There is a chance that it is. We will see.
8/31/11
Techncial Analysis - Swiss Franc 8/30/11
It was fun while it lasted, but we have taken some profits off the table in CHF. While the long term trend remains in place for now, the intermediate term trend has broken down enough to cause us to exit what we would consider intermediate term positions. Should this turn into a correction or consolidation, we might have to eventually reenter the trade.
Long term trend still in place.
It's happened. The intermediate term trend in the Swiss Franc has broken our lower parallel trendline. Is this a trend change, or just a little consolidation? I really don't know, and that's why I try to become more and more simple in following the trend and managing risk.
Trending up with a signal line above, the weekly moving average envelope still looks really positive. But, the daily MA envelope shows significant weakness with a signal line below a down-trending envelope.
RSI on the weekly chart is firing a warning shot by moving into the neutral territory. On the daily chart, the RSI is in downtrend territory.
Dynamic Trailing stop remains in uptrend mode on the weekly chart, but only barely. DTS is solidly in downtrend mode on the daily chart.
ADX / DMI has turned down a little on the weekly chart, and is registering non-trending action on the daily chart.
At the time of this posting, 1 USD = 0.81823 CHF.
Current Stance
Long Term: Hold
Intermediate Term: Flat
Definitions:
Flat = no position / not long or short the market.
Sell Short = positioning to attempt to profit on price declines
Buy / Long = positioning to attempt to profit on price advances
Hold = hold a long position
Hold Short = hold a short position
Long term trend still in place.
It's happened. The intermediate term trend in the Swiss Franc has broken our lower parallel trendline. Is this a trend change, or just a little consolidation? I really don't know, and that's why I try to become more and more simple in following the trend and managing risk.
Trending up with a signal line above, the weekly moving average envelope still looks really positive. But, the daily MA envelope shows significant weakness with a signal line below a down-trending envelope.
RSI on the weekly chart is firing a warning shot by moving into the neutral territory. On the daily chart, the RSI is in downtrend territory.
Dynamic Trailing stop remains in uptrend mode on the weekly chart, but only barely. DTS is solidly in downtrend mode on the daily chart.
ADX / DMI has turned down a little on the weekly chart, and is registering non-trending action on the daily chart.
At the time of this posting, 1 USD = 0.81823 CHF.
Current Stance
Long Term: Hold
Intermediate Term: Flat
Definitions:
Flat = no position / not long or short the market.
Sell Short = positioning to attempt to profit on price declines
Buy / Long = positioning to attempt to profit on price advances
Hold = hold a long position
Hold Short = hold a short position
Understanding the Fed
EWI's free eBook explains the common and misleading myths about the U.S. Federal Reserve Bank
Elliott Wave International
EWI's free eBook explains the common and misleading myths about the U.S. Federal Reserve Bank
Elliott Wave International
8/30/11
Technical Analysis - Silver 8/29/11
As stocks rallied today, silver and gold declined. How much as this action affected the price trend in silver?
Long term uptrend still intact for now.
There is still an intermediate term uptrend within a broader sideways range.
Moving average envelopes and RSI readings are neutral on both time frames.
Dynamic Trailing Stop is in uptrend mode on the weekly chart, but has moved back into downtrend mode on the daily chart -mixed signal.
ADX / DMI looks weak and non-trending on both charts at the moment.
My Elliott Wave interpretation leads me to the expectation intermediate term weakness followed by resumption of the larger uptrend.
What if this interpretation is wrong? Uh, that would mean we were dealing with financial markets. Most expectations are wrong. We just try to mange probabilities and risks in an effort to make a buck. Reassessment is a regular and routine part of being involved in these things.
Current Stance
Long Term: Hold (core position)
Intermediate Term: Flat
Definitions:
Flat = no position / not long or short the market.
Sell Short = positioned to attempt to make money on price declines
Buy / Long = positioned to make money on price advances
Hold = hold a long position
Hold Short = Hold a short position
Long term uptrend still intact for now.
There is still an intermediate term uptrend within a broader sideways range.
Moving average envelopes and RSI readings are neutral on both time frames.
Dynamic Trailing Stop is in uptrend mode on the weekly chart, but has moved back into downtrend mode on the daily chart -mixed signal.
ADX / DMI looks weak and non-trending on both charts at the moment.
My Elliott Wave interpretation leads me to the expectation intermediate term weakness followed by resumption of the larger uptrend.
What if this interpretation is wrong? Uh, that would mean we were dealing with financial markets. Most expectations are wrong. We just try to mange probabilities and risks in an effort to make a buck. Reassessment is a regular and routine part of being involved in these things.
Current Stance
Long Term: Hold (core position)
Intermediate Term: Flat
Definitions:
Flat = no position / not long or short the market.
Sell Short = positioned to attempt to make money on price declines
Buy / Long = positioned to make money on price advances
Hold = hold a long position
Hold Short = Hold a short position
Behind Closed Doors at the Fed: Ten Years of Research into America's Central Bank
Free Report Available Now
Elliott Wave International
Free Report Available Now
Elliott Wave International
8/27/11
Technical Analysis - S&P 500 8/27/11
Since last week's post, the market has continued to consolidate in what might become a very predictable pattern. More on that latter.
The weekly chart shows the possibility of a very significant downtrend emerging.
Parallel trendlines marking the downtrend on the daily chart have been violated. As I said last week, I would not argue against anyone taking profits from shorts as a result. That's just not my plan right now.
In last week's post I said my plan was to continue to hold short, while moving protective stops down to 1208.47 (cash market) 1206.75 (e-mini futures), which represents a profit area for our trade. This levels also represents an upper boundary of the current consolidation. Its really simple for me. If the boundary is not breached to the upside before more downside, then we stand to further profit. Alternatively, a breach of the current upper boundary of the consolidation would simply lead to defending capital by harvesting some profits as a result of respecting price trend.
No doubt some of you are noticing a potential Elliott Wave pattern on the chart. We'll discuss that later. For now let's keep it a little more simple.
My defensive plan is to take only some profits if the stop level is hit, while holding on to some of the position. Should that stop level be hit, my offensive plan would be to look to add more shorts as we see signs of such a rally ending. Of course, any of this can change based on market conditions, but that is the plan for now.
Weekly and daily bar charts both show downtrending moving average envelopes, each with signal lines currently in the downtrend range below the envelopes themselves. The daily time frame looks like it's lining up for a test.
RSI is in donwtrend range on both time frames, with the daily testing the neutral range. By the way, I recently did some testing with this indicator, and found that using it as an additional trend filter for other trend indicators can improve equity curve performance during a period of whipsaw or drawdown. It's worth watching as a trend indicator. That's why its included every week in the chart sets.
The Dynamic Trailing Stop is still in downtrend mode on the weekly bar chart, but has moved to uptrend mode on the daily bar chart.
ADX / DMI shows trending behavior on the weekly bar, but is weakening a bit due to consolidation on the daily chart.
My top long term Elliott Wave interpretation is shown on the chart above. Sure, there are alternates available, I am a trader first and analyst second. There is a definable trend with a simple Elliott explanation. I'm gonna trade the trend.
We are still testing Richard's line (named for the friend who pointed it out). Richard's line represents possible resistance, as it was previously support on a number of turns.
Earlier in the post I said that a very predictable pattern might be emerging out of the current consolidation. The daily chart above shows what I currently think might be going on. Elliott Wave labels count the current consolidation as part of a fourth wave correction. This fourth could form as a triangle or a flat. Both are shown. The triangle would make things easier to stomach as we hold shorts, while the flat would temporarily lead to new retracement highs before continuation of the broader trend.
Should we get upset if the market does something completely different than is outlined above? No! We are managing probabilities here. When it comes down to it, we are going to try to follow the price trend. If the market does something completely different than expected, it will just be doing what markets are good at doing -tricking traders and investors.
Last week, a 20-minute chart was posted to follow up on a one that had been posted the week prior. A possible short-term rally was expected, and a short term rally has occurred. This retracement may or may not be over, but it certainly has not amounted to much yet.
The VIX is consolidating with price, albeit from levels a little higher than we have become accustomed to in recent months. Complacently is not as high as it once was.
We have been noticing that the Put / Call has been at levels where we might expect a short term low to emerge. Even after the short term bottom has has emerged, the Put / Call is still essentially at those levels. This is right along the lines of our Elliott Wave expectation of a little more action out of the proposed wave-4.
As I mentioned earlier, any additional rally will most likely lead me to look to add more shorts to intermediate and long term positions (might have to defend some current profits first though).
Current Stance:
Long Term: Hold Short
Intermediate term: Hold Short (against stop mentioned earlier in post)
Short term:
My propriety short term system is currently neutral -not allowing trades at the moment. Directional orientation as well as position entries and exits in this system occur more frequently than posts to this blog.
Definitions:
Flat = no position / not long or short the market.
Sell / Short = positioning to attempt to profit on price declines
Buy / Long = positioning to attempt to profit on price advances
Hold = hold a long position
Hold Short = hold a short position
Parallel trendlines marking the downtrend on the daily chart have been violated. As I said last week, I would not argue against anyone taking profits from shorts as a result. That's just not my plan right now.
In last week's post I said my plan was to continue to hold short, while moving protective stops down to 1208.47 (cash market) 1206.75 (e-mini futures), which represents a profit area for our trade. This levels also represents an upper boundary of the current consolidation. Its really simple for me. If the boundary is not breached to the upside before more downside, then we stand to further profit. Alternatively, a breach of the current upper boundary of the consolidation would simply lead to defending capital by harvesting some profits as a result of respecting price trend.
No doubt some of you are noticing a potential Elliott Wave pattern on the chart. We'll discuss that later. For now let's keep it a little more simple.
My defensive plan is to take only some profits if the stop level is hit, while holding on to some of the position. Should that stop level be hit, my offensive plan would be to look to add more shorts as we see signs of such a rally ending. Of course, any of this can change based on market conditions, but that is the plan for now.
Weekly and daily bar charts both show downtrending moving average envelopes, each with signal lines currently in the downtrend range below the envelopes themselves. The daily time frame looks like it's lining up for a test.
RSI is in donwtrend range on both time frames, with the daily testing the neutral range. By the way, I recently did some testing with this indicator, and found that using it as an additional trend filter for other trend indicators can improve equity curve performance during a period of whipsaw or drawdown. It's worth watching as a trend indicator. That's why its included every week in the chart sets.
The Dynamic Trailing Stop is still in downtrend mode on the weekly bar chart, but has moved to uptrend mode on the daily bar chart.
ADX / DMI shows trending behavior on the weekly bar, but is weakening a bit due to consolidation on the daily chart.
My top long term Elliott Wave interpretation is shown on the chart above. Sure, there are alternates available, I am a trader first and analyst second. There is a definable trend with a simple Elliott explanation. I'm gonna trade the trend.
We are still testing Richard's line (named for the friend who pointed it out). Richard's line represents possible resistance, as it was previously support on a number of turns.
Earlier in the post I said that a very predictable pattern might be emerging out of the current consolidation. The daily chart above shows what I currently think might be going on. Elliott Wave labels count the current consolidation as part of a fourth wave correction. This fourth could form as a triangle or a flat. Both are shown. The triangle would make things easier to stomach as we hold shorts, while the flat would temporarily lead to new retracement highs before continuation of the broader trend.
Should we get upset if the market does something completely different than is outlined above? No! We are managing probabilities here. When it comes down to it, we are going to try to follow the price trend. If the market does something completely different than expected, it will just be doing what markets are good at doing -tricking traders and investors.
Last week, a 20-minute chart was posted to follow up on a one that had been posted the week prior. A possible short-term rally was expected, and a short term rally has occurred. This retracement may or may not be over, but it certainly has not amounted to much yet.
The VIX is consolidating with price, albeit from levels a little higher than we have become accustomed to in recent months. Complacently is not as high as it once was.
We have been noticing that the Put / Call has been at levels where we might expect a short term low to emerge. Even after the short term bottom has has emerged, the Put / Call is still essentially at those levels. This is right along the lines of our Elliott Wave expectation of a little more action out of the proposed wave-4.
As I mentioned earlier, any additional rally will most likely lead me to look to add more shorts to intermediate and long term positions (might have to defend some current profits first though).
Current Stance:
Long Term: Hold Short
Intermediate term: Hold Short (against stop mentioned earlier in post)
Short term:
My propriety short term system is currently neutral -not allowing trades at the moment. Directional orientation as well as position entries and exits in this system occur more frequently than posts to this blog.
Definitions:
Flat = no position / not long or short the market.
Sell / Short = positioning to attempt to profit on price declines
Buy / Long = positioning to attempt to profit on price advances
Hold = hold a long position
Hold Short = hold a short position
Behind Closed Doors at the Fed: Ten Years of Research into America's Central Bank
Free Report Available Now
Elliott Wave International
Free Report Available Now
Elliott Wave International
8/26/11
Behind Closed Doors at the Fed: Ten Years of Research into America's Central Bank
Free Report Available Now
By Elliott Wave International
By Elliott Wave International
External resistance to the Fed's policies is one thing. But the machinations of America's central bank are also encountering resistance from within the Fed itself, albeit "behind closed doors"... Read more.
8/25/11
Technical Analysis - EURO 8/25/11
Unlike some of the other markets tracked at this blog, the EURO has done virtually nothing since last week's post. It continues to be a market I am currently not interested in trading. Generally I am bearish on the EURO, so I expect my interest to eventually change with excitement to the short side. Until price trend tells us to take action, we just continue to watch and wait.
"Throughout all my yers of investing I've found that the big money was never made in the buying or the selling. The big money was made in the waiting" - Jesse Livermore.
Still looking like a long term distribution pattern to me.
The intermediate term continues to consolidate. I would not be surprised to see some break out to the upside from this congestion, but I don't plan to buy it at the moment.
Moving average envelopes and RSI are neutral over both time frames.
Dynamic Trailing Stop is in downtrend mode on the weekly and the daily chart.
ADX / DMI registers non-trending behavior on the weekly chart, but has perked up a bit on the daily chart. However, when we look at what the recent daily ADX perk up is relative to, then it does not necessarily indicate emerging trending action.
My Elliott Wave interpretation continues to be long term bearish on the EURO.
Current Stance
Long Term: Flat
Intermediate Term: Flat
Definitions:
Flat = no position / not long or short the market.
Sell / Short = positioning to attempt to profit on price declines
Buy / Long = positioning to attempt to profit on price advances
Hold = hold a long position
Hold Short = hold a short position
"Throughout all my yers of investing I've found that the big money was never made in the buying or the selling. The big money was made in the waiting" - Jesse Livermore.
Still looking like a long term distribution pattern to me.
The intermediate term continues to consolidate. I would not be surprised to see some break out to the upside from this congestion, but I don't plan to buy it at the moment.
Moving average envelopes and RSI are neutral over both time frames.
Dynamic Trailing Stop is in downtrend mode on the weekly and the daily chart.
ADX / DMI registers non-trending behavior on the weekly chart, but has perked up a bit on the daily chart. However, when we look at what the recent daily ADX perk up is relative to, then it does not necessarily indicate emerging trending action.
My Elliott Wave interpretation continues to be long term bearish on the EURO.
Current Stance
Long Term: Flat
Intermediate Term: Flat
Definitions:
Flat = no position / not long or short the market.
Sell / Short = positioning to attempt to profit on price declines
Buy / Long = positioning to attempt to profit on price advances
Hold = hold a long position
Hold Short = hold a short position
8/24/11
Technical Analysis - Gold 8/24/11
Congrats to Bob Prechter of EWI for putting out the call to short gold on the 19th. It was definitely an epic call; especially in the short term!
While the call to short mentioned above seems to have proven correct, my main edge in trading has been found by harnessing and riding trends. As the weekly bar chart above shows, gold has not violated it's current long term uptrend as of yet.
I have moved stops for our speculative long gold stance (holding a little physical is always good insurance) up to 1482. If the trend hits that level and ends, we exit. If the trend consolidates above that level and then continues to rise, we ride it.
Gold prices made a new high since last week's post, but the last two days of decline have brought price back to a range that was seen last week. Regardless, the intermediate term trend is still up for now.
Both the weekly and daily moving average envelopes are still trending up with signal lines remaining above the envelopes.
Weekly RSI is still in uptrend range, but daily RSI has now moved slightly into neutral territory.
The weekly Dynamic Trailing Stop remains in uptrend mode, while the daily DTS is now in downtrend mode. Certainly, I would not have a good argument against anyone who took profits with the daily DTS breach.
ADX / DMI continues to show trending behavior on the weekly chart and has only turned down slightly at this point on the daily bar chart.
Current Stance
Long Term: Hold (core position)
Intermediate Term: Hold
(Unfortunately, I failed to take the most recent intermediate term breakout, but I would hold if I had not made the mistake of dismissing a trend signal.)
Definitions:
Flat = no position / not long or short the market.
Sell Short = positioned to attempt to make money on price declines
Buy / Long = positioned to make money on price advances
Hold = hold a long position
Hold Short = Hold a short position
While the call to short mentioned above seems to have proven correct, my main edge in trading has been found by harnessing and riding trends. As the weekly bar chart above shows, gold has not violated it's current long term uptrend as of yet.
I have moved stops for our speculative long gold stance (holding a little physical is always good insurance) up to 1482. If the trend hits that level and ends, we exit. If the trend consolidates above that level and then continues to rise, we ride it.
Gold prices made a new high since last week's post, but the last two days of decline have brought price back to a range that was seen last week. Regardless, the intermediate term trend is still up for now.
Both the weekly and daily moving average envelopes are still trending up with signal lines remaining above the envelopes.
Weekly RSI is still in uptrend range, but daily RSI has now moved slightly into neutral territory.
The weekly Dynamic Trailing Stop remains in uptrend mode, while the daily DTS is now in downtrend mode. Certainly, I would not have a good argument against anyone who took profits with the daily DTS breach.
ADX / DMI continues to show trending behavior on the weekly chart and has only turned down slightly at this point on the daily bar chart.
Current Stance
Long Term: Hold (core position)
Intermediate Term: Hold
(Unfortunately, I failed to take the most recent intermediate term breakout, but I would hold if I had not made the mistake of dismissing a trend signal.)
Definitions:
Flat = no position / not long or short the market.
Sell Short = positioned to attempt to make money on price declines
Buy / Long = positioned to make money on price advances
Hold = hold a long position
Hold Short = Hold a short position
Techniques
During a Market Technicians Association continuing education web presentation today it was mentioned that it is probably a good idea to use things like pattern recognition techniques along with systematic trend following in order to better filter signals. Where have you heard or seen examples of that before?
So far its a good presentation on trend following. Nothing new, but a good primer for anyone new to trend following, and its always good to refresh and hear others talk about techniques for those with more experience and knowledge.
You can find the Market Technicians Association at www.mta.org.
So far its a good presentation on trend following. Nothing new, but a good primer for anyone new to trend following, and its always good to refresh and hear others talk about techniques for those with more experience and knowledge.
You can find the Market Technicians Association at www.mta.org.
8/23/11
Technical Analysis - Swiss Franc 8/23/11
The Swiss Franc recently came off it's highs. Let's look at some charts to determine the condition of the long an intermediate term price trends in CHF.
Long term trend off the price highs, but still intact.
According to the parallel lines method I post every week, the Franc is still in, but very close to challenging, an intermediate term uptrend.
According to other trend methods, the intermediate term uptrend has been violated. Even according to my own automated intermediate term algorithms (still in R&D phase, not published) the intermediate term trend is no longer up.
My Elliott Wave interpretation has the CHF most likely in a fourth wave right now. For those unfamiliar, a fourth wave would indicate the current downside action has a correction in a larger uptrend. At the same time, there appear to be five waves down from the top.
Ultimately, when to exit the trend is up to the discretion of the trader / investor. Although we trade several markets as futures contracts, much of our interest in this market is in regards to physical CHF notes. We continue to view this as a hold for now, while also being alert for signals to exit long term positions.
Weekly moving average envelope is trending up with signal line in uptrend range above envelope. Daily moving average envelope is still trending up, but signal line has now moved into downtrend range below envelope.
Weekly RSI remains in uptrend range, while daily RSI is in neutral territory.
Dynamic Trailing Stop in uptrend mode on weekly bar and in downtrend mode on daily bar. Note that the weekly DTS has been superior at tracking this trend. Sometimes there is not much difference between long term and intermediate term. In this case, I'm going with long term due to fewer whipsaws and increasing gains.
ADX / DMI is registering strong trending behavior in the weekly bar time frame, but is registering non-trending action in the daily bar time frame.
At the time of this posting, 1 USD = 0.79102 CHF
This has been a great currency for U.S. savers / investors to hold for some time. It has not only defended purchasing power, but also increased it! We will just have to keep watching to see if that continues to be the case.
Current Stance
Long Term: Hold
Intermediate Term: Hold
Definitions:
Flat = no position / not long or short the market.
Sell Short = positioning to attempt to profit on price declines
Buy / Long = positioning to attempt to profit on price advances
Hold = hold a long position
Hold Short = hold a short position
Long term trend off the price highs, but still intact.
According to the parallel lines method I post every week, the Franc is still in, but very close to challenging, an intermediate term uptrend.
According to other trend methods, the intermediate term uptrend has been violated. Even according to my own automated intermediate term algorithms (still in R&D phase, not published) the intermediate term trend is no longer up.
My Elliott Wave interpretation has the CHF most likely in a fourth wave right now. For those unfamiliar, a fourth wave would indicate the current downside action has a correction in a larger uptrend. At the same time, there appear to be five waves down from the top.
Ultimately, when to exit the trend is up to the discretion of the trader / investor. Although we trade several markets as futures contracts, much of our interest in this market is in regards to physical CHF notes. We continue to view this as a hold for now, while also being alert for signals to exit long term positions.
Weekly moving average envelope is trending up with signal line in uptrend range above envelope. Daily moving average envelope is still trending up, but signal line has now moved into downtrend range below envelope.
Weekly RSI remains in uptrend range, while daily RSI is in neutral territory.
Dynamic Trailing Stop in uptrend mode on weekly bar and in downtrend mode on daily bar. Note that the weekly DTS has been superior at tracking this trend. Sometimes there is not much difference between long term and intermediate term. In this case, I'm going with long term due to fewer whipsaws and increasing gains.
ADX / DMI is registering strong trending behavior in the weekly bar time frame, but is registering non-trending action in the daily bar time frame.
At the time of this posting, 1 USD = 0.79102 CHF
This has been a great currency for U.S. savers / investors to hold for some time. It has not only defended purchasing power, but also increased it! We will just have to keep watching to see if that continues to be the case.
Current Stance
Long Term: Hold
Intermediate Term: Hold
Definitions:
Flat = no position / not long or short the market.
Sell Short = positioning to attempt to profit on price declines
Buy / Long = positioning to attempt to profit on price advances
Hold = hold a long position
Hold Short = hold a short position
Understanding the Fed
EWI's free eBook explains the common and misleading myths about the U.S. Federal Reserve Bank
Elliott Wave International
EWI's free eBook explains the common and misleading myths about the U.S. Federal Reserve Bank
Elliott Wave International
8/22/11
Technical Analysis - S&P 500 8/22/11
Silver has rallied along with gold in recent sessions, but has still failed to reach a new high.
Long term uptrend still intact for silver.
Intermediate term uptrend within a broader sideways range.
Weekly moving average envelope trending slightly up with a signal line within neutral range. The daily moving average envelope is also trending up, and it's signal line is in uptrend range relative to the envelope.
RSI is in uptrend range on both the weekly and daily bar chart at this point.
The Dynamic Trailing Stop (DTS) is in uptrend mod on both the weekly and the daily chart.
ADX / DMI continues to register non-trending action on the weekly chart. AMD / DMI has turned up on the daily chart, registering some trending behavior for the intermediate term.
My Elliott Wave interpretation of the silver market continues to led me to expect intermediate term downside prior to resumption of the larger uptrend.
Current Stance
Long Term: Hold (core position)
Intermediate Term: Flat
Definitions:
Flat = no position / not long or short the market.
Sell Short = positioned to attempt to make money on price declines
Buy / Long = positioned to make money on price advances
Hold = hold a long position
Hold Short = Hold a short position
Last chance for Robert Prechter's Free "Critical Juncture" Report
Long term uptrend still intact for silver.
Intermediate term uptrend within a broader sideways range.
Weekly moving average envelope trending slightly up with a signal line within neutral range. The daily moving average envelope is also trending up, and it's signal line is in uptrend range relative to the envelope.
RSI is in uptrend range on both the weekly and daily bar chart at this point.
The Dynamic Trailing Stop (DTS) is in uptrend mod on both the weekly and the daily chart.
ADX / DMI continues to register non-trending action on the weekly chart. AMD / DMI has turned up on the daily chart, registering some trending behavior for the intermediate term.
My Elliott Wave interpretation of the silver market continues to led me to expect intermediate term downside prior to resumption of the larger uptrend.
Current Stance
Long Term: Hold (core position)
Intermediate Term: Flat
Definitions:
Flat = no position / not long or short the market.
Sell Short = positioned to attempt to make money on price declines
Buy / Long = positioned to make money on price advances
Hold = hold a long position
Hold Short = Hold a short position
Last chance for Robert Prechter's Free "Critical Juncture" Report
8/21/11
Technical Analysis S&P 500 8/21/11
Succumbing to selling pressure, the S&P 500 has continued to reward our short position.
Parallel trendlines are helping us define and track the long term price trend on the weekly bar chart above.
A rebound early this past week challenged the intermediate term parallel trendlines above, but quickly returned to the prior downtrend. This temporary breech may have been enough to lead some to close their shorts, but we used some discretion to continue to hold short. I will usually post a quick comment below the weekly post or as a new post itself if I see a major change between weekly posts.
Several factors lead to our deciding to continue holding intermediate term short positions. As I have been working on learning to program, I have a intermediate term algorithm that follows prices at this point. Although I do not believe this is refined enough to start publishing yet, I do take it into consideration. It is still short this market. Additionally, other trend following measures, some shown below, have remained short through the bounce. Last, but not least, my Elliott Wave interpretation indicates that an intermediate term low may be approaching, but is probably not here yet. There is a chance that some discretion will be applied in the coming days or weeks leading to taking some profits while the trend is still technically down.
As of now, I am moving stops for intermediate term short positions down to one tick above the high of 8/17/11, which is 1208.47 in the cash market and 1206.75 in the E-mini S&P Futures market (Sept contract). This locks in a profit for our intermediate term position and allows the trend to continue running if the market so chooses.
Moving average envelopes on both the weekly and daily bar time frames remain in downtrend mode.
RSI is also in downtrend range. A recent test of downtrend range resistance on the daily chart was followed shortly be a resumption of the downtrend.
Although the Dynamic Trailing Stop (DTS) offers tighter defensive levels than the moving average envelopes, it's downtrend mode has not been violated by the recent bounce on the daily bar chart. DTS remains in downtrend mode on the weekly and the daily chart.
ADX / DMI currently registeres trending action on both time frames.
The weekly chart above represents my top and most simplistic Elliott Wave interpretation at the moment. I will worry about all the possible alternate counts when price action tells me to. As for now, I'm trying to avoid analysis paralysis and just trade this thing.
Note the recent test of Richard's Line (named for friend who pointed it out to me). Price rallied back up for the test and turned right back around.
The chart above was posted last week. This week I added two things. Most importantly are various Fibonacci levels I'm watching. Secondly, a lot of folks out there are talking about the "death cross". What is being referred to is the fact that the 50 day moving average has now crossed below the 200 day moving average. This is not really something I watch for that much, but it is certainly a measure of trend, and it seems to be a popular discussion right now.
The one on the right is the updated chart of what followed.
Looking at this 20-min chart indicates that there are actually enough subdivisions there to lead one to expect another short-term rally, or possibly even an end to the intermediate term downtrend. But things could also subdivide lower. In an effort to avoid analysis paralysis, I'm continuing to hold short for now. We'll see what happens.
For many weeks on end the posts here showed how low the VIX was and how that was not a good area to buy the stock market. This bearish outlook as now been vindicated, and the VIX is no longer as low as it once was. Currently the VIX is at levels where an intermediate term low is certainly very possible. As for the long term, well, we know the VIX can get a lot more worried than it is now.
Certainly the Put / Call ratio is at a level where we might expect a short term low to begin to emerge (possibly from lower price levels though). Investors have been led to purchase Puts as insurance against their portfolios.
Current Stance:
Long Term: Hold Short
Intermediate term: Short (against stop mentioned earlier in post)
Short term:
My propriety short term system is currently taking trade signals on the short sale side of this market. Directional orientation as well as position entries and exits in this system occur more frequently than posts to this blog.
Definitions:
Flat = no position / not long or short the market.
Sell / Short = positioning to attempt to profit on price declines
Buy / Long = positioning to attempt to profit on price advances
Hold = hold a long position
Hold Short = hold a short position
See Prechter's "FREE FALL TERRITORY" Chart for Yourself
And see EWI's long-term forecast in the updated "Free Fall" chart
Elliott Wave International
Parallel trendlines are helping us define and track the long term price trend on the weekly bar chart above.
A rebound early this past week challenged the intermediate term parallel trendlines above, but quickly returned to the prior downtrend. This temporary breech may have been enough to lead some to close their shorts, but we used some discretion to continue to hold short. I will usually post a quick comment below the weekly post or as a new post itself if I see a major change between weekly posts.
Several factors lead to our deciding to continue holding intermediate term short positions. As I have been working on learning to program, I have a intermediate term algorithm that follows prices at this point. Although I do not believe this is refined enough to start publishing yet, I do take it into consideration. It is still short this market. Additionally, other trend following measures, some shown below, have remained short through the bounce. Last, but not least, my Elliott Wave interpretation indicates that an intermediate term low may be approaching, but is probably not here yet. There is a chance that some discretion will be applied in the coming days or weeks leading to taking some profits while the trend is still technically down.
As of now, I am moving stops for intermediate term short positions down to one tick above the high of 8/17/11, which is 1208.47 in the cash market and 1206.75 in the E-mini S&P Futures market (Sept contract). This locks in a profit for our intermediate term position and allows the trend to continue running if the market so chooses.
Moving average envelopes on both the weekly and daily bar time frames remain in downtrend mode.
RSI is also in downtrend range. A recent test of downtrend range resistance on the daily chart was followed shortly be a resumption of the downtrend.
Although the Dynamic Trailing Stop (DTS) offers tighter defensive levels than the moving average envelopes, it's downtrend mode has not been violated by the recent bounce on the daily bar chart. DTS remains in downtrend mode on the weekly and the daily chart.
ADX / DMI currently registeres trending action on both time frames.
The weekly chart above represents my top and most simplistic Elliott Wave interpretation at the moment. I will worry about all the possible alternate counts when price action tells me to. As for now, I'm trying to avoid analysis paralysis and just trade this thing.
Note the recent test of Richard's Line (named for friend who pointed it out to me). Price rallied back up for the test and turned right back around.
The chart above was posted last week. This week I added two things. Most importantly are various Fibonacci levels I'm watching. Secondly, a lot of folks out there are talking about the "death cross". What is being referred to is the fact that the 50 day moving average has now crossed below the 200 day moving average. This is not really something I watch for that much, but it is certainly a measure of trend, and it seems to be a popular discussion right now.
Anybody remember the following chart (on left) from last week: 
The one on the right is the updated chart of what followed.
Looking at this 20-min chart indicates that there are actually enough subdivisions there to lead one to expect another short-term rally, or possibly even an end to the intermediate term downtrend. But things could also subdivide lower. In an effort to avoid analysis paralysis, I'm continuing to hold short for now. We'll see what happens.
For many weeks on end the posts here showed how low the VIX was and how that was not a good area to buy the stock market. This bearish outlook as now been vindicated, and the VIX is no longer as low as it once was. Currently the VIX is at levels where an intermediate term low is certainly very possible. As for the long term, well, we know the VIX can get a lot more worried than it is now.
Certainly the Put / Call ratio is at a level where we might expect a short term low to begin to emerge (possibly from lower price levels though). Investors have been led to purchase Puts as insurance against their portfolios.
Current Stance:
Long Term: Hold Short
Intermediate term: Short (against stop mentioned earlier in post)
Short term:
My propriety short term system is currently taking trade signals on the short sale side of this market. Directional orientation as well as position entries and exits in this system occur more frequently than posts to this blog.
Definitions:
Flat = no position / not long or short the market.
Sell / Short = positioning to attempt to profit on price declines
Buy / Long = positioning to attempt to profit on price advances
Hold = hold a long position
Hold Short = hold a short position
See Prechter's "FREE FALL TERRITORY" Chart for Yourself
And see EWI's long-term forecast in the updated "Free Fall" chart
Elliott Wave International
8/19/11
See Prechter's "FREE FALL TERRITORY" Chart for Yourself
And see EWI's long-term forecast in the updated "Free Fall" chart
August 19, 2011
By Elliott Wave International
In the May 2008 issue of his monthly Elliott Wave Theorist, Robert Prechter showed this chart of the Dow Jones Industrials. As you can see, prices go back to the 1970s.
Please note that on the day this chart published (May 16), the Dow closed at 12,987 -- barely eight percent below the Dow's all-time high of the previous October.
Yet, as you can also clearly see, Prechter labeled the white space below the May 2008 price level as "Free Fall Territory."
At the time, no one else dared to publish such a bearish forecast. This was before the Lehman bankruptcy, the bailout binge, the home foreclosure crisis, and certainly before the worst of the stock market collapse.
In his June 2011 Theorist, Prechter published an update to the chart above, and here's the major difference: The updated chart "telescopes out" by one full degree of trend. Prices go back to the 1930s. The scale of the white space surrounding this chart's "free fall territory" label will show you what Prechter truly means.
His commentary in that issue also observed that
"the March-April [2011] rally was one of the most passionate bouts of stock buying I have ever witnessed."
Bob Prechter made this observation not in admiration, but as a warning.
In the past three weeks, the Dow Industrials have plummeted nearly 2,000 points. Most investors are confused and scared. How far down will the decline travel? Will it end tomorrow or go on for years?
The answers to these questions are crucial to your financial health. You can still get ahead of the trend, but only if you prepare now. Read EWI's long and near-term forecast. Get it in one comprehensive package -- and stay ahead of the crowd.
And -- get Bob Prechter's August Elliott Wave Theorist. It includes "many dozens" of charts. Bob will also record this Theorist as a rare "video issue" -- you'll be able to watch and listen as Prechter himself presents all the content.
Also -- as part of the same package, you get the August issue of our Elliott Wave Financial Forecast -- you'll see and read about the latest big picture in stocks, dollar, gold and more.
SAVE 57% with this LIMITED-TIME OFFER: See what we see next for the markets now via this instant-access discount subscription offer.
This article was syndicated by Elliott Wave International. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
8/18/11
Technical Analysis - EURO 8/18/11
Regular readers know I don't like the EURO for trading or investing right now. These weekly posts serve to keep use ready for the day that comes where a EURO trade (probably to the short side?) emerges.
Long term distribution. At least that's what it looks like to me.
Intermediate term chop. Even if prices break out of the intermediate term consolidation to the upside, I do not currently plan to follow the trend in this case. It would take more work on the long term chart for me to want to do that from this juncture.
Moving average envelopes are neutral. RSI is neutral.
Dynamic Trailing Stop is currently in downtrend mode on both charts.
ADX / DMI looks very weak on over both time frames.
My Elliott Wave interpretation continues to be long term bearish on the EURO.
Current Stance
Long Term: Flat
Intermediate Term: Flat
Definitions:
Flat = no position / not long or short the market.
Sell / Short = positioning to attempt to profit on price declines
Buy / Long = positioning to attempt to profit on price advances
Hold = hold a long position
Hold Short = hold a short position
Long term distribution. At least that's what it looks like to me.
Intermediate term chop. Even if prices break out of the intermediate term consolidation to the upside, I do not currently plan to follow the trend in this case. It would take more work on the long term chart for me to want to do that from this juncture.
Moving average envelopes are neutral. RSI is neutral.
ADX / DMI looks very weak on over both time frames.
My Elliott Wave interpretation continues to be long term bearish on the EURO.
Current Stance
Long Term: Flat
Intermediate Term: Flat
Definitions:
Flat = no position / not long or short the market.
Sell / Short = positioning to attempt to profit on price declines
Buy / Long = positioning to attempt to profit on price advances
Hold = hold a long position
Hold Short = hold a short position
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