7/2/08
Is this week full of volatility? This morning US stock market held in green zone even with worst ADP job data report of biggest loss in 6 years. Then the oil future is hitting wire with record close high that kill all the reversal momentum. All Major stock indexes are closed in lows of the day. Also, the follow-through confirmation is failed after hammer candlestick pattern for Dow and S&P. I had mentioned yesterday that I am not so convinced yet because the VIX was not closed(touched) in Fear Zone(+30).This is very very bearish now. As I said earlier that tomorrow is key day and the market is going to open half day due to the holiday of July 4th on Friday. Well, if tomorrow the market open down more than 100+ or 200+ points with VIX strike into 30+ zone, it would be a good aggressive entry points and the market would probably make the bottom(Not long term bottom-at least last for years). Otherwise, most likely all major indexes would posted a bad down day to celebrate our July 4th. There is one more case if market has perform wild wild west that it keep drops down from teens to over 300 points and recover almost breakeven at 1:00pm eastern market closed time with very heavy volume. Then it would be a good bottoming formation(another hammer, or high wave Doji star). Well, fasten the seat belt as the patriot roller coaster is about to riding down then....Let the market tells the story.
Wednesday, July 2, 2008
Tuesday, July 1, 2008
Intermediate-term bottom
7/1/08
What a reversal trading day!! As I mentioned days earlier, Dow was formed tweezers Doji since friday close. Today, it formed a hammer which is one of strong bullish reversal candlestick patterns after significant downtrend, appeared in deep oversold territory and reverse recover from breaking lower bolinger band. But I need to see a follow-through up day for confirmation tomorrow. Financial sector got good rebound. Moreover, I am not so convinced yet that this maybe an intermediate-term bottom as VIX is not spike in Fear Zone(over 30). The above mentioned technical also happen with S&P. The stronger Nasdaq found support and had good bounce too. The S&P did find support in my said support zone 1265-1275 (today the lowest is 1260 but closed 1284). The Dow has bounce from 12200 the upper level as I told too. Here the next big hurdle for market to rebound higher is falling on the last trading day of this week. As I wrote it on Sunday, this thursday that ECB and Non-farm payroll are very critical to bring up sentiment change. Still, market sentiment has not changed in favor of Bulls yet as oil future still trade in topping area.
What a reversal trading day!! As I mentioned days earlier, Dow was formed tweezers Doji since friday close. Today, it formed a hammer which is one of strong bullish reversal candlestick patterns after significant downtrend, appeared in deep oversold territory and reverse recover from breaking lower bolinger band. But I need to see a follow-through up day for confirmation tomorrow. Financial sector got good rebound. Moreover, I am not so convinced yet that this maybe an intermediate-term bottom as VIX is not spike in Fear Zone(over 30). The above mentioned technical also happen with S&P. The stronger Nasdaq found support and had good bounce too. The S&P did find support in my said support zone 1265-1275 (today the lowest is 1260 but closed 1284). The Dow has bounce from 12200 the upper level as I told too. Here the next big hurdle for market to rebound higher is falling on the last trading day of this week. As I wrote it on Sunday, this thursday that ECB and Non-farm payroll are very critical to bring up sentiment change. Still, market sentiment has not changed in favor of Bulls yet as oil future still trade in topping area.
Monday, June 30, 2008
First Half of Bear Market Year End
6/30/08
US stock markets end mixed today on financial sector losses and additional economic worries. The DOW closed up tiny 3.5 to 11350, the S&P 500 climbed 1.6 to 1280 and the Nasdaq fell 22.6 to 2293. LEH fell to an 8 year low today to 19.68. Technically, the DOW formed another Doji star and so is S&P, if combined with last friday candlestick pattern. Both indexes were close to form a morning star pattern(if tomorrow both indexes are closed on much high notes). It seems that it is good sign for both. But if tomorrow the bears are in control again, market would fall new lows for sure. The crude oil future was trading new highs during middle of the day after closed slightly down from friday closing price. US stock market has posted three consecutive down quarters since year 1978 which was our US oil crisis period with high inflation too. How interesting! Are we getting an economy similar to the year in 70's?? Is stagflation coming?? Prolong recession?? Depression? Whatever what people call for, it is not good definitely. Be careful to pick good stocks to trade. Otherwise, cheap stocks would get cheaper. Buy stocks in downfall is totally like catching a sharp falling knife. Example, AMR(American Airline), all time lows was $1.25 after year 2000 9/11. Now, AMR is trading around $5.00 and it still has lots of room to go down with opposite direction that oil future keep going thru the roof. Good luck to pick the winners before seeing the technical charts.
US stock markets end mixed today on financial sector losses and additional economic worries. The DOW closed up tiny 3.5 to 11350, the S&P 500 climbed 1.6 to 1280 and the Nasdaq fell 22.6 to 2293. LEH fell to an 8 year low today to 19.68. Technically, the DOW formed another Doji star and so is S&P, if combined with last friday candlestick pattern. Both indexes were close to form a morning star pattern(if tomorrow both indexes are closed on much high notes). It seems that it is good sign for both. But if tomorrow the bears are in control again, market would fall new lows for sure. The crude oil future was trading new highs during middle of the day after closed slightly down from friday closing price. US stock market has posted three consecutive down quarters since year 1978 which was our US oil crisis period with high inflation too. How interesting! Are we getting an economy similar to the year in 70's?? Is stagflation coming?? Prolong recession?? Depression? Whatever what people call for, it is not good definitely. Be careful to pick good stocks to trade. Otherwise, cheap stocks would get cheaper. Buy stocks in downfall is totally like catching a sharp falling knife. Example, AMR(American Airline), all time lows was $1.25 after year 2000 9/11. Now, AMR is trading around $5.00 and it still has lots of room to go down with opposite direction that oil future keep going thru the roof. Good luck to pick the winners before seeing the technical charts.
Sunday, June 29, 2008
Expect super volatility weeks
6/29/08
Remember I have mentioned about the relationship of currency pair USD/JPY vs Dow index movement. Currency traders are always like to use carry trade with USD/JPY pair (In fact, EUR/JPY is gradually more active). The correlation/trend ratio between USD/JPY with DOW is getting unity more than usual for this coming weeks and after. Currently, USD is falling close to all time lows against other countries. The most important economic data(Non-Farm payroll) is going to announce this coming thursday rather than firday right at the same time as the post rate announcement news by the ECB due to july 4th holiday. Therefore, the volatility in the currency pair as well as the US stock market would be huge, especially if there are surprises on both issues. And the worst would be, if ECB increases rate, dollar would get more weaken(means USD/JPY weaken also), and with bad NFP number. Then, it surely will give Bulls a hard time for US stock market. Moreover, greenback would clearly on the defensive play after july 3rd(thursday) as US currency traders are off for holiday that no patriotic action help support our $$. Well, hopefully that US stock markets are off making good capitulated bottom technically before thursday. Monday, the chicago PMI survery estimate 48.4. Let see how this surprise(if there is one) play out on traders/investors action monday.
Remember I have mentioned about the relationship of currency pair USD/JPY vs Dow index movement. Currency traders are always like to use carry trade with USD/JPY pair (In fact, EUR/JPY is gradually more active). The correlation/trend ratio between USD/JPY with DOW is getting unity more than usual for this coming weeks and after. Currently, USD is falling close to all time lows against other countries. The most important economic data(Non-Farm payroll) is going to announce this coming thursday rather than firday right at the same time as the post rate announcement news by the ECB due to july 4th holiday. Therefore, the volatility in the currency pair as well as the US stock market would be huge, especially if there are surprises on both issues. And the worst would be, if ECB increases rate, dollar would get more weaken(means USD/JPY weaken also), and with bad NFP number. Then, it surely will give Bulls a hard time for US stock market. Moreover, greenback would clearly on the defensive play after july 3rd(thursday) as US currency traders are off for holiday that no patriotic action help support our $$. Well, hopefully that US stock markets are off making good capitulated bottom technically before thursday. Monday, the chicago PMI survery estimate 48.4. Let see how this surprise(if there is one) play out on traders/investors action monday.
Offical Bear Market for Dow?
6/29/08
Friday Dow index down another 106 points and posted 19.8% correction since all time high. All medias kept writing Dow is about into BEAR MARKET. Well, those 20% term often making people confused the stock trend stage. I had said the main uptrend was broken since 12/2007 and market were already step into BEAR trend. Technicians are already knew it 6 months early than today's everyone sense. S&P did fall into the support zone 1165-1175 area and got little bounce. But the VIX index still showing no fear yet. In order to make a good solid bottoming process, we need to see VIX way into 30's area. It does not mean that market could not have meaningful rebounce from this level. But, as market technician, I would get more evidence, more signals to call the market has bottomed. I would guess the Dow would have at least 1000 points rally after bottom. The crude oil future is still pointing strong upward momentum and the trendline built from 2/2008 has not been broken so far. So, do not give non-sense wish oil future would fall huge unless that uptrend line broke.
Folks, the Fed, our Bush's government both cannot help to avert US economy into recession or even depression. With global inflationary pressure increase, it is a very hard task that our Fed could do to control it easily. OPEC president voice out loud the oil future will go to $150-$170. Housing is still in worst zone. Credit squeeze rebuild again with all Fed magic did not work at all. I would expect more banks would failure and the size of those default banks would get larger. I am still remain Bearish.
Friday Dow index down another 106 points and posted 19.8% correction since all time high. All medias kept writing Dow is about into BEAR MARKET. Well, those 20% term often making people confused the stock trend stage. I had said the main uptrend was broken since 12/2007 and market were already step into BEAR trend. Technicians are already knew it 6 months early than today's everyone sense. S&P did fall into the support zone 1165-1175 area and got little bounce. But the VIX index still showing no fear yet. In order to make a good solid bottoming process, we need to see VIX way into 30's area. It does not mean that market could not have meaningful rebounce from this level. But, as market technician, I would get more evidence, more signals to call the market has bottomed. I would guess the Dow would have at least 1000 points rally after bottom. The crude oil future is still pointing strong upward momentum and the trendline built from 2/2008 has not been broken so far. So, do not give non-sense wish oil future would fall huge unless that uptrend line broke.
Folks, the Fed, our Bush's government both cannot help to avert US economy into recession or even depression. With global inflationary pressure increase, it is a very hard task that our Fed could do to control it easily. OPEC president voice out loud the oil future will go to $150-$170. Housing is still in worst zone. Credit squeeze rebuild again with all Fed magic did not work at all. I would expect more banks would failure and the size of those default banks would get larger. I am still remain Bearish.
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