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My current take on TLT:
1) Looks like a developing bearish wedge pattern to me.
2) 21-day SMA should offer support.
3) Accumulate TLT between its 5-day SMA and 21-day SMA.
4) Sell TLT if SAR reverses; MACD crosses; or daily close below 21-day SMA by greater than equal to 1%.
If the wave doesn't crest by 36, you should be okay. One half the hurdle taken out today as the gap was filled. Other half of the hurdle is price resistance and 21-day SMA around 36. Good luck!
TLT is a buy on Friday between 91.28--89.48. As long as it can stay above its 21-day SMA on a closing basis, I'm long. I'm buying on dips below its 5-day SMA. With the ADX over 20 and the MACD and Parabolic SAR still in positive configuration, I'll accumulating between 91.28--89.48.
Note the volume and price today. Price was down and volume are declining. I consider the current market trend is strong (bullish--long positions being forced to liquidate; countertrend move will end as all sellers sell their positions.
Three events will trigger a sell: 1) SAR reverses, 2) MACD crosses its signal line, or 3) 1% close below the 21-day SMA.
Cheers!
OT: Breakdown, Bounce and…Confirmation?
Breakdown, Bounce and…Confirmation?
LAST FRIDAY'S ACTION was the trigger that the bears have been waiting to see for weeks. By trading below supports from the recent March-April trading range, the major indexes have given two kinds of bears – the trading bears and the investing bears – reason to rejoice.
The short-termers got a quick ride, the kind they dream about, and from their point of view landed on an obvious (nothing is obvious) place to cash in their short positions.
Many of the indexes, from the Standard & Poor's 500 big caps to the S&P 600 small caps, landed on their respective 200-day moving averages
Clearly, the move down was so swift that it left all sorts of technical momentum-based indicators oversold and the combination left the market in prime condition for a bounce.
That's the old news. As the market works on its recovery and indicators return to more normal readings, we have to look at some of the hiding places ahead where new bears are going to jump on the breakdown and add more supply to the existing abundance of shares now for sale.
In other words, we have to look to see where resistance is going to arise to make an attempt to scuttle the recovery – that is, unless today's inflationary consumer price index report does not do it first.
Technical analysts call this upcoming resistance the "test of the breakdown" since it usually appears at the same level as the breakdown itself. It is where less aggressive bears see their second chance to sell at old prices.
It is also where many bulls trapped in losing positions established by buying at a presumed support level see their chance to get out even or with only minor losses.
All of this selling caps the advance and the market stalls. What happens next is the real key. If the market can absorb all of this selling and actually move higher we'll know right away that the bulls are still there.
We'll know demand for shares is still strong after a minor breather and the breakdown can be deemed false.
But that's where the other type of bears – the investors – come into play. These long-termers enjoyed the short-term trading range breakdown, of course, but also saw a breakdown from a larger trading range that began in November of last year
Further, they have seen the market break below the trendline that supported the cyclical bull market since the March 2003 low and that is a major event in anyone's book.
Whatever short-term upside correction develops here, if any, is of little concern to them unless it not only moves the market back into its old trading ranges but also back above the trendline. It's a tall order, to be sure.
Assuming that the test of the breakdown is successful, we can finally look forward to a market that is trending after months of sideways action.
Unfortunately for most investors, the direction of that trend is down and has the label of cyclical bear market.
The label of cyclical vs. secular bear market has distinction only if you are a long-term investor. During the former, it is theoretically possible to sit tight while the market spends a year or two falling and wait for the next cyclical bull market. But that is highly unpalatable to most people.
A secular bear market, on the other hand, does so much damage and for so long that it may not be possible to recoup losses for many years. Remember, a 50% decline requires a 100% rebound just to break even. It's just simple math.
No matter what we call it, a bear market of any kind means prices are going to go down and that means either selling stocks short or simply stepping aside as the damage unfolds.
The transition period from bull to bear can be immediate, like the March 2000 reversal in the Nasdaq, or it can be gradual, like the year and a half wedge pattern that ended a major bull market for the US Dollar in 2002.
The latter creates plenty of false signals in both directions and frustrates long-term players while giving traders a quick move after quick move to ride.
But when we step back and wait for the market to not only signal the breakdown, as it has done, but confirm it with successful tests, as it looks like it is doing, we'll see a clear trend of lower highs and lower lows emerge. That is how we can be confident that the best course of action is not buying dips but rather selling rallies.
Congratulations bob3!
Gizmo,
Price Headley's Number 12 Rule of Trading: I will act upon what the market is doing, rather than what I think it "should" be doing.
W@G2 QQQQ 04/20/05 for a 04/22/05 close
34.93 frenchee
Note the low volume on today's move and gap resistance around 35.50. Don't think this move has legs. $BPCOMPQ still has a negative divergence with $NAMO. Bottome line for me is 35.50-36 looks like it's going to be hard to break thru.
If that's the case, GLD might run again. I'll keep an eye on TLT, $USD, and GLD. If TLT tanks and $USD starts to decline in a trending mode, GLD should take off!
Thanks for the alert...
4godnwv,
"The Coming Bull Market in Gold Stocks" by Frank Barbera. Excellent read...
http://www.financialsense.com/editorials/barbera/2005/0414.html
Hello Gizmo,
$USB looks like it's starting to trend upward. ADX is now over 20 and headed up with momentum indicators confirming the short-term trend. I wouldn't short the $USB unless SAR was breached or the 50-day SMA was decisively taken out, whichever comes first. Also, I'd want to see the MACD go on a sell signal.
Good luck to you if you are shorting it. It's due for a retracement but ya better be nimble!
W@G1 ~QQQQ 04/18/05 for a 04/20/05 close
36.00 frenchee
$NAMO is in a presignal buy area.
However, $BPCOMPQ showing no signs a bottom is in. In fact, it seems to be picking up downside momentum.
If you do play it longer from here, best keep stops tight as I don't see potential support until 34. If we get a countertrend rally, 36 looks like resistance.
$NAMO is in a presignal buy area.
However, $BPCOMPQ showing no signs a bottom is in. In fact, it seems to be picking up downside momentum.
If you do play it longer from here, best keep stops tight as I don't see potential support until 34.
Good luck Gizmo!
sorry to see the trade didn't work out...
swing man,
Thanks for the update on where the Fib levels are. Makes me confident resistenace should be around 37.08.
Best of luck on your trades!
W@G 2~QQQQ 04/13/05 for a 04/15/05 close~
37.25 rayrohn
37.00 BULLarkey
36.44 frenchee
Target reached today and took profit @35.92. In TLT now waiting for another opportunity to short QQQQ again. Think that opportunity will happen around 37.07.
OT Here's a view of TLT
Gizmo,
TLT is currently my favorite ETF. Hope your forecast is correct since I'm loaded up!
Nasdaq internals indicate more work to the downside is probable based on the $NAMO and its indicators not being oversold.
Nasdaq Composite Bullish Percentage Index showing basing signs. Will most likely cover short if SAR is reversed or MACD crosses.
Here's my current breakdown on why I'm still bearish on QQQQ.
Reference http://stockcharts.com/h-sc/ui?symbol=qqqq&period=DAILY&years=0&months=3&days=0&...
1) Slow STO, RSI, MFI, and Chi Osc bearish but not oversold. Suggests more downside action is probable.
2) MACD histogram rolling over while under the zero line.
3) Lots of resistance between 36.75 and 37. Note the volume associated with these price range.
My current target is 35.92 with a stop at 36.95.
Good chart Gizmo. Relative strenght ratio analysis is one of my favorite tools to use. Thanks for sharing...
OT: Thanks swing man.
Been on vacation visiting the Smokey Mountains. If you haven't been there before, recommend you visit sometimes. Plenty of natural wonders...
36.25 my next target with RSI and MFI rolling over. See http://img14.imgspot.com/u/05/99/20/QQQQdaily040805.png
36.76 quiet
36.50 BULLarkey
36.33 financialadvisor
36.25 frenchee
Lot's of resistance around 37. Let's see if there's legs the rest of the week. Looks like more gain on Thursday and back down on Friday since the 5-day RSI is already at 60...
Consolidating Or Getting a Grip?
by Bob Colby
The stock market has been stabilizing since its low last Wednesday 3/23/05. From the peak on 3/7/05 to the low on 3/23/05, the S&P 500 dropped 4.91%. Short-term technical market indicators hit their deepest oversold readings of 2005.
Over the past 3 trading sessions, downside momentum has ground to a halt. Some indexes are at or near various technical supports. The S&P 500 retraced a normal one-third of its August-March upswing.
It seems possible that the 3-day loss of downside momentum is merely a 3-day Pennant Consolidation Pattern within a continuing downtrend which could resume.
On the other hand, it seems equally possible that the 12-day correction reached a turning point last week, and the market is stabilizing and building a base for a rally.
The latest survey by Investors Intelligence shows Bulls at 53.6% versus Bears at 27.8%. This is the lowest net Bullishness since last September, which might be Bullish, according to the Art of Contrary Opinion. Volatility (VIX) is heading up, and that is also Bullish.
Systematic trend-following indicators remain Bearish for the short term, except now they are very close to a turning point.
Oil, commodities, gold, and foreign currencies are breaking down, and that might encourage money to flow back into stocks.
Monday’s activity again suggests that the Demand for stocks may be beginning to match the Supply for stocks. The stock market started strong but gave back most of its gains in the final hour of trading. The S&P 500 finished with a gain of only 0.24%. Most but not all major indexes confirmed moderate strength, except for Biotech, Networking, and Long-Term Bonds, which fell more than 0.50%.
Breadth was moderately Bearish, with 1436 advances trailing 1868 declines on the NYSE. Volume on the NYSE eased slightly to 1.70 billion shares, down from 1.72 billion shares traded in the previous session. Volume may reflect a hangover from the long holiday weekend.
The ISE Sentiment Index is now mildly optimistic at 1.95, compared to a neutral 1.73 previously. This indicator is a call/put options volume ratio based on new customer positions.
Systematic trend-following indicators remain Bearish for the short term, except now they are close to a turning point.
How's Lou doing these days?
OT: CHRIST IS RISEN!
AnderL,
Insightful analysis. Thanks!
FA,
Bullish for TLT and bearish for GLD...
ANNANDALE, Va. (MarketWatch) -- The psychologically easy thing to do right now is to be bearish on bonds and bullish on gold.
And it became even more comfortable in the wake of the Federal Reserve's decision Tuesday to hike short-term interest rates another quarter of a percent. In announcing the decision, the Fed's Open Market Committee felt compelled to say that inflationary pressures are heating up. (Read full story.)
And, needless to say, increased inflation is good news for gold and bad for bonds.
But there's something a little too neat and tidy about this narrative. Being bearish on bonds and bullish on gold is a bit too comfortable.
Making money is rarely that easy.
Consider the latest readings from the Hulbert Bond Newsletter Sentiment Index (HBNSI) and Hulbert Gold Newsletter Sentiment Index (HGNSI). These two indexes reflect the average recommended exposure to the bond and gold markets among a subset of bond and gold timing newsletters tracked by the Hulbert Financial Digest.
As of Tuesday night's close, the HBNSI stood at negative 56.8 percent. The negative reading means that the average bond timer in this index is short the bond market. In fact, the current level equals this index's all-time low. Never in the years of our tracking this group of bond timing newsletters have they been more bearish than they are now.
In contrast, the gold timers are extremely bullish: As of Tuesday night, the HGNSI stood at 71.4 percent. That's within shouting distance of this index's all-time high reading of 89.6 percent.
From the point of view of contrarian analysis, these readings suggest that bonds are more likely to go up than down over the short term -- and that gold will do the opposite.
Over the past four years, for example, the HBNSI has dropped to this low a level just five times. Within the weeks following each of those occasions, the bond market staged a significant rally.
The most recent occasion on which the HBNSI was this low was last May 14, nearly a year ago. Over the subsequent four months, the government's 30-year Treasury bond rose by 10 percent.
Almost the precise opposite story can be told about gold sentiment. There has been only one other occasion in the past several years when the HGNSI was higher than where it stands today. That came at the end of this past November, when this index rose to 78.6 percent. Over the subsequent 2-plus months, gold fell by around 10 percent.
As always, of course, there are no guarantees. Sentiment is not the only thing that makes the world go around, and it is certainly possible that bonds will continue to decline in the face of extreme bearishness among bond timers -- and for gold to go up in the face of near-extreme bullishness among gold timers.
Nevertheless, sentiment is a powerful in the market, particularly over the short term. That's because investors almost always overreact, even when they correctly identify the market's trend.
At a minimum, therefore, the contrarian bet right now is that investors are overreacting now in both the bond and gold markets
OT: Critical Day
by Bob Colby
Wednesday’s activity suggests that the Demand for stocks may be beginning to match the Supply for stocks. The market is oversold, and the 12-day correction has wrung the previously excessive Bullish sentiment out of the market. Time cycles suggest an interesting juncture.
Friday is a holiday and the market is closed. Thursday 3/24/05 is precisely a Fibonacci 8 weeks from the important low on 1/24/05. Also, Thursday 3/24/05 is precisely 60 months from the S&P 500 Composite all-time high. W. D. Gann paid attention to anniversary dates from important highs and lows. He also made special note of a cycle of 60 months, which is five years. This week is a Fibonacci 21 weeks from the important low of 10/25/04. The short-term correction has lasted 12 trading days, and Thursday 3/24/05 is the Fibonacci 13th trading day since the high of 3/7/05. By all these counts, Thursday 3/24/05 is a date that bears watching for signs of trend change.
The correction has knocked many technical oscillators down to a deep oversold condition, the deepest of 2005 in some cases. Also, some of the indexes are near various technical supports.
The ISE Sentiment Index is now more than one standard deviation below the norm at 1.19, compared to 1.66 previously. This indicator is a call/put options volume ratio based on new customer positions. The current low level indicates caution on the part of options speculators, which is Bullish, according the Art of Contrary Opinion.
The latest survey by Investors Intelligence shows Bulls at 53.6% versus Bears at 27.8%, the lowest net Bullishness since last September, which also might be Bullish.
Oil, commodities, gold, and foreign currencies are breaking down, and that might encourage money to flow back into stocks.
On Wednesday, the stock market was moderately weak in the first 80 minutes before turning up after 10:50 a.m. The S&P 500 finished with a slight gain of 0.07% by the close. Not all major indexes confirmed the small upturn, however. Breadth was Bearish again, with 734 advances trailing 2607 declines on the NYSE. Volume on the NYSE rose to 2.28 billion shares, up from 2.11 billion shares traded in the previous session. High and rising volume indicates heavy selling pressure was met with heavy demand, and so these forces are starting to come into balance.
FA, here's my current read on the QQQQs FWIW...
http://www.investorshub.com/boards/read_msg.asp?message_id=5837151
flota,
Here's some explanation via John Murphy...
GOLD SELLING TIED TO RISING DOLLAR ... Some of you have asked why gold sold off this week in reaction to news of higher inflation. After all, commodities are leading indicators of inflation. Keep in mind that a big part of the commodity advance over the last three years has been tied to a falling dollar. This week, however, the dollar bounced as gold (and the CRB Index) has fallen. The selling in gold is directly tied to a rebound in the dollar. When the dollar rises, gold (and other commodities) correct. Gold is a mirror image of the dollar. The bigger question is why the dollar is rallying. Besides technical considerations, the dollar is also being helped by rising U.S. interest rates. That makes commodities sensitive to rising rates.
RATES AND THE DOLLAR ARE LINKED ... There are a lot of things that determine the direction of the U.S. dollar including the trade deficit and the relative position of competing global interest rates. The direction of U.S. interest rates also plays a role. In other words, the dollar is influenced by the direction of U.S. interest rates. Interest rates usually turn before the dollar does. The recent upside breakout in bond yields makes the dollar more attractive to foreign investors. Rising rates may not be enough to pull the dollar into a major uptrend. But rising rates may be enough to keep it in a trading range for awhile. A firmer dollar makes gold and other commodities prone to profit-taking.
Guess Congress figured that's all us civil servants needed...
Now short the QQQQ. Got in on Monday at 36.60. Current stop at 37.41. Suggest shorting QQQQ on strength up to its 50-day SMA.
What makes the speculation appealing is there no chart support until 34.90, the ADX is increasing, MACD is decreasing, volume on down days much higher than volume on up days, and the close is below the price 200-day SMA.
If we get a big down day on heavy volume, plan to close the postion and take profit as we are due for a short-term recovery afterward.
FA--thanks for the analysis.
I'm keeping tabs on it too. My Government retirement savings correlate with these ETFs: SPY, EFA, VXF, and TLT. So if you see something worth pointing out in these EFTs, please let me know.
Currently, I'm waiting on any of my choices to go above their 21-day SMA before I go long. Currently, I'm in 100% cash.
Thanks again for your update--appreciate it!