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Archive for the ‘Pivot Point’ Category

Market Outlook

I think the ES might be setting up for a rally up to 1465 or so. After that, I think we might get another scary drop in December to SPX 13XX.

I’ve mainly been sitting on cash.  I’m just not good enough/experienced enough to trade this market yet.  Burned a few times on the long side, too scary to start on the short side too.  Therefore, capital preservation trumps all.

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Market Outlook

I’ve previously raised concern about how the corrections in the SPX are getting more tightly spaced. As you can see in the first chart below, the distance between each correction has roughly been halved each time. By implication, the next correction could come in the 10-20 days.

Separately, pivot analysis suggests that we should be settling into a solid rally right about now as we get ready to rally into Nov’s R1 or R2 considering how we’ve held Oct’s PP. The problem is whether the market can keep itself above Nov’s higher PP (which I think will come in around 1520 or so when I get Wednesday’s closing data).

Of course, there’s nothing to stop the market from satisfying both these scenarios by rallying to new highs in the coming two weeks only to sell off real hard by the time the 10-20 day window is up.

I remain bullish for now. However caution is advised as a result the corrective pattern which has developed over the past year.

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As an aside, I don’t think there’ll be a rate cut, which will be negative for stocks in the short term, and will weigh on commodities and support the dollar. The thing is I don’t know how that’ll fit with the above analysis.

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But seriously, today’s jobs data makes the Fed look like a fool for cutting rates so drastically. For now, Jim Rogers appears to be right about the rate move.

There’s little denying that the big surprise cut is nothing more than a Wall Street bailout.

There was a big up move on the 30-Year Treasury Yield Index. You’d think that the dollar would get a decent bid, but no – it rips then cracks to the downside.

NDX easily breached weekly R2 at 2136, and now sits at monthly R1 (around 2148). It also cracked my earlier noted ‘heavy resistance’. If this continues, we should accelerate to the upside towards 2204 and then possibly 2306 (of course, this assumes we accelerate upwards). I think we will tag 2306 by year end.  Dow is targeting 14260 first, then 14630. If we do correct here, downside for October is limited to 13630.

I’ll leave you with this clip. Sort of sums up how the idiotic beartards have fumbled the ball late August and gave bulls the upper hand.

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LT bull still in tact.

No bear market on the horizon, although we are still technically in correction mode. Monthly pivot is at 1488, which will serve as resistance given how overbought we are in the short term. However, I’ve been thinking that perhaps this rally can last longer than most people expect, thus who knows…It can go a long way, just like it did last summer. I think 1405 or 1430 will most likely hold on the downside. In the short term, I still favour a downdraft in the coming weeks, which should finish up this correction once and for all…or maybe not.

Short term chart/targets:

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Long term view: First chart shows the histogram is still very much above zero, which is a sign of a healthy bull market. Second chart speaks for itself.

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It appears the rally is stopping short. Bears are gaining momentum it appears and they have everything going for them. Looks like the interim bottom turned out to be only a short term bottom.

Of note is the All Ord’s pathetic excuse of a rally. Might as well call the Aussie market dead for the coming months.

The bulls are gonna have a rough time. Sidelines or day trading is the best way to go for now.

By the way, the Fed Reserve needs to cut rates or the US economy is going to go down the gurgler. It needs to cut before it’s too late.

Update: It sucks to be long right now. In the short term, the chart looks like we’ll get a swing up by Monday or Tuesday, if the market gaps down slightly and flushes out the weak hands.  I’m getting positive divergences on the hourly, but if we bounce, I’d be looking to probably short if ESU7 fails to get above 1470s. It could get ugly. SPX has reached what I deem as strong support at 1428-1437, and it is at 1433. There should be some sort of a reaction. If there is none, we are then going straight for the sub 1400 region, perhaps 1360.

Reminder people: Bears are fucktards.

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This is merely some commentary I’m offering to those mum and dad investors who are holding MBL (which I’m glad I’m not).  For what it’s worth, I’ll be blunt and harsh and I won’t be apologetic since the market was clearly not apologetic to MBL shareholders over the last few weeks.

For those people that have held onto this stinking piece of shit since its $87 share issue, I say you deserve today’s shit whacking.  When those that head the ‘millionaire’ factory start issuing shares when the stock is trading at all time highs, would you be buying?  Moreover, the charts were ugly as, and volume was getting quite heavy on the selling prior to the recent selloff.

Looking at the chart, the stock ‘should’ find solid support near 71.5 area, maybe a few cents lower and bounce to 78 or 83 region.  But personally, I feel the only real safe area to add this to one’s long term portfolio is near the $67 region, which coincides with a 38% retracement of its entire bull run.  Personally, I believe $67 would most likely mark the bottom of a massive trading range for this stock.  If sentiment really turns sour, then we could see it retrace 50% to the $58 region (very unlikely, but it is possible).  I might try and catch this near 71.5 (if it can get there this week or the next) for a good bounce (and no more), but I’ve got a feeling that I might shoot myself in the foot by trying this.

From another perspective, we could look at the monthly pivot points.  As you can see, we bounced a few days ago near S2, and only a day later, we’re sitting at July’s S3 of 73.73.  But since this is August, we can see the monthly PP is at 84.74, which is too far away to even think about for now.  We’re below August S1 76.61, and just above S2 at 70.71.  That again makes me believe that we’ll see a bounce from this stock beginning from the 70.70 to 71.5 region.

Long term, I’m neutral to slightly bearish on this stock because the 200EMA has turned down today.  That said, it appears to be a bit too late to sell now, so I’d take to unloading on rallies to the 78-83 region.

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As for Babcock and Brown (BNB), it’ll probably follow in Macquarie’s (MBL) footsteps.

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We’re resting on the first trend line, and we’ll probably break through this trendline later on.

As you can see, there’s a fib cluster near 1430 and 1440. Incidentally, that is also where next month’s S1 will likely be. So any further down moves will probably end there. For this to occur, we need to rally to 1490-1500 on the SPX. We’ll probably even touch that number today.

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Update: Took an ESU7 short at 1494. This bounce could have some serious balls, so I’m gonna have to keep the stops somewhat tight despite the volatility. This is no a position trade, just a scalp. Target is the 1485 area. Already in profit now, so my stop is stop at breakeven for the free ride.

Update2: I’m not feeling ballsy, so I’m taking profits for one contract at 1489 for 5 points. The other one still has a stop at breakeven.

Update3: Stopped out of remaining contract. Looks like we’re at least headed for 1492 (38%) retracement on the SPX. I’m out for now.  In the coming days, if there is a deep dip, I’ll be looking to establish myself on a carry trade position (EUR/JPY or GBY/JPY) as well as get myself some emini sp.

Update4: Could I be even more wrong? :p.  At least I was trading in the right direction for today.

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