaq, despite some serious weakness (stochastics have yet to cross 50) appear to be in about the same shape as the SPX. Instead of trying to project "targets", I simply used the horizontal lines to show where we are now trading. Until the upper or lower boundaries are broken, we are range bound.

The 40 week average is looking like a magnet, drawing price toward it on all averages. On the Dow, you can see the relative strength both in stochastics and MACD, but is just as rangebound as the Nasdaq.

The Dow transports have been the strongest of the indexes since this correection began, and are now in the best shape. the are the only major index that is above the 40 week line, and the closet to breaking out. On the negative side, they are also looking at rapidly shrinking volume.

The Russell 2000 was the closest to breaking down through the lower level of it's range, but it didn't, and has been the leader on the bounce back up.  It is, however, still in a precarious position, has weak stochastics, and is going to have to contend with a 40 week line tha is very close to turning downwards.

Ever since the big rally of July of 2009, we entered into what has become a large trading range, which, despite the breakout earlier this year (and subsequent collapse back) has resulted in a basically flat market for about a year.

I will have the new highs update shortly.

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