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Saturday, December 4, 2010

Week-end Observations!!!

Roy's free week-end update is here and yes, he still is bullish, especially on the Asian markets. He takes a look at the $BSE, India's Sensex Index and the Indonesian Stock Market. He starts with a few general comments on the markets before moving on to the charts. Over-all he is bullish on stocks, over-seas currencies, and commodities and bearish on the US Dollar. To view his clip, Click here!!!.
Unlike the Russell the SPX still has a possibility that the 4th wave is not completed, and if it is, a truncated 5th might be playing out. The most worrisome problems for the SPX to currently be in the 5th wave up is the way the SPX is playing out in the green channel, a parallel line connecting the 1st and the 3rd wave should also come close to connecting the 2nd and the 4th creating a channel which has not happened, not even close. Normally a 4th wave will consolidate longer in terms of time compared to the 2nd wave. A 2nd wave also is normally a sharp correction, and the 4th works out in a sideways flat burning off all of the over-bought conditions from the 3rd wave clearing the way for the 5th to advance. Amd as of now the indicators are already reaching over-bought conditions meaning we still have not made a bottom in the 4th wave, or the 5th wave is close to wrapping up.
The time issue also supports the idea that the SPX could be in a 4th wave. The 1st wave lasted 5 weeks, the 2nd wave lasted 3 weeks and the 3rd lasted 9 weeks, it just does not make sense that this 4th wave would only last 3 weeks, shorter then even the 1st wave. The Summation Index has now printed two black bars, not a good sign for the longer term trend. If the bars start to accelerate to the upside a new up-trend will be confirmed. With the two black bars the way there are now it is possible to believe that the equities are still in a 4th wave and this is just a period of consolidation, before a resumption of the downtrend to finish off the 4th wave, however another black bar moving higher really pushes the odds that the 5th wave is currently underway. The Summation Index will most likely not make a higher high above 953 for a 5th wave as it should continue to diverge as momentum towards the end of large moves normally wanes.
This is one of the longer trend charts I use to help figure out market direction, the Percent of Stocks above their 50 day MA with an over-lay of the 20 day MA that has been a very reliable indicator in the past. This chart went bullish when the price action crossed above the 20 day MA. normally a good sign a bottom has been put in. IF the SPX is indeed in a 5th wave up the price action on this chart should diverge(make a lower high) from the previous high because momentum should be at its extreme for the SPX in its 3rd wave, not the current 5th wave.
**Don't forget to checkout and bookmark the new page dedicated solely for the Trend Finder II. It is also now set-up so you can quickly sign-up for daily e-mails to keep up with the various market trends and changes.
**I plan on posting and analysing more charts Sunday morning, including a look at the Dollar.

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