Today is a "what if" scenario day for me: what if yesterday's low was "the bottom"? While I have no real reason to assume it is (and actually kind of doubt it), there is a decent case to be made that this may be the beginning of a decent up move. Volume was pretty good today, although option expiration enhanced that. The 50dma, while broke yesterday, broke again today from the bottom, and may now provide some support. The main reason I think the market may move up: earnings season. During the last few, the market has moved relentlessly up during the heart of earnings season, only to slow down and pull back after the bulk of it was over. there is no guarantee that will happen again, but until it changes the probability is there. Technically, we are again in day 1 of a rally attempt, but again, July and August historially have a low percentage of successful follow through days.
The most notable feature of the weekly chart is the dreaded head and shoulders pattern developing. This one has a better chance of working than the last two, because, for one, the volume pattern is more typical of a head and shoulders top than the last two, and for another, you don't hear the pundits on CNBC talking about this one. However, until the neckline around 1250 is broken, it's just an academic exercise.
Also notable in the weekly charts is the strong upward momentum indicators. Stochastics barely show a down week this week, and MACD, while not outrageously bullish, are also moving up. The Nasdaq had a relatively strong week, and may well be just in a slight pullback after a very sharp move up.
The Dow industrials have an up sloping neckline, which technically means it will be easier for it to break, but I would be more concerned about a potential bear trap if this one breaks and the others don't. This also has plenty of upward momentum, and if you trade in the direction of weekly stochastics, this week presented a buying opportunity.
I'm goint to mix it up this week with a couple of commodity charts, the first being West Texas Intermediate, also known as crude oil. This is still trading at a substantial discount to Brent crude, but for or purposes that is not terribly important. We are more concerned about the trend, which, with a correction that appears to be just about over, is up. Stochastic are now flashing a buy signal here, and even if this doesn;t get to a new high, there is plenty of room to made a hefty profit.
Gold reminds me of the kid in the story " the Emperor's New Clothes", who is the only one who is not afraid to say the Emperor is naked. In this case the Emperor is the world's central banks, and gold is telling them they aren't wearing any clothes. For nearly 3 years it has been in a relentless up trend, outperforming every major asset class, and is now at a new high, despite the best efforts of the mainstream media to tell us all how bad an investment it is. Nice call, guys.
I am not a financial professional, just a guy that trades my own account.
I am also not a musical professional, just a guy that makes music on the computer. Thus, two blogs, one trading and on musical.
And, no, the picture is not me, it is the late, great John Belushi, one of the inspirations for these blogs.
This blog is focused on technical analysis of stocks and markets, putting heavy emphasis on chart analysis. My trading style is derived primarily from my mentor, William "Yoda" O'Neil, and the focus here is on leading and breakout stocks, but all forms of trading are covered to some extent. Economic and political news that effects the market are also topics here, and the blog may occasionally become a platform for my political and philosophical ranting. I keep several spreadsheets on Google docs which track various aspects of the market and readers are welcome to vies and comment on them.
Google Docs Spreadsheets
There are several spreadsheet that I maintain on Google docs to track various watchlists and trends in the market.
1. The earnings list - a group of small and micro cap, low float stocks that have exhibited recent rapid earnings growth. They are modeled along the lines of William O'Neil's CAN SLIM system, but limited to small cap, highly volatile stocks.
2. The relative strength list - a group of stocks which are near 52 week highs and have shown an increase in average daily volume. The list is limited to the top 200 stocks according to my methodology, which will be detailed on one of the pages of the spreadsheet.
It can be accessed here, and is also updates weekly.
3. Relative strength by industry - Uses industry data from Finviz.com to track the percentage of stocks within each industry that are in the top 25% of the 52 week price range, looking for trends.