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Charts courtesy of stockcharts.com

Friday, May 10, 2013

Friday Weekly Charts

I hate it when it does this on Friday: the market lands alost right on a critical pivot pint, in this case the R2 monthly pivot, something that I would normally call a top. However, with the way the market has been acting since January, there is no way I would be stupid enough to make a prediction here. Since the beginning of 2013, we have 4 complete months: in two of them, R2 contained price, in the other two, R2 did not contain price. Flip a coin.

This one is much more significant: the R2 annual pivot point on the weekly chart, breached this week. Since Stockcharts.com has added this to their charts, R2 has been the upper limit for the year, rarely if ever being actually tested. Until now. You can probably ignore the bearish volume pattern on the chart: bearish signals we got 3 weeks ago were ignored as well.

The Nasdaq weekly is still well below R2, which, if anything, means it has more room to move, and you can seed, it is picking up the pace. Volume is not quite as bearish here as it is on SPX, which also means this is probably going to move up some more.
 
R2 is a distant memory on the Dow industrials. Since there are no other pivot points calculated, I figure the next one would be equal distance above R2 and R1 is below. That is just a guess, and any idea of "resistance" on a chart at an all time high is probably pretty silly.

The Transports mad a straight up move, had what turned out to be a very mild correction, and is now breaking out again, and has the potential, at least, of making another straight up move. The support level of that correction? Why, the previously broken R2, of course.

This may be the real test: I have found that the Russell 2000 usually gives the first indication of market trend changes coming, and this is right at R2. I won;t hazard a guess as to what happens here, but whatever it is, it is going to be very important.

The market is in almost unbelievably bullish condition, and is starting (and I mean starting), to look like the very beginnings of a blow off top. If so, we may have weeks, or even months, of big moves the upside. That is when it will be in the process of topping. If that scenario is wrong, the other possibility is that we are beginning a secular bull market. If that is the case, then we will see a blow off top in, oh, about 15 years.

I will have the new highs update shortly.

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